What are the steps to starting a business in Illinois?
How do you start a business?
What do you do or where do you even begin?
We’ve got great news for you! In this Ultimate Guide, we have spent time gathering all the relevant information that you need! We offer you our Step-By-Step guide on how to start a business in Illinois!
Keep reading as we’ve got exactly all the information that you need!
Let’s start a new business journey together!
Are you ready?
Let’s get started!
Quick intro: How to start a business?
This is a daunting question, isn’t it?
It’s a simple one to ask.
There are so many possible answers.
In this Ultimate Guide, we answer the question head-on!
Let’s walk through every step necessary to start a business in Illinois.
We will look at the process from the beginning (the business idea) all the way to forming your business entity and running your business.
Our objective is to provide you guidance as to how you can successfully start a business (recognizing that you are the master of your own journey).
Remember, you are free to choose your path and do what you think makes sense.
Hey everyone, my name is Amir!
I’m a lawyer by trade and I have helped many businesses and individuals form their business entities and start their business.
I’ve worked in private practice for over a decade and have many years of experience as general counsel in a global software company.
I know first hand what it takes to start a business.
I understand the challenges, the hard work, the upside and downside of running a business.
This guide is not legal advice or some magic roadmap to getting you into a successful business right off the bat.
This comprehensive document is how I have condensed my knowledge so you can benefit from it.
Being an entrepreneur
Being an entrepreneur, a businessman or a businesswoman is not something that you just read about and become all of a sudden.
Entrepreneurship is a state of mind, it’s a learning process, it’s a journey, it’s a desire to achieve your deepest goals.
Starting a business starts with a motivation that is in your heart, in your gut.
You crave it, you want more of it…
If you are reading this today, it’s because you have that fire burning in you (perhaps you are exploring the idea, you’re thinking about it) and that’s great.
Being successful in business starts with self-education, discipline, knowledge and sacrifice.
With the right information, you can make the right business decision that can propel your company to the greatest heights.
My objective with this guide is to provide you with an outline of the different steps you need to take to materialize your goals, your dreams.
It’s going to be up to you to decide what you will do with the knowledge I’m about to share with you.
You are the one holding the pen to your story, your journey, your mission.
I’m happy that you’re still here and you are still primed about this “business” project.
Now, with the intro out of the way, let’s not waste any more time and jump right in.
Let’s go over how to make your dream a reality!
The State of Illinois
But first, let’s talk about Illinois!
The beautiful state of Illinois is located in the Midwestern and Great Lakes regions of the United States.
Illinois borders Indiana, Lake Michigan, Wabash River, Ohio River, Kentucky, Missouri, Iowa, Mississippi River and Wisconsin.
Springfield is its capital and Chicago its largest city and metropolitan area.
According to reports, in 2019, Illinois’s gross domestic product amounted to $879 billion.
Starting a business in Illinois
Illinois is fertile grounds for businesses to flourish and startups to bloom!
Illinois is one of the states with the highest gross domestic product in the United States and to many represents a microcosm of the entire United States due to its diverse economy.
You have an important transportation hub through the Port of Chicago providing the state of Illinois a tremendous base of economic diversity.
There are more than 1.2 million small businesses operating in Illinois employing approximately 45.1% of the workforce in the state.
Although Illinois has a relatively high corporate tax rate, entrepreneurs can find many industries and many important players operating in Illinois.
The state attributes importance to the small business and private sector so you can find small business loans, grants and other advantages in starting a business in IL.
With a dense population and high-calibre universities, you will also find skilled labor and a great pool of candidates to choose from.
The Illinois Secretary of State manages business entities registered in its state, ensures companies remain compliant with state rules and offers business services to individuals and businesses.
Step 1: Find Your Business Idea
The first step in starting any business venture in Illinois is to come up with your business idea.
That million-dollar idea!
Many entrepreneurs and founders have made a fortune with a simple yet powerful business idea.
Do you have that revolutionary idea for your business?
Will you shatter the traditional ways!
Perhaps you are going to take a product or a service that already exists and take it to a whole new level, give a new spin or present it in a different light.
Maybe you may be on the verge of creating a brand new product or creating a new need, market trend, that may change the world.
Are you starting a business to nourish a hobby of yours, for a good cause, to give back to the community, or to start a side hustle?
No matter why you are thinking of taking a “business” dive, you must have a clear business idea.
All subsequent steps in starting a business will depend on your idea and how you intend to turn your vision into a reality!
If you are still exploring your options, that’s perfectly ok.
