How to Start a Business in Illinois


If you’re considering starting a business in Illinois, the state has plenty of resources to help get your new venture off the ground. You’ll want to start by forming an entity, which can be incorporated as a sole proprietorship or limited liability company (LLC).

Form a Legal Entity

There are five types of legal entities you can form in Illinois: a sole proprietorship, partnership, corporation, limited liability company (LLC), and nonprofit. Each type has different tax and registration requirements. The type you choose will depend on your business needs as well as other factors such as your personal financial situation and future plans for growth.

Register with the Illinois Department of Revenue

To register with the Illinois Department of Revenue, you need to submit the following:

  • A completed application for a sales tax license (Form ST-4) or withholding tax license (Form ST-1), along with $50.
  • An application for a service tax license (Form ST-3), along with $50. Again, you can find it online here.
  • A form consenting to service of process by mail or electronic transmission if you’re a corporation and want to be served in person or electronically by default (Form DL 1).

Register your Business Name

You can file for a DBA or LLC, but first, you must register your business name with the Illinois Secretary of State. The name must be unique, available in Illinois, and not the same as an existing business or trademarked product. It also cannot be the name of a government entity, such as the “City of Chicago.”

Register for State and Local Taxes

You will need to register for state and local taxes. Depending on the type of business you have, you may also be required to obtain a business license or permit. The Illinois Department of Revenue provides an overview of the different types of taxes that must be paid when starting a business in the state.

In addition, if you plan on selling goods or services in Illinois, you must pay sales tax on them. Sales tax rates vary depending on where your customers live in Illinois.

Obtain Licenses and Permits

In Illinois, licenses and permits are required for nearly every conceivable business activity. If you want to sell alcohol, operate a taxi service or rent out a property, you’re required to obtain the necessary licensing from the state and local governments. These licenses can be obtained through the Alcoholic Beverage Commission (ABC), Department of Transportation (DOT), and municipal offices, respectively. You’ll also need a business license at all levels of government in order to legally operate in Illinois.

Get Business Insurance

If you’re looking to start a business, insurance coverage is essential. It can protect your business from liability for injury or property damage, cover theft and fire damage, and much more. You’ll need to find the right coverage for your needs and budget, but there are many options available from agents and brokers as well as online sellers.

Establish an Operational Plan

Having a solid operational plan is essential to any new business, but it’s something that many people don’t think about until they’re already knee-deep in their startup. The good news is that creating a business plan doesn’t need to be complicated or difficult—you can create one in less than a week by following these steps:

  • Identify your company’s main objectives and goals. Think about what you want your company to do, and how you want it to grow over time.
  • Research the market opportunity for your product or service idea (or similar products/services). Look at trends in the industry, determine whether there are enough customers who would buy from you at current pricing levels, and any regulatory concerns related to offering this type of product/service.
  • Write out every step involved in bringing your idea into reality—from purchasing equipment up to launching your product/service on time with no delays along the way—and estimate costs associated with each phase based on data collected from the research steps above.
  • Review all sections of the plan before sending it off either digitally via email attachment or hard copy via mail service such as USPS Priority Mail Express (recommended due to speedier arrival times compared with regular first-class mail delivery options).

Open a Business Bank Account

Open up a separate, business-only bank account to avoid mixing personal and business funds. Ideally, this account should be at a different bank than the one where you have your personal checking and savings accounts (even if it’s just across the street). This way there is no chance of your personal finances getting mixed up with those of your company. If needed, keep enough money in this new account so that if payroll checks are issued but not cashed immediately, there’s still enough cash available for them to clear when they do get cashed later on down the line.


If you’re ready to start a new business in Illinois, you might be surprised at how easy it is. Illinois is one of the easiest states in which to get started. Many people are surprised by how simple and straightforward the process can be. The state has been ranked as one of the best places to do business by CNBC Business News Network, Kiplinger’s Personal Finance Magazine, Forbes Magazine, and many others.


Starting a business in Illinois is easy, but that doesn’t mean it’s without challenges. While there are plenty of resources to help you through the process, it’s still important to have a good plan in place before you start. If you don’t know what type of business structure works best for your company, consult an attorney or accountant who has experience with small businesses like yours. They can help ensure that you get started on the right foot and avoid costly mistakes along the way!

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