Chicago Business Lawyer
I am a Chicago business lawyer ad 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.
Please see my Chicago corporate lawyer page for details about forming an Illinois LLC.
Illinois S Corporations
Cost to Form an Illinois Corporation
Chicago business lawyers typically charge $1000 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.