Very few come up with the most perfect business idea right out the gate.
For those of you exploring how to get into starting a business of your own, you can find so much inspiration by doing a search online, talking to friends, family or reaching out to professionals already working in the industry you may be contemplating.
There is never a shortage of business ideas.
Brainstorm a few business ideas, think about them and select the one that makes the most sense to you.
Once you have your business idea, you are good to move to the next step!
Step 2: Do Your Market Research
You now have the best business idea ever!
What should you do next?
Should you jump into setting up the business operations or should you do something before?
Well…there’s no right or wrong answer!
In most cases, it’s best to do market research to assess whether your business idea makes business sense.
In other cases, regardless of the market conditions, you are so convinced that your business idea is revolutionary and will work that you may want to skip the market research altogether.
Most will opt to do some research to “validate” their business idea.
Having dealt with serial entrepreneurs, large corporations and average guys and gals going into business, I can tell you that those who were looking to commit a lot of money to start a business preferred to do some research before jumping cold-turkey.
Don’t forget, you will put a lot of time, money and energy into this business.
It would be nice to see that your market research supports the feasibility of your business idea.
Typically, the objective of your market research is to evaluate:
- What is the demand for your product or service?
- How big is the addressable market that you will be targeting?
- Are there economic indicators that may impact your business?
- Who are the competitors?
- Is the market saturated or is it a growing segment?
- What is the price that the market is willing to pay for your goods or services?
- Are there barriers to entry?
Here are some resources to help you with your market research.
Step 3: Prepare Your Business Plan
Your business idea is fantastic and you found the numbers proving the viability of the business.
Now, you need to roll up your sleeves and…
Time for the business plan!
Writing a business plan
You have reached the step of writing your business plan.
This is probably one of the most important steps in the life of your business journey (as short as it may be so far).
During this process, you will collect your thoughts and present your business project in a thought-out and organized fashion (in writing).
That’s correct, you must write out your business idea.
Writing a business plan does not have to be a super complicated or long process.
At the end of the day, it’s a process where you (the entrepreneur) put your business idea (what you identified in Step 1) on paper.
As you go through the business plan creation, you’ll be forced to think of different aspects of the business (the exciting party and the not so exciting part).
Just like doing market research, it is not mandatory to write a business plan.
Purpose of a business plan
However, most business founders and entrepreneurs will write a business plan to:
- Prove to yourself that your idea can work in real-life
- Makes you think of the different aspects of the business such as competitors, compliance, financial projection, management team, product, technology and so on
- Convince other founders of the viability of their business ideas
- Provide you with credibility when speaking to others (like banks and other business partners)
- Just to clarify and organize all their thoughts
Think about your business plan as a “map” when you are looking to embark on a long travel journey.
You know you want to travel the world, you know what may be your first few steps but you have no clue what’s going to happen in a few months or years down the road.
Even with a map, you don’t know exactly what’s going to happen during your journey but have a “plan” as of today and you know what you need to do to get to your destination.
Remember, it’s nearly impossible to predict everything perfectly in a business plan.
The idea is not to be perfect but to have a comprehensive blueprint or roadmap on where you are and how you want to get to your business vision.
In a sense, a business plan is an ever-evolving and live document.
Even when you start your business operations, you’ll need to regularly evaluate where you are, what you’ve done and what is the best path forward.
In business, you’ll always remain in a constant state of evaluation and decision making.
Therefore, it’s a good idea to sharpen your skills immediately so you are better prepared when you need to make business decisions in the heat of the action.
In a nutshell, a good business plan will help you:
- Plan your business and clarify your business model
- Evaluate your business idea and put it through a mental test
- Research your business
- Identify your strengths and weaknesses
- Research your competitors
- Most importantly, figure out if you can be profitable
Step 4: Choose a Business Structure
You have reached the point where you now need to think a little bit “legal”!
How are you going to structure your business?
In other words, what type of business entity are you going to form (if any) to start the business in Illinois?
Depending on the type of business you want to start, the industry, the level of risk involved, the level of protection you need for your personal assets and how much you are willing to spend time on administrative paperwork, you’ll find that a different type of company may be suitable for you.
Typical, the factors that many entrepreneurs consider when choosing a business structure is with respect to:
- Legal liability
- Ownership flexibility
- Future needs
Here are the different types of business entities:
- Sole proprietorship
- General Partnership
- Limited Liability Partnership
- Limited liability company
- C Corporation
- S Corporation
- Nonprofit corporation
There are many factors to consider when selecting your business structure:
- What type of ownership structure do you wish to have?
