Step 1: Decide on a Business Structure

There are 3 basic options: a DBA, a Corporation or an LLC. Click here to learn more about business entities.

• A DBA or “Doing Business As” (also known as a “Fictitious Business Name” or FBN) is not really a separate structure, but just a different name that an individual or partners use as their business name.
• A Corporation is a separate entity (provides liability protection to the owners) that has a structure that includes shareholders, directors and officers. More complex than a DBA but the entity of choice for large companies and startups that intend to raise funding. Some professions are required to choose what is known as a “Professional Corporation” or PC (doctors, lawyers, architects, etc.)
• An LLC or “Limited Liability Company” is a newer type of business that is both a separate entity but provides very easy management (doesn’t require directors or officers) and taxation. Has largely replaced the DBA and Corporation in popularity recently as it provides liability protection but with much less complexity (and taxation) than a Corporation.

Step 2: Pick a Business Name

Picking a business name is easier said than done – many legal and business problems can arise from picking the wrong name (you can always change it later but the less times you have to do that, the better). In Step 3 we’ll show you how to search for the name in Illinois, but we highly recommend you do the following before searching Illinois state databases:

• Make sure you’ve covered the basics in your chosen name: unique, easy to understand/pronounce (practice saying it out loud: “Thanks for calling XYZ”) and can survive over time (“DVD World” is not timely). Here are some of our tips on business identity including logo and trademarks.
• Do a search on Google, Bing and DuckDuckGo of your proposed name. This is a “first sweep” of any potential conflicts, especially in your state or local jurisdiction. NOTE: If you intend to operate nationally or even internationally it will be even more important that your name be unique. This should cover many cases where a company name is being used but not officially trademarked (see next tip).
• Do a trademark search with the US Patent and Trademark Office (USPTO). This will be a very good indicator if you’re name will have any conflicts. There’s an art to trademark searches (trademark specialists will charge you handsomely to do a thorough search) but in our experience if you can use google at a fairly advanced level you can reasonably clear a name yourself. Tip: search misspellings, plurals, variations of spelling, sound-alikes and other versions of your chosen name to be sure it’s not already registered.

Step 4: Obtain your Federal Employer Identification Number (FEIN or “EIN”)

Your EIN is like your Social Security Number for your company. It’s required for Corporations and LLC’s and optional for DBA’s (if you don’t have any employees, then it’s required). However, if you are a DBA and don’t obtain an EIN you will be forced to use your Social Security Number on many documents so it’s typically recommended you obtain the EIN to prevent identity theft. You can apply online with the IRS or via IRS Form SS-4. You can read more about corporate tax laws on the Illinois Comptroller website.

NOTE: We can obtain your EIN for you if you we form your company.

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Step 5: Open Company Accounts: Bank and Credit Cards

To keep business and personal expenses separate, you should open a separate account for your business. In addition, getting business credit cards is how you begin to build a company credit profile (corporation or LLC required) and can later qualify for larger loans and lines of credit. To open the account simply call your chosen bank and inquire on the steps to open a business bank account. Typically you’ll need a) your filed paperwork b) your EIN c) a company resolution authorizing your company to open the account (signed by the owners, members, officers or directors, etc.).

Top Business Banks in Illinois:

• Bank of America
• BMO Harris Bank
• First Midwest Bank
• Associated Bank
• Woodforest National Bank

TIP: Our business formation service includes a free banking resolution for your use.

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Step 6: Obtain Business Licenses and Permits

Now that you’ve registered your business name you need to obtain a business license for your company – this authorizes your company to do business in your city or county. Typically this also involves registering for state taxes and permits (the city may require them as part of the business licensing process).

Tip: We work with a company that can obtain and prepare business licenses and permits for you. Click here to learn more.

Step 7: Annual and Ongoing Requirements

DBA: In Illinois, your Fictitious Business Name should be valid for 5 years (unless you change company name or other information listed on the FBN) at which point you’ll need to renew it with the county.

LLC: Illinois requires both annual reports and an annual franchise tax. These are due within a 60-day period immediately preceding the first day of the month of incorporation. The fee is $75 plus an amount based on your business’s paid-in capital.

Corporation:  Your business must keep corporate records at its principal place of business. Every year, an officer of your corporation must file an annual report. Generally, this report can be filed electronically unless:

• Your business owns property or transacts business outside of the state
• There have been recent changes in authorized shares, issued shares, or paid-in capital
• You need to enter more than six officers or directors on your report.

Franchise Taxes: Illinois businesses are required to file a $75 annual report with a $25 minimum franchise tax, based on your company’s paid-in capital.  The franchise tax form in Illinois is widely decried as being one of the most complicated in the country – it’s therefore advisable to work through your corporate taxes with an accountant.

Important Illinois Contacts

• Illinois Secretary of State
• Illinois Department of Revenue
• Illinois Department of Labor