Forming an LLC in Illinois costs $150 to file Articles of Organization (Form LLC-5.5) with the Illinois Secretary of State, with online approval in 7–10 business days (or 24 hours for $100 expedited). The annual report is $75, due in the LLC's anniversary month. Illinois has no LLC franchise tax (the corporate franchise tax was repealed in 2021), but it does levy a 1.5% Personal Property Replacement Tax (PPRT) on LLC profits attributed to Illinois — a quirk that catches many new owners off guard. Combined with a 4.95% flat individual income tax and Cook County sales tax that can hit 10%+, Illinois has higher ongoing costs than its neighbors. Chicago anchors a top-5 U.S. business market with deep finance, B2B SaaS, logistics, and manufacturing clusters. For founders genuinely operating in Chicago, Illinois's costs are usually justified by access to capital and talent.
How much does a Illinois LLC cost?
Budget around $299 to launch an Illinois LLC in Year 1: a $150 state filing fee paid to the Illinois Secretary of State, plus roughly $149 for a registered agent service if you don't use your own address. The Secretary of State processes most online filings in 5–7 business days, so no expensive expedite fee is typically needed. After that, Illinois keeps ongoing costs modest — the annual report runs just $75 per year, well below the painful recurring fees in states like Tennessee ($300), Massachusetts ($500), or Nevada ($325+). Illinois has no franchise tax or publication requirement (unlike New York or Nebraska), which makes it one of the cleaner states for cost predictability. By Year 5, expect to spend roughly $599 total: your $299 first-year cost plus four additional $75 annual reports.
Why form your LLC in Illinois
Chicago is a top-5 U.S. business market, with strong finance, logistics, and B2B SaaS. The $150 filing fee and $75/year report are both above national average — pay for the location.
- Chicago is a top-5 U.S. business market — finance, trading, B2B SaaS, logistics
- No LLC franchise tax (repealed)
- Flat 4.95% personal income tax
- Strong manufacturing and food/beverage industries downstate
- Major airline and rail hub
- Online approval in 7–10 business days; 24-hour expedited for $100
Best fit for: Finance & trading (Chicago) · Logistics · Manufacturing
Don’t want to file yourself? Northwest Registered Agent files your Illinois LLC for $39 + state fee and acts as your registered agent the first year free.
How to form a Illinois LLC in 7 steps
- 1Search the Illinois business name database
Use the Illinois Secretary of State business name search to confirm availability. The name must include "Limited Liability Company", "L.L.C.", or "LLC". Reserve a name for $25 (held 90 days) if needed.
- 2Appoint an Illinois registered agent
Required to have a physical Illinois street address. Can be the LLC owner if they're an Illinois resident, or a commercial service.
- 3File Articles of Organization (Form LLC-5.5)
File online through the Illinois SOS portal for $150. Standard processing is 7–10 business days; 24-hour expedited is $100 extra ($250 total). The Articles include LLC name, principal place of business, registered agent, purpose, and member/manager structure.
- 4Draft an Operating Agreement
Not required by Illinois law but strongly recommended. Defines membership interests, voting, profit/loss splits, and dissolution. Banks routinely ask for it when opening a business account.
- 5Apply for an EIN with the IRS
Free at irs.gov, takes 10 minutes online. Required for opening a business bank account, registering with the Illinois Department of Revenue, and filing federal taxes.
- 6Register with the Illinois Department of Revenue (IDOR)
Register through MyTax Illinois for sales and use tax, withholding tax, and the Personal Property Replacement Tax (PPRT). The PPRT is 1.5% on Illinois-source LLC profits — file annually via Form IL-1065 or IL-1120.
- 7Get any required local licenses and calendar your annual report
Chicago and many other Illinois cities require business licenses or permits. Then calendar your annual report — due in the LLC's anniversary month with a $75 fee. Late filings after 60 days incur a $300 penalty.