- Are you looking to get personal liability protection?
- Are there tax advantages that you can claim with a specific type of business entity?
Depending on the business structure you choose, there may be an impact on:
- How much taxes will you need to pay?
- What do you need to do to actually form the business entity?
- How will the business founders or owners be liable for the business’s financial and legal obligations?
Let’s look at each business structure briefly.
One of the most common types of business structure used to start a new business is that of a sole proprietorship.
That’s the case due to its simplicity to form and how it is an “informal” type of business structure.
A sole proprietorship is when you start conducting your business activities under your name without formally registering a business entity.
You are running an unincorporated business where you own 100% of the business and are the only one making all the business shots.
Since there is no legal business entity formed, all business is done under your personal name.
Some choose to register a DBA (“Doing Business As”, “fictitious name” or “assumed name”) where the sole proprietor does business under a trade name instead of his or her personal name.
The advantage is that you don’t have any formalities to respect to form a sole proprietorship.
The moment you start doing business under your name, you are automatically a sole proprietor.
What’s attractive about this business structure is that it’s really easy to start a business (you are pretty much ready when you decide you are ready!).
However, it does come with important disadvantages.
As a sole proprietor, you are fully responsible for all the business debt and expenses.
If things don’t go as planned, your business creditors can come after you personally!
So if a business client, supplier, vendor or anyone files a lawsuit against you, your personal assets are exposed.
That’s right, your house, your car, your personal savings.
Sole proprietorships may be useful for very low-risk businesses or to test a business idea on a very small scale.
However, doing business under this structure must be done carefully to avoid any legal liability or risk as the sole proprietor is exposed to unlimited liability.
A partnership is the association of two or more individuals uniting their skills, knowledge and resources to operate a business and share profits between themselves.
The simplest type of business structure where you have more than one business founder or entrepreneur involved is a general partnership.
A general partnership is sort of the equivalent of a “sole proprietorship” but where you have more than one person.
This type of business is also considered an “informal” one as there are no formalities or particular steps required to form a general partnership.
The partners agree to contribute money, labour or skills for the advancement of the business objectives.
They will equally share 100% of the business profits but are personally liable for 100% of the business liabilities as well.
Each partner will have unlimited liability in regards to business debt, financial obligations and legal responsibility.
Similar to a sole proprietorship, there are no registration formalities.
The moment the business partners decide to work together towards a common business goal, you have a general partnership formed.
Some general partners elect to sign a general partnership agreement so they can clarify their rights and obligations.
Although the partners are not required to have a “contract” or “partnership agreement”, it can be a good idea to clarify the specific rights and obligations of each partner in writing.
A partnership agreement is a legal document that outlines how the partnership should be managed, what are the responsibilities of each partner to the business and between each other.
From a tax point of view, a general partnership income flows directly to the general partners who pay taxes on their personal income tax.
The general partnership is not a separate business entity and does not file its own taxes.
In other words, the business income and losses can be reported on the partner’s personal income tax report.
Similar to sole proprietors, the general partners in a general partnership are exposed to unlimited liability.
This type of business structure may also be suitable for very low-risk business ventures.
Limited Liability Partnership
A limited liability partnership (LLP) is essentially a general partnership with the exception that the partners are not responsible for the wrongful acts of one another.
In a general partnership, if a partner causes damage to a client or someone, the other partners will be held responsible for the damages caused by this partner.
On the other hand, in a limited liability partnership, the partners are responsible for their own actions and not that of the other partners.
In this respect, the partners have limited liability protection (just like corporations) with regards to the errors and omissions of their fellow partners.
Many lawyers, accountants and professionals choose to structure themselves as a limited liability partnership.
Limited liability company
A limited liability company or LLC is a popular type of business entity in the United States as it is designed to offer some advantages of corporations and partnerships (sort of the best of both worlds).
An LLC allows business founders and entrepreneurs to shelter their personal assets from business risk just like corporations while at the same time benefit from certain tax advantages offered by partnerships (pass-through taxation).
In other words, the business owners are able to work in a legal entity giving them limited liability protection while at the same time they can funnel the business income directly to their personal income tax.
An LLC can be formed based on the state statutes where you are looking to form the LLC.
In many states, LLCs have a limited lifespan.
In other words, when a member joins or leaves, you may be required to dissolve and reform your LLC.
The owners of an LLC (or members) are not personally responsible for the company’s debt and liabilities.
