Start a Business in Illinois Step by Step: Registrations, Licenses and Taxes

To start a business in Illinois you complete four layers of paperwork in a sensible order: a state entity filing with the Secretary of State, a federal employer identification number, state tax and employer accounts, and the local approvals your city, county health department and zoning office require. None of the layers is difficult, but skipping one is the usual reason a new owner in Aurora, Naperville or Batavia receives a penalty notice a year later. This guide walks the route in order, with the fees and rules in force in October 2026.

Who needs to follow these steps?

Everyone who sells goods or services in Illinois needs some version of this route; the entity type changes the paperwork.

• Sole proprietors and general partnerships do not file anything with the Secretary of State. If they use a business name other than their own legal names, they file an assumed name with the county clerk (see assumed name and county clerk filings).
• LLCs and corporations exist only after the Secretary of State files their articles. Choosing between them is covered in Illinois LLC vs corporation.
• Out-of-state and foreign entities may need to qualify instead; read foreign qualification in Illinois.

The state's Business Information Center, run by the Department of Commerce and Economic Opportunity, answers license and permit questions and publishes a 2026 "Starting Your Business in Illinois" handbook.

How do you start a business in Illinois, step by step?

1. Choose the structure. Compare liability, tax treatment and cost. Federal tax classification is a separate decision from the state filing; see U.S. business entity types and tax forms.
2. Check that the name is available. Use the Secretary of State's business entity search. An LLC name must include "Limited Liability Company", "LLC" or "L.L.C."; a corporation name must include "Corporation", "Corp.", "Company", "Co.", "Incorporated" or "Inc." The name of an LLC that was administratively dissolved stays unavailable for three years.
3. Appoint a registered agent. Every Illinois LLC and corporation needs an agent who lives in Illinois (or an entity authorized to act as one) at a street address, not a P.O. box. See annual report and registered agent rules.
4. File the articles. Domestic LLCs file Articles of Organization (form LLC-5.5) and corporations file Articles of Incorporation (form BCA 2.10). Online filing is available for straightforward cases; the confirmation arrives by email once the Department of Business Services approves the document. Business Services also lists an office at the Aurora DMV for in-person filings.
5. Get a federal EIN. The IRS issues the number for free. The online tool is for entities whose principal place of business is in the U.S. and whose responsible party has an SSN or ITIN; founders located abroad apply by phone, fax or mail. Foreign-founder specifics are in EIN and U.S. bank account for foreign founders.
6. Register with IDOR. In MyTax Illinois choose "Register a New Business (Form REG-1)". IDOR says to register before you make any purchases or sales or hire an employee. Online applications take roughly one to two business days; paper applications take weeks.
7. Register with IDES if you will have employees. Newly created employers must register with the Illinois Department of Employment Security within 30 days of start-up, and the MyTax Illinois registration can cover it. Details are in Illinois employer registrations.
8. Arrange workers' compensation. Illinois requires coverage even for one part-time employee.
9. Clear the local layer. Your municipality may require a registration or license, an occupancy permit and zoning confirmation, and a county health department permit if you handle food. See local licenses, permits and zoning.
10. Set up money, books and the calendar. Open a business bank account, start bookkeeping and put the annual report date on the Illinois compliance calendar.

What does it cost to form the entity?

Online payments carry a processor fee, and corporations also owe Illinois franchise tax, explained in the LLC-versus-corporation guide. Add the cost of any city registration, health permit or newspaper publication of an assumed name.

What documents and information should you gather?

• Two or three legal name choices and the principal business address
• Registered agent's name, Illinois street address and written agreement to serve
• Names and addresses of managers or members (LLC) or incorporators, directors and officers (corporation)
• For a corporation: the number of shares to authorize and the consideration to be received for them
• The responsible party's SSN or ITIN, for the EIN
• A description of your business activities for IDOR, plus the expected hire date and payroll start
• The lease or property address, for zoning and occupancy questions

What are the deadlines after you form?

How does it differ if you come from Canada or India?

Canadian and Indian founders can form an Illinois entity, but their home-country rules keep running: a Canadian resident still reports foreign property and an Indian resident still discloses foreign assets in the home return. Under FinCEN's final rule of August 11, 2026 (effective August 14, 2026), U.S. companies no longer file beneficial ownership information reports, which removes one filing that earlier guides told founders to expect. The beneficial ownership comparison covers how Canada and India treat the same question.

Worked example

Meera, a Bengaluru-born software consultant living in Aurora, forms a single-member LLC in September. She pays $150 online for the Articles of Organization, obtains an EIN, and registers in MyTax Illinois the same week. Because she works from a home office, she learns that Aurora exempts home-based businesses from its city registration, though zoning still applies to her home occupation. She expects no employees yet, so she skips IDES but notes the 30-day rule if she hires. Her first annual report ($75) comes due before the first day of the following September. Her first-year state filing cost is therefore $150 plus $75 a year later, before any local fees.

Mistakes to avoid

• Naming a registered agent who has not agreed, or who later moves, so state mail is missed.
• Using a P.O. box as the registered office.
• Selling before the IDOR registration is complete.
• Assuming a sole proprietorship needs nothing; ignoring the county assumed name rule is a misdemeanor.
• Forgetting the 20-day new hire report.

How we can help

Our firm is based in the Aurora and Fox Valley area and handles the U.S. side of formation: entity selection, state and federal registrations, bookkeeping set-up and payroll. If you also have obligations in Canada or India, we coordinate with your Canadian CPA or Indian Chartered Accountant so the filings agree. See business formation and registrations, bookkeeping and accounting and payroll and employer compliance. For the wider picture, start at the How to Do Business hub.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.