Incorporating in Illinois
Have a great idea for a business but don’t know where to start? At Block Law Associates, we’re ready to put our decades of experience in helping small business owners to work for you. Many small businesses are launched as sole proprietorships in which the business owner and the business are one entity. Separating your business from your person and assigning it to a new entity can offer a range of benefits for entrepreneurs. Why incorporate? Credibility and name protection Adding “Inc.” or “Co.” after your business name can add legitimacy to your operation in the minds of customers, vendors, and partners. Additionally, Illinois restricts incorporated businesses from using the name of an existing business, so you can feel more comfortable in investing in your brand. Existence in perpetuity Both corporations and Limited Liability Companies (LLC’s) can persist after a change in ownership. If properly handled, control of the business can be passed on to the next generation. Expense deduction If properly structured, business owners can deduct normal business expenses including salaries prior to passing on income to owners. Personal asset protection The most important reason to incorporate your business is the protection of your personal assets. With proper structure and management, the liabilities you are exposed to as a business owner are limited to the assets of your business. Without liability limitation, your personal property could be at risk in a lawsuit. How do I incorporate in Illinois? You can incorporate your business in Illinois with an internet connection, a credit card, and a few hours. If you’re confused by the process, please reach out--our team of skilled professionals and attorneys will make sure you’re in compliance with Illinois law and that your corporate entity is structured to meet your needs. Pick a name As mentioned above, your business name cannot be shared with any existing business in Illinois. Luckily, the Illinois Secretary of State website offers a search tool to check and see if your potential name is taken. Type the name you’re considering in, and review the search results--if there’s an existing business with the name you’re considering, or even a name that’s substantially similar, your incorporation documents will be rejected by the Secretary of State. Your name must include “Corporation,” “Company,” “Incorporated,” “Limited,” or an approved abbreviation of one of those words. Complete the Illinois Articles of Incorporation Once you’ve figured out a name, you can begin the process of actually incorporating your business. Illinois allows you to complete and file your articles of incorporation online; we can also file the articles of incorporation on your behalf. We’ll go over the basics below, but you want to be sure that you’re completing these documents correctly--errors in documents submitted to the Illinois Secretary of State can be costly and time-consuming to correct, or worse, errors can render your corporation null and void, or even subject you to civil penalties. Registered Agent and Registered Office Each corporate entity in Illinois is required to have a registered agent that resides within the state. A registered agent is a responsible party other than your corporation whose name and address are kept within Illinois’ official records. This responsible party formally accepts legal and tax documents on behalf of the corporate entity. In legal terms, this is called accepting “service of process.” You can serve as the registered agent for your business if you live in Illinois, but there are a few things to keep in mind: a registered agent must be personally available at the address on file with the state during business hours. If you’re not consistently available at the location listed on your public documents, you shouldn’t be your own registered agent. Additionally, your registered agent’s address is publicly available information, so listing your own name and address makes that information available to everyone. We can act as your registered agent for a small annual fee. In addition to accepting service of process and keeping your personal information from the public domain, our comprehensive legal team can advise you on the documents you receive. Corporate Purpose All corporations filed online in Illinois have the same general purpose: “The transaction of any or all lawful business for which corporations may be incorporated under the Illinois Business Incorporation Act.” That’s broad enough to to encompass a vast majority of corporate activity, but there are some important exceptions--if you’re forming a nonprofit corporation, or a corporation that provides professional services, you’ll need to modify your corporate purpose. If that’s the case, you should reach out to us so that we can make sure your incorporation is effective. Authorized Shares This section lists the number of shares you’d like to create, as well as the total number of shares you expect to issue. You also need to include the “consideration to be received thereof”--in this context, “consideration” refers to the amount of money you’ll give the company in exchange for your shares. If you’re filing online, you can only create a single class of stock; we can assist you if you’d like a more complex equity structure. Directors and Estimated Values Your articles of incorporation also allow you to include the names and addresses of directors, the value of your property in and outside of the state, and an estimate of the amount of business you’ll do in and outside of the state. These sections are optional, and because the information included in the articles of incorporation becomes part of the public record, most corporations skip this section. Illinois Incorporator An incorporator is the person who signs and submits your Articles of Incorporation. The incorporator doesn’t have to be otherwise affiliated with your business, but they do have to provide their name and address when they file the Articles. Filing Once you’ve completed your Articles of Incorporation, all that remains to create your corporation is to file them with the Illinois Secretary of State and pay the requisite fees--it’s $150.00 to file online, plus an initial franchise tax of at least $25.00 and a small credit card processing fee. If you need to expedite your filing, the Illinois Secretary of State offers a 24-turnaround for an additional $100 fee. What should I do after I’ve incorporated my business? Congratulations! You’ve completed the first step in starting your company. Your duties as a small business owner don’t end here, though--you’ll next have to create bylaws, appoint a board of directors, and have your first shareholder meeting. In a year, you’ll have to file your annual report and have your annual meeting. If you don’t comply with all of Illinois’ corporate requirements, your corporation could lapse or even be disregarded by the courts, leaving your personal assets at risk. Our team at Block Law Associates has decades of experience in helping small business owners navigate the complexities of corporate governance and compliance. We’re here to help you and your business. Give us a call at 312-346-5656, or send an email to email@example.com and we’ll be in touch.