What’s interesting is that LLCs have the ability to elect not to pay federal taxes and have the members pay taxes directly on their personal tax returns just like partnerships.
LLCs are therefore able to combine the limited liability protection of corporations with the pass-through taxation benefits of partnerships into one single entity.
Due to its lighter compliance requirements and greater flexibility, LLCs are regularly used as business entities to start a business.
Every state treats LLCs differently so it’s important to understand the specific treatments in the states that you intend to operate a business or register.
There are some companies out there that specialize in LLC formation. They are not lawyers and are much more affordable. If you’re interested in saving time and forming your LLC properly, click for more details.
A C Corporation or a C Corp is a type of business structure where the business entity is entirely separate and distinct from the business owners.
It’s called a “C” Corp as it is subject to the tax rules outlined under the Subchapter C of the Internal Revenue Code.
All corporations formed in the United States will be taxed as a C Corporation by default.
A C Corp is fundamentally a “corporation”.
The corporation will be a separate legal entity and the entity will be owned by shareholders.
As a shareholder, you are legally and financially protected from business liability and debt (unless you give personal guarantees of course!).
That’s probably one of the most important reasons why so many choose to incorporate a company.
C Corporations are the most common type of business entity in the world and represent some business structure of the world’s largest businesses listed in the stock market and with the largest market capitalization.
The reason that’s the case is that they are the most preferred type of business entity by investors, venture capitalists, angel investors and financial institutions.
Many choose a C Corp as they intend to attract eternal investors or may want to sell parts of the company by issuing equity securities to outside stakeholders.
On the other hand, C Corps have many compliance and regulatory rules to observe.
They must hold annual meetings of the board of directors and shareholders, they must ensure they remain compliant with the state rules when issuing shares and securities and so on.
Also, the business income is taxed as corporate income directly in the hands of the corporation.
The business owners cannot elect pass-through taxation or have parts of the business income or losses flow through to the shareholders.
This type of business entity may be suitable for those who are looking to scale their business, issue shares to investors, take a significant commercial risk and are comfortable with leaving business earnings in the company to avoid double taxation.
In summary, here are some of the key features of a C Corporation:
- It’s a corporation just like any other corporation legally formed in the state
- It has stockholder meetings
- It has director meetings
- It is registered with the relevant Secretary of State or State agency
- The shareholders control the corporation and elect the board members
- The shareholders are not responsible for the business losses
- Business creditors can only go after the business assets for payment
- It pays taxes annually at the corporate level
- Shareholders get taxed only when they get dividend distributions
An S Corporation or S Corp is pretty much the same type of business entity as a C Corp.
It is a “corporation” providing limited liability protection to its shareholders.
Just like any other corporation, one of the biggest advantages is the limited personal liability protection it offers to its shareholders.
But why is it called an “S” Corporation?
The reason why it’s called an S Corp is that it is subject to Subchapter S of the Internal Revenue Code.
Under Subchapter S, the corporation can have its income pass through to the shareholders just like partnerships to avoid double taxation.
In other words, the company will not pay federal taxes at the entity level and the business income will be taxed in the hands of the shareholders.
In a sense, the S Corp is more of a tax status description than a different type of corporation.
When you form a corporation, by default, it is a C Corp for tax purposes.
However, if you meet the S Corporation eligibility requirements, you can elect to be taxed as an S Corp by filing the necessary paperwork with the IRS.
To be eligible as an S Corp, you must:
- Have no more than 100 shareholders
- All shareholders must have the same type of shares
- All shareholders must be US citizens or resident aliens
- Shareholders must be individuals and cannot be partnerships or other corporations
An S Corporation provides the benefits of a standard corporation combined with the pass-through taxation offered to partnerships.
However, to remain eligible as an S Corp, your company may be limited in its future.
This type of company is suitable for those looking to operate a high-risk business, do not have the intention to operate it internationally and are looking to primarily pull out the company earnings to pay the shareholders on a regular basis in a tax advantageous way.
In summary, here are the key features of an S Corporation:
- It offers personal asset protection just like any other corporation
- You do not pay federal taxes at the corporate level
- S corporation shareholders can be employees of the business and draw salaries as employees and split their income between dividends and salary
- Shares in an S Corp can be easily transferred without significant tax consequences
- They can use the cash method of accounting instead of the accrual method
- Gives the business owners more credibility in running their business under a corporation
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Other business entities
What are different types of business entities that you can form to start and run a business?
