Doing Business In Illinois
Manufacturing in Illinois accounts for 14% of the state’s total output and generates $101 billion in economic activity. Illinois’s manufacturing sector grew out of its agricultural production.
The diversified nature of its economy—strength in manufacturing, agriculture, finance, mining, transportation, government, technology, and services (including tourism)—makes Illinois a microcosm of the national economy. This diversity generally provides greater stability at times when other states with more narrowly based industries suffer.
Small Business and Startup Environment
Illinois has 1,001,185 small businesses, according to the most current federal data available. Of those 1,001,185 small businesses in Illinois, 280,373 have employees. The remaining 720,812 are Illinois small businesses that have no employees.
Illinois Entrepreneurship functions as a portal of entrepreneurial opportunities at the University of Illinois. The University has a vibrant and rapidly evolving entrepreneurial ecosystem, and there are many partners across campus that work together to provide support and resources to the entrepreneurial community.
Prominent resident entrepreneurs who’ve stuck with Chicago include Rahal, who sold his protein-bar startup RxBar to Kellogg’s in 2016 for $600 million, and the co-founders of the digital coupon site Groupon, which went public in 2014, raising $192.5 million. Two of Groupon’s three co-founders, Eric Lefkofsky and Brad Keywell, have new Chicago-based projects: Lefkofskylaunched Tempus, a medical data company that also has a library of clinical and molecular data, and Keywell started Uptake, a predictive analytics software maker for clients in the mining, aviation, rail, energy, retail, and construction industries.
Step 1: Choose A Business Structure
The most common business structures are sole proprietorship, partnership, limited liability company (LLC), and a few different types of corporations—the standard corporation (often called a C corporation or “C corp”), the small business corporation (often called an S corporation or “S corp”), and the benefit corporation (often called a B corporation or “B corp”).
The most common business structures are:
Happens when you operate your business as yourself. There is no separate legal entity created; the law treats you and your business as one person. You are responsible and personally liable for all business activities or wrongdoing.
The same thing as a Sole Proprietorship, but just with 2 or more people. Like a Sole Proprietorship, a Partnership doesn’t create a separate legal entity and the partners are responsible and personally liable for any business activity or wrongdoing.
A more complex legal structure that requires a board of directors, corporate officers, and shareholders. Corporations don’t usually work for most small business owners since they face double taxation. Corporations can be beneficial to companies that are looking to raise capital investment, take the company public, or have large healthcare expenses for their employees. The most common types of companies that form Corporations are high-growth technology and startup companies.
Unlike a Sole Proprietorship or a Partnership, a Corporation is a separate legal entity from its owners (called shareholders). It provides them with personal liability protection.
A legal entity that combines the benefits of a Corporation and a Sole Proprietorship/Partnership.
An LLC in Illinois is a separate legal entity under the law. And like a Corporation, it provides personal liability protection for the owners. If the LLC is sued, the owner’s personal assets – like their home, cars, and bank accounts – are protected. And like a Sole Proprietorship/Partnership, an LLC has pass-through taxation (so there’s no double taxation).
A Illinois LLC is the most popular option and a good choice for people who want to run a small business for two reasons:
- Personal liability protection (personal assets are kept safe)
- No double taxation
Unlike a Sole Proprietorship (and a Partnership), your Illinois LLC’s assets are separate and distinct from your personal assets. In the event your LLC gets sued, your personal assets are protected.
And unlike a Corporation, your LLC is not subject to double taxation. Instead, your LLC’s profits will “pass-through” to your personal tax return and federal taxes are paid just once.
Step 2: Choose The Right Business Name
Choosing a business name is important, you want to make it easier for your customers to remember it, here are some tips:
- Avoid hard-to-spell names.
- Don’t pick a name that could be limiting as your business grows.
- Conduct a thorough Internet search.
- Search and purchase a domain name.
- Use a name that conveys some meaning.
- Conduct a trademark search.
Step 3: Register Your Business
Step 4: Obtain an EIN Tax Number
With limited exceptions, most businesses require an Employer Identification Number (EIN), also known as a Tax ID Number. An EIN is used to identify a business in its federal tax filings. Without an EIN, you can’t hire employees or open a business bank account.
Step 5: Open A Bank Account
– Open a business bank account:
- Separates your personal assets from your company’s assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
– Get a business credit card:
- Helps you separate personal and business expenses.
- Builds your company’s credit history, which can be useful to raise capital later on.
Step 6: Licenses & Permits
Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).
Here are some links for Illinois Businesses:
Selling products? Check Illinois Resale Permit
Step 7: Branding & Marketing
Your brand is the image customers have of your business, so it’s important to determine who is your audience and what is the message that you want to project. That way, your company’s image will be what you intend it to be. It should be strategic and intentional.
Step 8: Establish a Web Presence
Creating an optimized website helps you to gain important visibility for the right terms. A website is a powerful sales tool and one that allows you to address your customers’ concerns, give them the information they need to make a decision and create compelling calls to action.
In addition to a website, you should also consider other avenues for promoting your business online: