Should i incorporate in illinois

Directors and officers: How many directors must there be? Which officer positions are required? What powers do they have? How do you fill a vacancy or remove a director or officer? Finances: What are the procedures for retaining profits, issuing dividends, and paying bills?

Who can withdraw money from the corporate bank account or sign checks? Records: Where is the corporate book to be kept? What information will be maintained? How are requests for review or access honored? Can records or copies be kept or distributed digitally?

Amendments and emergencies: Who can amend bylaws and how? Can emergency bylaws be adopted in the case of disaster? Illinois bylaws can make other provisions as well, assuming additions are in accordance with state law. Creating bylaws can be overwhelming—where do you start?

Northwest can help. We give you free corporate bylaws when you hire us to form your Illinois corporation. We offer many other free corporate forms as well, including templates for resolutions and meeting minutes. An organizational meeting is the first official meeting of the corporation after the business is legally formed with the state. At this meeting, bylaws are adopted, officers are appointed, and any other initial business is conducted.

The first meeting minutes should also be recorded and added to your corporate record book. Attendees can, however, waive their required notice in writing. Businesses that mix personal and business finances together risk losing their liability protections, so your corporation will need its own bank account. In addition, a corporate bank account is essential for easily accepting payments, paying bills and holding funds.

The resolution would state that the person going to the bank is authorized by the business to open the account in the name of the corporation.

At Northwest, we provide free corporate bank resolutions , along with many other free corporate forms, to help you get started fast.

In Illinois, corporations file an annual report each year, along with a state franchise tax. You update information on directors, officers and shares. The second half of the form helps you calculate your franchise tax, which can either be based on paid-in capital at a rate between 0.

There is some good news though—the state is phasing out the franchise tax over the next few years. In the meantime, franchise tax exemptions increase each year until the tax goes away in The filing is due before the first day of your anniversary month the month you first incorporated. These filings can be easy to forget—which is why we send our clients automatic reminders for your Illinois Annual Report and Franchise Tax filings.

Or better yet, let us file for you. Besides the annual franchise tax discussed above, Illinois corporations have two more major taxes to contend with: a corporate net income tax and a personal property replacement tax. The personal property replacement tax which weirdly has nothing to do with property also taxes net income. The rate is 2. Essentially, this means a typical corporation pays a combined 9.

The Illinois sales tax is 6. City, county and specialty sales taxes can be tacked on as well, making the average total sales tax 7. You can file Illinois articles online or by mail. Mailed filings must be submitted in duplicate typed or printed in black ink to the following address:. If you are incorporated and you file an S-Corp election with the IRS, you can take a portion of your business income as a salary and the rest as profit.

You will only pay self-employment tax on your salary, and will take your profits free and clear of self-employment tax! This means that even though it costs money to incorporate, incorporation will actually save you money in the long run by reducing your self-employment tax.

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Additional Illinois Corporation Franchise Tax Corporations in Illinois are subjected to an annual franchise tax based on their net worth for the privilege of doing business as a corporation in Illinois. Unlike most states, this tax is in addition to the corporate income tax, instead of in lieu of it. This extra tax should be taken into consideration when considering a corporate entity.

This tax varies depending on your business entity: C corporations: 2. Illinois Personal Income Taxes Unlike most states, the current personal income tax rate in Illinois is a flat 4. This rate is advantageous for an LLC, especially higher-income LLCs, since it leads to paying less on annual taxes as well as more simplicity around tax season.

Final Answer. How to Incorporate in Illinois In order to start a corporation in Illinois, also known as incorporating, you must file the Articles of Incorporation with the Illinois Secretary of State. Corporate Name. Purpose for Which the Corporation is Organized. Describe the purpose for forming your corporation. Preferences of the Shares of Each Class. Optional Number of Directors. List how many directors will constitute the initial board of directors.

Optional Names and Addresses of Directors. Give the full names and addresses of each initial director. Optional Corporation Values and Amounts of Business. Other Provisions. Name and Address of Incorporators. List the name and complete street address of each incorporator in your corporation. To complete the Illinois Articles of Organization, you must include the following information:. Limited Liability Company Name. Address of Principal Place of Business. Effective Date.

Registered Agent Name and Address. Purpose of the LLC. State the character of the business objectives of your LLC. Duration of the Company. Specify whether your LLC will exist perpetually or exist for a specified period of time.

Flexible Profit Distribution : A startup company in Illinois LLC has the benefit of being able to select different ways of distribution of profits unlike a partnership where the distribution is No Minutes of meetings : An LLC startup company in Illinois will not be required to maintain any minutes of the meetings or resolutions. If you register a new company in Illinois, some of the programs that you can benefit from include: Participation Loan Program: A startup company in Illinois can benefit from this program as the Illinois Department of Commerce and Economic Opportunity DCEO participates with lenders to enable loan access to new businesses.

Illinois Enterprise Zone Program: This is quite a beneficial program if you register a new business in Illinois enterprise zone. Your business would be eligible for state and local tax incentives under this program including sales tax exemption on Manufacturing Machinery and Equipment.