In addition to sole proprietorships, general partnerships, limited liability partnerships, LLCs and corporations, you may find the following business entities relevant for your business:
- Nonprofit corporation
- Professional corporation
- Limited liability limited partnership (LLLP)
- Limited partnerships (LP)
- Business trust
- Statutory trust
- Tribal business entity
- Cooperative association
- B Corporation
For example, nonprofit organizations are generally formed to perform charitable activities, have a religious mission, for education and literary work, scientific purposes or a mission that is for the social good.
In most cases, the business activities of a nonprofit entity are tax-exempt where the legal entity does not pay taxes on the profits it earns.
Business trusts are typically created through a declaration of trust where property is transferred to the trust to be managed for the benefit of the trust beneficiaries.
A limited partnership is a type of business structure where you have at least one general partner and one limited partner.
Typically, limited partners are “investors” and will not exercise any decision-making authority on the day-to-day operations of the business.
On the other hand, general partners not only have an interest in the partnership but exercise control over it.
They are ultimately accountable for business profits or losses.
Step 5: Select Your Business Name
You’ve done a great job so far!
You are advancing quite well in your business startup project.
You have an awesome idea, you’ve done your research, you’ve validated that your business idea has lots of potential to succeed and you have selected the most suitable business structure.
Now, let’s address the name of your business.
Doing Business As
If you are doing business as a general partner or sole proprietor, you will do business under your personal name by default.
However, you have the option of registering a trade name or a DBA but it’s not mandatory to do so.
Those who prefer to register a trade name while structured as a sole proprietorship or partnership do it so it gives their business more credibility.
Legal entity name
If you are forming a legal entity such as a corporation or a limited liability company, you’ll need to have a business name for your company.
This means that your company will have a name given to it when it is formed (or when it is born!).
It’s important to register a business with the state by ensuring that your business name does not conflict with another business registered in the same state.
With the relevant Secretary of State or equivalent agency, you can generally do the necessary business entity search to see if another business has registered the same business name or not.
Protecting your business name
Registering a fictitious name or a business entity with a state provides limited protection with regards to the name of your business.
In other words, you’ll be protected to the extent that another person will not be able to register the exact same business name or DBA within the state where you registered your DBA or formed your business.
If you want your business name or DBA to be protected outside of your state and give it more solid legal protection, you’ll need to go for a trademark.
You can trademark anything that identifies or refers to your business, such as:
- Your company logo
- Your company slogan
- Your company name
- Any visual, word, graphics or identifier of your company, products or services
In the United States, the U.S. Patent & Trademark Office (USPTO) manages the registration of trademarks and patents.
You should look into trademarks, copyrights or patents if you have a band name you want to protect, a slogan, word, phrase or statement linked to your product, your service or your company.
Related to trademarks:
What is a trademark
US trademark search
Trademark vs copyright
Step 6: Name search and reservation
Before registering a company or DBA, you need to make sure that the name is available for you to register.
If your designed business name matches that of a registered business or DBA or is substantially close, the Secretary of State will not approve your name registration.
Corporations and LLCs have specific requirements to follow in selecting their names.
For instance, the business name must be distinguishable from other existing entity names or trade names and must contain identifiers such as “INC” or “LLC”.
Illinois provides an online database where you can search for business entity names.
As a result, you can do an Illinois Business Search or Illinois Corporation Search to ensure your name is available for registration.
Once you do a search in the Illinois Business Entity search and you don’t find any conflicting names, you’ll be able to proceed with your incorporation or formation process.
It’s recommended to do a search on the IL business names before filing your articles of incorporation or limited liability company formation.
Using the business entity search function will help reduce the chances that your application be rejected due to name conflict issues.
You can reserve a business name with the State of Illinois before filing your business entity documents if that’s important.
The reservation of an entity name is done by submitting an application to that effect.
Having a reserved name does not mean that you are authorized to conduct business in Illinois, it just means that the name is being “held” for you until you complete your company paperwork.
You are not required to reserve a name before filing but it’s a good way to ensure that you are not going to spend a lot of time and effort in filing for a business entity name that is already taken.
To reserve a name, you should perform an IL Business Name Search to ensure that the name you wish to register is available and not registered by someone else.
Doing Business As
If you are a sole proprietor, you can choose to do business under your personal name.
You also have the choice of doing business under a “trade name” that is similar to a business name.
For instance, Mary can do business as “Mary” or “Mary’s Sweet Bakery”.
If the DBA Mary’s Sweet Bakery is available for registration in Illinois, Mary will be able to register it as a trade name giving her the right to use that DBA in her business operations.
