Chicago Business Lawyer
Chicago business lawyer and CPA. Business lawyers often form LLCs and corporations, help clients buy or sell companies, and dissolve LLCs and corporations. Business lawyers also help clients choose the right business entity. Sole proprietorship, general partnership, limited partnership, LLC, S corporation, or C corporation? I typically form private for-profit businesses as either LLCs or corporations and which elect to be treated as S corporations or partnerships for tax purposes. Which legal entity and tax treatment is right for your business? Retain a Chicago business lawyer to form the right business entity and understand the tax consequences of your business entity.
The below information focuses on llinois LLCs and Illinois S corporations.
Chicago corporate lawyer and CPA Brian J. Thompson discusses LLC formation, operation and taxation.
Illinois LLC Filing Fee
First, how much does it cost to form an Illinois LLLC? Generally, Chicago business lawyers charge $1000 or more to form an Illinois LLC. However, some business lawyers charge hourly to form an LLC requiring a complicated operating agreement. In addition, the Illinois Secretary of State charges $500 ($614.10 for online filing and expedited service)* to file articles of organization for an Illinois LLC.
*New lower IL LLC filing fee . . . Illinois reduced the LLC filing fee to $150 ($255.88 for online filing with the $100 expedited service fee) effective January 1, 2018.
Benefits of Forming an LLC
Generally, limited personal liability is one of the primary reasons to form an LLC. If a business operates as a sole proprietorship or partnership, the owners may face unlimited personal liability. In addition, tax benefits may be another reason to form an Illinois LLC.
How to Form an Illinois LLC
An Illinois LLC is formed by filing articles of organization with the Illinois Secretary of State. However, the articles of organization do not address the LLC’s internal governance matters.
LLC Operating Agreements
The operating agreement is the principal document relating to the internal governance of an LLC. However, an LLC’s operating agreement is not filed with the Illinois Secretary of State’s office. The Illinois Limited Liability Company Act governs relations among the members, managers, and company not addressed in the operating agreement. An operating agreement may modify any provision of the Illinois Limited Liability Company Act, with certain exceptions noted in the LLC Act.
Illinois LLC Search
Finally, check the Illinois LLC and corporate name search at the cyberdrive website to see if your preferred LLC name is available:
Illinois Secretary of State LLC Name Search
Illinois LLC formation can be complex for those not familiar with the Illinois statute and federal tax law. Therefore, you should work with an experienced business lawyer when forming an Illinois LLC. Contact Chicago corporate lawyer and CPA Brian J. Thompson at Brian@BrianThompsonLaw.com.
Illinois S Corporations
Cost to Form an Illinois Corporation
Chicago business lawyers typically charge $1,000 or more to form a corporation. However, some Chicago business lawyers charge hourly to form a corporation with a complicated corporate structure or corporate bylaws. In addition, the Illinois Secretary of State charges $150 (add an additional $100 for expedited service) to file articles of incorporation for an Illinois corporation.
Benefits of Incorporation
First of all, business persons form corporations to get limited personal liability for corporate activities. Also, incorporators may be seeking certain tax advantages of electing S corporation status.
Forming an Illinois S Corporation
An Illinois S corporation is formed by filing articles of incorporation with the Illinois Secretary of State, requesting an Employer Id Number, obtaining a state ID number from the Illinois Dept or Revenue, and, finally, electing S-corporation tax status.
However, the articles of incorporation do not address internal governance matters. Instead, corporate bylaws address corporate governance matters.
S Corporation Restrictions
Most noteworthy, the limitations and restrictions regarding S corporations include:
- One hundred shareholders limit;
- Only qualified shareholders – an S corporation is permitted to have only certain types of shareholders including individuals who are US citizens or residents, estates, certain types of trusts, charitable organizations, pension plans, and individual retirement accounts.
- One class of stock – each share of the corporation’s stock must have the same rights to distributions and liquidation proceeds, although differences in voting rights among classes of stock do not constitute an impermissible second class of stock.
- Shareholder consent – all the shareholders must consent in writing to the election to be an S corporation.
- Qualified entities – restrictions limit the types of corporate entities that may elect S status (neither insurance companies nor financial institutions that use the reserve method of accounting for bad debts can be S corporations).
However, most of the foregoing limitations and restrictions do not apply to LLCs. Therefore, an LLC may be a simpler and better business entity in some instances.
Chicago business lawyer Brian J. Thompson will form your Illinois LLC or Illinois S corporation. Finally, visit Illinois Department of Commerce Small Business Assistance for general information on Illinois small business law and formation.