In this Article, we will give you a snapshot of the legal compliance requirement and associated fees required to register Limited Liability Company (LLC) in Illinois and most importantly, maintain the status of an LLC, especially as a small business e-commerce start up.

In the United States, LLCs are registered on the state level, therefore you can register an LLC in any of the 50 States in the United States, including Washington DC.

You can check out our the best states in the US  to register your LLC as a small business e-commerce start-up, if you want to pay less State fees, less State imposed taxes and do less periodic paperwork in order to maintain your LLC. 

In this Article, our focus is on Illinois LLC. What cost should you expect to pay when you register an Illinois LLC? What periodic filings requirements are imposed on Illinois LLCs? What State taxes are levied on e-commerce small business start ups in Illinois and what are the tax rates? What business permits are required to be obtained by e-commerce businesses in Illinois, what’s the cost of these permits and are there any renewal requirements?  

This Article presents you a snapshot, so you know what fees and legal compliance requirements to expect if you want to register an LLC for your e-commerce small business start up in Illinois, operate with the required licenses and maintain your LLC status.

Business registration and compliance in Illinois

  • LLC Registration cost;  the state fee for registering an LLC in Illinois is $154. You can register your LLC with Bizee for a service charge of $0 + the State fee.
  • LLC registration Publishing requirement; No, LLCs in Illinois are not required to publish their registration in a local newspaper. 
  • Has the Option to register as an Anonymous LLC; No, LLCs in Illinois do not have the option to register as an anonymous LLC. Meaning that the business details of the LLC Owners are published on the Illinois public records. The LLC can still maintain some privacy by using a virtual office address and not the Owners real addresses. 
  • DBA requirement; DBA is required if your LLC is operating under a different name than your LLC registered name. In Illinois DBA is referred to as an “Assumed name”. Cost of registration is $30-$150, the length of approval is 5 years. You can register for a DBA  in Idaho online. Illinois has a requirement for approved DBA to be published in a local newspaper within 15 days of DBA approval. the Illinois DBA publishing must be done once per week for 3 consecutive weeks. You can learn more about Illinois DBA state fees here or outsource the registration of your Illinois DBA (if needed) to Bizee.
  • Annual returns filing requirement; yes, cost of filing annual report for LLCs in Illinois is $75

You can file the Illinois annual returns yourself, you’ll need to visit the Business Services page on the Illinois Secretary of State website or you can outsource the filling of your annual returns to  Bizee for a $99 service charge + the state fee.

Annual Franchise tax filing and compliance in Alabama 

  • State Franchise tax requirement; The Illinois franchise tax was repealed in 2020. However, that repeal won’t go into effect until December 31, 2025. no actual Franchise tax applies to an LLC or partnership in Illinois  (unless treated as a corporation for tax purposes).

In 2023, franchise businesses in Illinois are required to remit a franchise tax amounting to 0.1% of their paid-in capital, capped at $1 million. Yet, a $100,000 exemption is applicable, setting the minimum franchise tax at $25.

You can learn more about the Illinois Franchise tax. 

Annual State income tax filing and compliance in Illinois 

  • State income tax requirement; Illinois maintains a flat 4.95% individual income tax rate and a 9.50% corporate income tax rate. 
  • Who files State income tax; LLCs by default are passed through entities meaning that tax obligation passes through to the individuals who own the LLC. Therefore an LLC with a default tax status pays the individual state income tax. Interestingly, if the individuals behind the LLC are not resident in the state and do not have state source income (a dependent agent in the state), then they are not required to pay “individual State income tax”.

If the LLC owners are resident in the State or have State source income (a dependent agent in the state), then the LLC Owners are required to pay “individual State income tax”.

If the LLC has elected to be taxed as a corporation (C-corp), then the LLC is required to pay “Corporate State income tax”.

  • How to file state income tax; You can file your Illinois State income tax by yourself. You will need to visit the State website. Alternatively, we recommend using the Service of a Certified Public Accountant (CPA), through H&R Block to file your state income tax. 

Periodic Sales tax filing and compliance in Illinois

  • Sales tax requirement; In Illinois, the state sales tax rate is 6.25%, with a maximum local sales tax rate of 4.75%. The average combined state and local sales tax rate is 8.82%.
  • Sales tax nexus; Sales tax nexus is the state-defined threshold between a Seller and a state, which when reached makes it obligatory  for the Seller to register for a  Seller permit in the state, charge sales tax to customers in the state and remit the sales tax to the State Government. 

Generally, there is the “physical sales tax nexus” and “economic sales tax nexus”.

Physical sales tax nexus is reached when the Seller had physical presence in the state (i.e have an office address, a warehouse etc). 

In most States, “economic sales tax nexus” is reached when a Seller makes up to 200 transactions or $100,000 in sales in a State.

It’s important to note that, when you register your LLC in the State of Illinois (which generally requires that you have a registered business address in Illinois), you automatically meet the physical sales tax nexus and will be required to obtain a Sales tax permit in Illinois, charge applicable sales tax rates to customers in Illinois and remit sales tax to the Illinois State Government. 

  • Sales tax permit; It costs $0 to register for a Illinois sales tax permit, but there are other licenses fees for some businesses with  tax responsibilities. You can learn more about sales tax cost in Illinois. Sales tax permit in Illinois expires after one year and the permit is automatically renewed for compliant businesses.  
  • Reseller/Resale Certificate; Businesses who purchase products from their suppliers for the purpose of reselling those products to their customers can make sales tax free purchases from their suppliers if they have a resale certificate.   

This means that Resale businesses can get cheaper product prices from their suppliers (that is product prices without sales tax included) which can help these Businesses have a higher profit margin and/or maintain competitive selling prices to their Customers.

Generally, suppliers will charge the sales tax rate applicable in the State where the product is to be delivered unless the business presents to the supplier a Resale Certificate  (also called a Reseller Certificate). 

The Resale certificate must be valid and acceptable in the state where the product is to be delivered. 

Businesses can present any of the below listed Resale certificates to suppliers if they want to make sales tax free purchases for product delivery to an Illinois address.

Note; Illinois does not accept out-of-State Seller ID.

This means that Resale Businesses seeking sales-tax-free purchases in Illinois must have an Illinois Seller ID ( i.e Register for an Illinois Sale Tax Permit and have an Illinois Sales Tax permit ID or register Illinois Form ST: EX-A and have the Seller exemption ID number). If they choose to use the MTC uniform resale certificate and wish to indicate Illinois as the resale state, they must furnish their Illinois Seller ID on the MTC form.

The Illinois Department of Revenue recommends that Certificates of Resale be updated at least every three years.

Conclusion

This Article shows you a snapshot of the legal fillings and compliance requirements for LLCs that are registered in Illinois, specifically for LLCs that want to carry on the business of selling and especially for small e-commerce start up LLCs that are registered in Illinois. 

If you are wondering what might be the best State in the United States to register your small business (especially if you are a reseller or an e-commerce business), we have written this Article, where we go over our most recommended states for registering a business in the United States, if you want to pay less LLC filing and legal compliance fees, if you want less state imposed taxes and if you want to do less periodic legal paperwork required to maintain your LLC status. 

I started Vivibosslink.com as a Free Resource to document simple yet tested guides for beginners and Entrepreneurs in Ecommerce, so they don’t have to go through the rabbit holes that I did.

Similar Posts