In Illinois, an assumed name is a name (also called “doing business as” or “DBA”) that is different from your personal name or official business entity name.
You can register your assumed name with the Illinois Secretary of State by going to CyberDriveIllinois.
However, it’s important to note that the registration of your name does not grant you ownership of the trade name.
Step 7: Register Your Business
You’ve done your homework and you are now ready to actually register your business and form your desired legal entity.
To register your business entity, you’ll need to access the required registration forms provided by the State of Illinois (online or PDF), complete them and submit them to the state for processing.
What are the steps in forming an LLC in Illinois?
You can form and register your LLC by following a few steps:
- File your Illinois LLC Articles of Organization
- Pay your LLC filing fees
- Get your LLC approval confirmation
What are the steps to incorporating a company in Illinois?
When you are forming a corporation with less than five employees, it’s generally better to register the business in your home state.
It may appear that some other states may offer cheaper alternatives to incorporating a company but in reality, you may end up paying more.
In fact, if you incorporate in another state, you’ll still need to register your company in your home state and qualify as a foreign entity.
So if you register “out-of-state”, you may end up having to pay additional filing fees, pay additional yearly fees, have to appoint a local registered agent and qualify as a foreign business in your home state.
You’ll need to remain in good standing with the state where you initially incorporated and your home state where you are doing business.
To incorporate in Illinois, you’ll need to:
- Complete your Corporation Articles of Incorporation
- Pay your corporation filing fees
- Get your corporation approval confirmation
It’s important that you handle your incorporation process properly as many requests and documents filed are rejected due to name issues, errors, misstatements or other defects with the application.
Step 8: Get Your EIN
Business entities need an Employer Identification Number (also referred to as EIN or FEIN) representing a unique tax ID number allowing the business entity to deal with the IRS.
EIN is a nine-digit number that is unique to your business required to:
- Identify your business with the tax authorities
- Used to pay payroll taxes
- Used in your company’s tax return filings
In most cases, you’ll need an EIN when starting your business.
However, if you are a sole proprietorship or a single-member LLC without any employees, you may not need to get an EIN right away.
Step 9: Open Your Business Bank Account
When operating a business, it’s important to keep your business bank account operations separate from your personal bank operations.
In other words, you want to be able to trace all your business income and expenses without having to go through all kinds of deposits and withdrawals happening in your personal account.
Reconciling your business accounting with your business account will be so much easier.
Maintaining a clear separation between your business and personal affairs is quite important if you want to ensure you do not lose your personal liability protection.
Your business assets and personal assets should not be commingled (that may blur the lines between you acting personally or through the company).
To open your commercial bank account, you’ll need to bring certain documents and information with you to the bank:
Sole proprietors and general partnerships:
- EIN or SSN
- Owner’s drivers’ license
- DBA certificate
- Articles of incorporation (or certificate of formation)
- Certificate of good standing
- Shareholders’ drivers’ license
- Articles of organization (or certificate of formation)
- Operating agreement
- Certificate of good standing
- Members’ drivers’ license
Related to business bank account:
Online business bank account
Small business bank account
How to open a business bank account
Step 10: Apply For Your Business License
Depending on the nature of the business you are looking to start, you may need certain business licenses.
Business licenses are permits issued by the government or its agencies that allow companies or individuals to conduct business in a certain territory or in compliance with the law.
Every state may have its own business license requirements.
The state requires that new businesses obtain the necessary permits and licenses corresponding to their line of business.
Each permit and business license may have different costs and requirements.
You may need to get a permit for things like medical services, landscape construction, real estate services, alarm permits, building permits, zoning permits and so on.
There are no “general” business licenses required in the State of Illinois but you will need to ensure your business gets the necessary permits or other licenses based on the specifics of your business.
For instance, businesses selling certain products and services should register for a Sales Tax Permit and withholding tax with the Illinois Department of Revenue (Form REG-1).
Also, those looking to start a professional business must get their professional licensing (the Illinois Department of Financial and Professional Regulation representing an important licensing agency).
Some common business license requirements are:
- General business license
- Health and safety permits
- Sales tax license
- Professional license
- Sign permits
- City business license
For instance, a general business license is a basic license allowing a person or company to engage in commercial activities within a specific territory, jurisdiction or area.
Related to business license:
Illinois business license
What is a business license
How to get a business license
Do you need a business license
Step 11: Get Business Financing
Let’s face it, starting a business requires that you put up some cash!
Some have been able to start highly successful businesses with just hundreds of dollars in initial investment while others invest significant sums of money.
