A Guide to Starting Your Small Business in Illinois

business registration, Gierach Law Firm, Naperville small business law attorney, operate a small business, start a small business, starting your small businessIllinois is known as being one of the toughest states in the U.S. to start and operate a business. Due to the extensive regulations, taxes, and other red tape, entrepreneurs looking to set up shop in Illinois must be well educated about the rules and laws governing business operations in the state. However, to help begin the process, a guide to successfully starting a small business in Illinois is listed below.

Creating a Business Plan

A business plan provides a comprehensive course of action, development goals, and a management structure for your small business. A business plan is not required to operate a business in Illinois. However according to Bloomberg, around 80 percent of small businesses fail in their first year, as mentioned in a recent article in Forbes. This high rate of failure could be for a variety of reasons. With that said, not having a vision for your business and its operations may increase the likelihood that your business will not succeed, or that it will not be as successful as it could. When soliciting small business loans or other investments, a business plan can play a crucial role in illustrating that your business is credible and worthy of investment.

The Different Business Structures Available

Businesses in Illinois can be organized under six different structures. A business entity can be organized as a limited liability partnership (LLP), sole proprietorship, limited liability company (LLC), general or limited partnership, “C” corporation, or “S” corporation.

A sole proprietorship is a business that is operated and owned by one person, and there is no legal distinction between the business and the owner. An LLP consists of one general partner who manages the business, and partners who have limited liability and function as investors, but are not part of the management of the business. LLCs offer several of the benefits of a corporation and an LLP.

LLCs provide limited liability, flexible operation and management opportunities, and flow-through tax status. A “C” corporation is the classic corporate business entity. “C” corporations can sell company stocks to shareholders, allow for the easy transfer of ownership, and its owners have limited liability. “S” corporations function like corporations but are limited in the amount of shareholders that they can have. Creating an “S” corporation requires that you file with the Internal Revenue Service (IRS).

Business Registration

Business registration is often required for a business to legally operate in Illinois. You will be required to register and be licensed with the Illinois Department of Revenue if you plan to manufacture, sell, or buy products and/or plan to hire any employees. Your business may also have to register with the IRS. It is also important to be aware of any specific taxes that can be levied by the county and municipality where your business is operating. Thus, it is a great idea to contact your local area revenue department and chamber of commerce to learn about the different registration requirements for business operations.

Lastly, depending on your profession and the businesses that you will be conducting, you may need to register for a license with the Illinois Division of Professional Regulation (IDFPR).

If you are stressed out about the different laws and regulations that must followed to operate a small business in Illinois, take a deep breath, pick up the phone, and contact our Naperville small business law attorneys at the Gierach Law Firm. We are  here to help.