Do you have a great business idea, but you’re not quite sure how to get from the idea phase into owning and operating your own business in Illinois? You’ve come to the right place! There are many important aspects to running a company, and like any other state, Illinois has its own rules and regulations to consider.
In this guide to starting a business in Illinois, we’ll discuss all the relevant details to business ownership in this state. By the time you’re done reading, we think you’ll have a strong grasp on the necessary steps involved.
How to Start a Business in Illinois (in 10 Steps)
1) Create a Business Plan
The first step to creating any business in any state is to plan what products and services you’ll sell, set your operational budget, and figure out how you want to market your company.
Your business plan doesn’t have to be fancy at all, you just need to make sure you spend enough time considering these important aspects before you actually launch your business. To get started, SBA.gov has a great free tool.
2) Choose a Name
The name of your business is an extremely important attribute because it’s often how you make your first impression to potential customers.
Legal Considerations
Depending on whether you choose to form a corporation or a limited liability company, there are some legal aspects as well (for example, an LLC must include “LLC” or “limited liability company” in the business name, and a corporation must include “incorporated,” “corporation,” “Inc.,” or “Corp.”).
Explanatory Naming
Beyond the basic legalities, you should focus on clearly identifying what your company does in your business name. You can also consider incorporating your values into your business name, like using the word “green” to denote environmental friendliness.
Something You Love
Finally, choose a name that you personally like and take pride in, and one that both sounds good when spoken aloud and looks good on paper.
One big piece of advice we have for naming a business is that you shouldn’t get too focused on one idea until you either form your company or reserve the name.
The Illinois Secretary of State website makes it easy to check your name’s availability using their search tool. The name reservation forms will vary based on your type of business, but for most LLCs, you can reserve a name using the Application to Reserve a Name form. Generally, name reservation in Illinois requires a $25 processing fee ($50 for expedited service) and the following information:
- Name of LLC
- Name and address of applicant
- Signature
The reservation only lasts for 90 days, so you will need to either form your company in that time, your file a new reservation before it expires.
3) Decide on a Registered Agent
An Illinois registered agent is the person or service in charge of receiving your important government documents, and forwarding them to you.
You can find all forms related to registered agents on the Illinois Secretary of State’s website. The Secretary of State provides the following guidelines for registered agents:
- The registered agent can be an individual, a domestic company, or a foreign company (licensed to transact business in Illinois)
- The registered office must have an Illinois street address
This position is vital to any Illinois business because without a registered agent, you could lose your good standing with the state, see your business dissolved by the state, or even remain unaware of a lawsuit progressing against your company.
Though the Secretary of State does not provide an official list of registered agents, there are numerous registered agent companies operating in Illinois.

Rocket Tip: We recommend designating an online service to handle these requirements. This eliminates junk mail and keeps your personal and/or business address off public record. ZenBusiness and IncFile both offer a free registered agent service when you use them to form a business online.
4) Choose a Structure and Form Your Business
If you’re just operating a sole proprietorship or general partnership, you don’t need this step (or several of the others in this guide, including selecting a registered agent), because those business structures don’t require any sort of formal formation process.
This leaves two main options: the corporation and the limited liability company.
The LLC is the more common option, partially because it’s much simpler. There’s not much paperwork involved, and the maintenance requirements basically amount to an annual report. Furthermore, LLC owners still receive the personal asset protection that makes a corporation so attractive as a business type in the first place. For more specific information about starting an LLC, check out our full article on the topic.
For some entrepreneurs, the corporation is the better choice. There’s far more effort involved both in forming one and in maintaining it with the state of Illinois, but for larger businesses they’re usually the better option, as they allow for more growth and investment than LLCs generally do.
If you would like to know more, check out our “LLC vs Corporation: What Is the Difference?” article. No matter which business structure you choose to form, you can find all the relevant forms on the Iowa Secretary of State’s website or have a professional business formation website do it for you.
5) Take Care of Tax Obligations
The vast majority of businesses operating in Illinois will need a federal tax ID number (EIN), which can be acquired from the IRS.
There are three primary taxes that can apply to your business in Illinois: corporate income tax, personal property replacement tax, and corporation franchise tax. Most Illinois businesses will be subject to at least one of these taxes, with the personal property replacement tax being the most common among them. This tax on net income ranges from 1.5%-2.5%, depending on the nature of your business (traditional corporation, LLC, etc). Additionally, special tax rates and exemptions may apply to certain industries. You can find out more about your business’ tax obligations on the Illinois Department of Revenue website.
Keep in mind that your city and/or county may have taxation requirements as well, so make sure to check with them to make sure you aren’t missing anything.
Here’s some business resources for each of the largest cities in Illinois:
6) Acquire Business Licenses and Permits
Some states have statewide business licenses that every company needs to acquire, but Illinois does not.
However, there are a variety of occupational and professional licenses for businesses in Illinois. These cover a wide range of businesses and industries, from the Animal Health and Welfare License to the Public Water Supply Permit. Thankfully, Illinois’s government website provides more information about acquiring the right license for your business.
Much like with taxation issues, there’s also the matter of local licenses to consider. You can learn more about county-level occupational licenses right here.
7) Obtain Required Insurance Policies
Any business with at least one employee is required to have workers’ compensation insurance in the state of Illinois. Any other insurance types (like property insurance or general liability insurance) are optional. However, if your business uses a vehicle for commercial purposes, you will also be required to have commercial auto insurance.
You can learn more about these insurance types and how they apply to Illinois businesses by visiting the Workers’ Compensation Commission and/or the Department of Insurance websites.
It is the employer’s responsibility to get these policies to protect your employees, regardless of what line of business you’re in. Of course, it’s probably a good idea to acquire industry-specific policies to protect your company in other ways, but unemployment and workers’ comp are the ones strictly required by law.
8) Open a Business Bank Account
Whether you start a limited liability company or a corporation, you’ll need to keep your business and personal assets separated.
This is where opening a business bank account comes in. While having a separate checking account for your company isn’t a legal requirement, it makes separating your assets considerably easier, and we always advise that any business owner does so.
9) Develop a Business Website
In this day and age, even strictly local businesses should have a website, because the internet is your first point of contact for many of your customers. Your site doesn’t need to be fancy, but you should put some thought into your domain name, and make sure it’s something memorable and easy to type without misspellings.
If you’re not comfortable designing a site yourself ― and if you also don’t have the budget to hire a professional designer ― there are plenty of website builder tools that can help you put together a solid website. WordPress and Weebly are very easy to use.
10) Don’t Be Afraid to Ask for Help
If you run into problems with any of the steps outlined in this guide, remember that you can always find help.
In this state, the Illinois Small Business Development Center exists solely to (in their own words) “provide confidential business guidance, training and other resources to start-up and existing small businesses.” With 35 locations across Illinois, the SBDC is ready and willing to help if you need assistance.
Another excellent resource is the Illinois chapter of the U.S. Small Business Administration. Their website has information regarding small business events, business resources, press releases, SBA programs, and more.
Conclusion
While there are several vital steps in the process of starting a business in Illinois, taken individually these steps aren’t terribly complex.
It can seem overwhelming if you consider the entire process all at once, but if you break down these steps and take care of them one at a time, they’re all quite manageable. Keep in mind that you don’t need to go it alone with the DIY option ― if this process becomes overwhelming, or if you simply don’t have the time and energy to devote to these steps ― assistance is available.