Depending on the type of business you will start, you may have to think about getting a bank or financial institution to give you some financing or you may need to find investors.
Getting business financing is not easy.
It takes a lot of effort, perseverance and dedication.
You’ll need to know what your business goals and objectives are, how much you are putting in and how much you need to eventually break even and have the business profits sustain its operations (and give you enough to earn a living!).
This is where your business plan comes in handy.
You may also need a pitch deck so you can give investors a glimpse of all the beautiful and wonderful things you are planning to do with your company.
If you speak to investors with clear objectives and a reasonable plan to achieve your goals, you’ll have a much greater chance of convincing them to invest in your business.
You’ll need to learn the business jargon and lingo associated with running a business, investments and financing.
There are different types of financing that you can go for, such as:
- Love money from family members and friends
- Angel investors
- Bank loans
- Using your line of credit
- Personal loan
- Small business loan
- Business grants
You’ll need to look around and see what you can find so you can access the right amount of capital to get your business off the ground.
Related to business financing:
Small business loan
Small business grants
Small business credit card
Community development financing
Venture capitalist financing
Merchant cash advance
SBA 7(a) loans
SBA 504 loan
SBA Express loans
Related questions to business financing:
How to get a small business loan
Small business loan forgiveness
Step 12: Get Business Insurance
We’ll bet that you have thought of everything so far except for getting insurance!
Why bother with that additional cost that will not give you anything in return unless there is a disaster.
After all, you’re going to be successful in your business and steer clear from all disasters…
You know exactly what type of business you want to start, how to form your business entity and how to get your project from the ground up, but…
Did not think of “investing” in business insurance!
Granted, in many cases, business insurances are “good to have”.
It’s no big deal if you don’t have it!
However, you may need to have insurance if the state rules require that you have insurance such as professional liability insurance for certain types of businesses.
On the other hand, if you are not legally required to have insurance, you may want to consider getting insurance to protect yourself in case you are investing a significant sum of money in equipment crucial for your business profitability (as an example).
If you extended all your initial investment and financing to get yourself a really valuable piece of equipment or machine, it would be disastrous if the thing is stolen or goes up in flames.
You have to use your best business judgment to decide whether or not business insurance is something that is just “good to have” or can potentially “save” your business.
Essentially, business insurance will help you cover the costs associated with property damage or liability claims.
You may be able to get away without having adequate insurance.
However, you may end up with a legal claim against your company or suffer an incident resulting in significant out-of-pocket costs.
Getting insurance is not on top of everyone’s priority list, but it’s important to address the topic as a business person.
Look at it purely from a business and commercial perspective.
If you get a good level of protection at a reasonable cost, as an entrepreneur, you should think about it.
Let’s move on…
Related to business insurance:
General liability insurance
Professional liability insurance
Product liability insurance
Business property insurance
Business interruption insurance
Business vehicle insurance
Workers compensation insurance
Small business insurance
Business insurance costs
Related questions to business insurance:
How to find the right business insurance
How much is business insurance
Step 13: Business Operations Management
Starting business operations can be rewarding and challenging at the same time.
You’ve worked hard to form a business and now you want to see yourself succeed in your business venture.
Entrepreneurs and business founders spend a lot of time in their business and must make a lot of compromises to see their “baby” grow.
Running a business can be done in a very simplistic way or can get quite complex depending on the size of your business, the nature of your operations and so on.
There are many aspects to operating a business, such as:
- Designing your company logo
- Designing your business cards
- Building a beautiful company website
- Getting web hosting services
- Getting business email accounts
- Buying supplies
- Buying equipment
- Buying inventory
- Implementing business technology
- Getting business software
- Hiring employees
- Handling business accounting
- Preparing company financial statements
- Handling company budget and spending
- Creating contract templates
- Reviewing contracts with clients, suppliers and vendors
- Signing contracts
- Handling compliance matters
- Business marketing and sales
- Managing company payroll
- Filing taxes
And the list goes on and on.
Successful business management is crucial for the long-term success of your company.
Having the right equipment, the right people, the right culture and the right strategy to develop goods or provide services better than anyone else is an art.
It is your turn to prove to the world that you are made for business.
Not only you can dream of a business idea, but you can skillfully translate that dream into reality by combining the right assets and human resources.
Let’s face it, if this was easy, everyone would have been in business.
Not everyone is made to start and successfully operate a business, and that’s ok.
As an entrepreneur, when you know your strengths and limitations, you can find the right partners, employees or personnel to complement the areas that you are lacking.
