The Debate Over LLC Filing Fees in Illinois

LLC filing fees in Illinois, small business, lawyer, attorney, Illinois business lawyerWithin Illinois, limited liability corporations (“LLCs”) are a business structure used by many small business owners and entrepreneurs. The Illinois Secretary of State reported that in 2012 over 29,000 businesses in the state filed under LLC status, which was 2,000 more than the previous year.

LLCs allow businesses to avoid corporate taxes, while also shielding personal assets from potential litigation and other legal issues arising from the LLC’s operation. Within Illinois and throughout the U.S. though, the process and costs of LLC creation have caused significant barriers to entrepreneurs and small business owners.

The Current Incorporation Process

 LLC creation is conducted online via the Illinois Secretary of State website. When creating a new LLC, you are required to pay an assortment of fees, which combined could result in an out-of-pocket cost of almost $6,500. The creation of an LLC is a three-step process, which consists of the following:

  • Pick a name for the LLC that has not already been taken. The end of the LLC name must include one of the following abbreviations:  “L.L.C.,”  “LLC.,” or “limited liability company”;
  • File Articles of Organization Form LLC-5.5 with the Illinois State Department of Business Services; and
  • A registered agent for the receipt of legal service must be appointed and must reside within Illinois.

Notably, in Illinois the filing of Articles of Organization costs $500, which is the second highest filing fee in the country. New business owners and entrepreneurs must either cut into their personal savings to cover the costs, or abandon business creation entirely, overwhelmed with the costs of entry into the Illinois business market.

 Complaints and Possible Changes to the Current LLC Filing System

The formation of LLCs presents clear benefits to the economy by providing job creation, growth, and innovation. However, a less expensive filing process could do even more good by encouraging increasing numbers of entrepreneurs to file as LLCs.

Illinois currently has some of the highest state-mandated filing fees in the country. Outcry about this fact has encouraged Illinois lawmakers to call for changes to the current filling procedure. In fact, on January 29th, Governor Pat Quinn proposed a significant decrease of LLC filing fees stating that a “small but important step will encourage entrepreneurs to start their business and put more people to work.” If accepted, Governor Quinn’s proposal would reduce the cost of LLC filings to just $39, 12 times less than the current $500 filing fee. Throughout the country, states such as New York and Massachusetts are also reviewing their current LLC filing laws in order to lift some of the financial barriers to LLC filing.

LLC filings can be extremely expensive and complicated. Lucky for you the business law attorneys here at the Gierach Law Firm in Naperville, Illinois are skilled at business formation strategies. Contact the Gierach Law Firm today in order to discuss any assistance you need with LLC business filings.