Starting a New Company in Illinois: The Order of Operations

We get a lot of calls that start with: "I formed an LLC last week. Now what do I do?" The honest answer is usually: undo two things, do six things in a different order, and skip three things you spent money on. Most new owners get the sequence wrong because the internet's advice is fragmented and conflicting.

Here is the order we walk new clients through.

Step 1: Decide on the entity

Before you file anything, decide whether you want to be a sole prop, LLC, partnership, or corporation. We covered this in our entity article. Get the entity right before you spend $300 on a state filing for the wrong one.

Step 2: Choose the state of formation

For most Illinois-based businesses, the answer is Illinois. The internet will tell you to form in Delaware or Wyoming. For small businesses operating in Illinois, that's usually wrong: you'll have to register as a foreign entity in Illinois anyway, paying both states' fees, plus you'll need a registered agent in the formation state. Form in the state where you're operating unless there's a specific reason not to.

Step 3: Pick a name and check availability

Search the Illinois Secretary of State's business name database before you commit. Then do a separate trademark search at uspto.gov — state availability does not protect you from a federal trademark holder. Then check whether the .com domain is available.

If all three are available, lock in the domain immediately. Filing the entity comes next; the domain takes 30 seconds and is the cheapest insurance against losing the name during the multi-week filing process.

Step 4: File the formation document

For an Illinois LLC, that's Articles of Organization through the Illinois Secretary of State. The fee is $150. Approval is usually 1–3 business days online.

For a corporation, Articles of Incorporation, also through the Illinois SOS.

Skip the LegalZoom upsells. The state's online portal does the same job for the same filing fee, without the $300 "premium package."

Step 5: Get the EIN

Once the entity is approved, apply for an Employer Identification Number (EIN) at irs.gov. It's free, online, and takes 5 minutes. Anyone charging you for an EIN is overcharging you for something the IRS gives away.

Step 6: Set up the operating agreement (LLC) or bylaws (corp)

An operating agreement is the internal document that governs how the LLC works — who owns what, how profits are split, how decisions get made, what happens when someone wants out. Illinois doesn't require it, but every bank, lawyer, and CPA will.

Single-member LLC: a 5-page template is fine. Multi-member: invest in a real attorney to draft it.

Step 7: Open a business bank account

Bring the formation document, EIN letter, and operating agreement. From this moment on, never run business money through your personal account. The single biggest threat to your LLC's liability shield is commingling. Keep them separate from day one.

Step 8: Make the S-Corp election (if applicable)

If you decided in Step 1 that S-Corp taxation makes sense, file Form 2553 with the IRS. There's a deadline — generally within 75 days of formation, or by March 15 of the year you want it to take effect. Late elections are possible but require Form 2553 plus an explanation. Don't be late.

Step 9: Register for state taxes

If you'll have employees, register for Illinois withholding through MyTax Illinois. Register for Illinois unemployment through IDES. If you'll sell taxable goods or services, register for Illinois sales tax. Each is a separate registration.

Step 10: Get business licenses and local registrations

Check your municipality. Many Kane County towns require a local business license. Some require a use permit for commercial space. Saint Charles, Geneva, Batavia, and St. Charles Township each have slightly different rules. Don't assume.

Step 11: Set up books and payroll before you have transactions

Spin up QuickBooks (or your bookkeeping system of choice) before the first transaction. Categorize from day one. If you're going to have employees, set up payroll before the first hire date — not after.

We've seen first-year tax engagements bloat by 10+ hours because the owner started a Shopify store on a Tuesday and didn't think about the books until February. Don't be that owner.

Step 12: Schedule the first quarterly tax projection

Around month 4–6 of operation, sit down with a CPA and run the first projection. By then you have enough revenue data to estimate the year. This is where you'd catch entity mistakes early enough to fix, set up a quarterly estimate cadence, and avoid the April surprise.

If you're starting something — or you started six months ago and want a sanity check — send us a note. We do new-company setup engagements as a fixed fee, and most of the work pays for itself in the things we keep you from doing wrong.