After all, a business is made of people making many decisions on a day-to-day basis and making the best of it.
Related to business management:
Step 14: Business Entity Maintenance
Running a business means that you must keep your business entity in good standing at all times, especially if you funded your business with a bank loan or through investors.
To keep your business in good standing with the state where it was formed, you must file the required annual, biennial or other types of reports required and pay the applicable fees.
Keeping up with your business entity maintenance means that you’ll need to:
- File your annual reports
- Manage any foreign qualifications that you have (if you registered your company in other states than the state where it was formed)
- File your articles of amendment
- File your article of conversion
- Handle any reinstatements
- File your articles of dissolution
- Maintain your DBA registrations
- Maintain your trademarks
- Maintain a registered agent for your business
- Keep your company records up-to-date
- Ensure you hold your required annual meetings
- Get a certificate of good standing
Certificate of good standing
Also, you may need to prove that your company is compliant with the state laws and is in good status.
That’s when you can get a certificate of existence or letter of good standing representing a statement issued by the state confirming that your business entity has the authority to do business in the State of Illinois.
You can submit a request to the Illinois SOS office or submit a request online at a cost of $25 along with expedited fees bringing the total to $47.
During the life of your business, you may be required to provide a certificate of status to prove to banks, investors or other organizations that your company is compliant with the Illinois state laws.
To form a business entity such as a Corporation or LLC, you’ll need to have a registered agent.
The registered agent is the person or entity located in ID designated by your business entity to receive the service of any legal process or official communications.
In accordance with Illinois rules, the registered agent must respect the following parameters:
- An individual or entity who is physically addressed in Illinois
- The registered agent cannot have a post office box address
- The registered agent must be either a natural person or an entity (domestic or foreign) licensed to transact business in the State
Business entity registration services…
There you have it!
We’ve gone through the process of how to start a business in Illinois.
Some of you may speed through this process and be up and running in no time whereas others may want to be accompanied during the business entity formation process.
If you are comfortable with the process or have the motivation to handle the entire business entity formation process yourself, you’re in great shape.
You guys fall into the “do-it-yourself” category!
To all you DIY guys and gals, I hope this guide gave you the basic knowledge and understanding of how to start a business.
Get legal advice
To those who are not in the DIY group, if you are starting a business in a niche market, in a highly regulated industry or risky business segment, you may want to get some legal advice before you go full force.
You are better off hiring the services of a business lawyer, corporate lawyer or attorney to guide you in navigating the complexities of your business venture.
It may be worth spending the money to get the strategic legal advice necessary to get your business off the ground the right way.
Also, if you build a relationship with a good business lawyer, you may eventually need the person’s services as your business grows and scales.
It can be a good thing to build the relationship early.
You’ll need to evaluate your particular situation to see if consulting with a lawyer can be the right thing for you.
Related to business lawyer:
How to find a business lawyer
What to look for in a business lawyer
How much does a business lawyer cost
Business filing services
To everyone else (those who are not fully DIY or are looking to pay a lawyer at this time), you also have interesting options.
You are looking to start a small business that you may want to scale over time but you don’t believe that it’s worth spending the top dollars for an attorney to support you through that process.
In that case, you can find a middle ground between a DIY strategy and legal advice: hiring a document filing service company.
You can refer to these specialized business entity service companies in several ways:
- Incorporation service companies
- LLC formation services
- Business entity formation services
- Business entity management services
- Business filing services
These guys are specialized service providers focusing on filing incorporation papers, business entity registration, providing registered agent services, maintaining your company in good status and more.
Their costs vary but are much cheaper than what a lawyer may charge.
For many, it’s a good alternative to hiring a lawyer while making sure the business entity formation is done right.
Typically, they’ll offer you an online platform where you’ll submit your requests and keep track of what they are doing for you.
To learn more about business filing service companies able to support you in starting a business, company incorporation, forming an LLC, registering DBAs or handling the necessary paperwork with the State of Illinois, you should read this.
State of Illinois Contact Info
Starting a business in Illinois
Wow, you made it to the end of this epic guide on how to start a business! This means that you are absolutely serious about getting into business and I commend you for it. I’m super excited to have helped you with this business journey (short or long) and I’m sure it will be extremely gratifying and exhilarating for you while at the same time challenging and filled with uncertainty! After all, isn’t that what all entrepreneurs are striving to get!!
How to write a business plan
How to incorporate a company
How to form an LLC
How to form a partnership
How to register a business name
How to get EIN
How to find a registered agent
How to get business funding
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