File directly with Illinois Secretary of State →
Illinois LLC taxes & compliance
Illinois has a 1.5% Personal Property Replacement Tax that catches new owners off guard — it’s on top of the 4.95% individual income tax. Sales tax can hit 10%+ in Cook County.
Ongoing compliance checklist
- Annual report — $75, due in the LLC's anniversary month
- Personal Property Replacement Tax (PPRT) — 1.5% on Illinois LLC profits
- Sales and use tax filings (IDOR)
- Withholding tax filings if you have IL employees
- Federal income tax (Form 1065 multi-member, Schedule C SMLLC)
Registered agent rules
Required — IL street address.
Hidden costs new Illinois LLC owners forget
- Personal Property Replacement Tax (PPRT): 1.5% on LLC profits attributed to Illinois
- Annual report fee: $75/year
- Cook County sales tax can reach 10.25%+ (Chicago)
- $300 late penalty on annual report after 60 days past due
- Foreign LLC qualification: $150
- Some Chicago neighborhoods require additional business licenses
Should you use a formation service in Illinois?
You can absolutely file directly with the Illinois Secretary of State for the $150 state fee. The reasons most Illinois owners use a service anyway are (1) registered-agent privacy — keeping their home address off public filings — and (2) calendar reminders for ongoing compliance.
Have Northwest form your Illinois LLC for $39 + state fee
Free registered agent for the first year. Real human support. Privacy-by-default — your home address stays off public filings.
Free tool
See the real 5-year cost of a Illinois LLC
Filing fee · registered agent · annual report · franchise tax — all calculated, year by year.
Open cost calculator for Illinois →Illinois's Personal Property Replacement Tax: the hidden LLC levy
Illinois imposes a tax that exists in virtually no other state: the Personal Property Replacement Tax (PPRT). LLCs taxed as partnerships owe 1.5% of net income to the state — on top of Illinois's 4.95% personal income tax that members already pay on their distributive share. LLCs electing S-corp status also pay the 1.5% PPRT at the entity level. This is not a filing fee or franchise tax — it is a straight percentage of profit that the LLC itself remits, separate from what members report on their personal returns. A modestly profitable LLC clearing $80,000 in net income owes $1,200 in PPRT before a single member pays a dollar of personal income tax. The annual report deadline is also unusually strict: it must be filed before the first day of the LLC's anniversary month, not on a fixed calendar date shared by all entities. Miss that rolling deadline and the state assesses a $100 late penalty and can administratively dissolve the LLC. No other state in the Midwest combines a rolling anniversary deadline with an entity-level replacement tax on pass-through income.
Year 1: $150 (state filing fee) + $149 (registered agent) + $0 (annual report not due until anniversary month in year 2) = $299 total. Year 2 onward: add $75 annual report + $149 registered agent = $224/yr recurring, plus 1.5% PPRT on net income. By Year 5: approximately $1,193 in fixed state and agent costs alone, before PPRT on profits.
Illinois owners frequently miss the rolling annual report deadline — due before the first day of the LLC's anniversary month, not on a shared statewide date. An LLC formed on March 15 must file its annual report before March 1 each subsequent year. Owners who assume a standard April or December deadline let the $75 report slip, triggering a $100 late penalty and risking administrative dissolution.
Illinois LLC: frequently asked questions
How much does it cost to start an LLC in Illinois?
Illinois Secretary of State charges $150 to file Articles of Organization. The annual report is $75, due in the LLC's anniversary month. Realistic year-one cost: $150. Ongoing yearly cost: $75 plus the 1.5% Personal Property Replacement Tax on LLC profits.
How long does it take to form an LLC in Illinois?
Online filings through the Illinois SOS portal approve in 7–10 business days. Expedited 24-hour processing is available for $100 extra ($250 total). Mail filings take 3–4 weeks.
What is the Illinois Personal Property Replacement Tax (PPRT)?
The PPRT is a 1.5% tax on LLC profits attributed to Illinois (different rates apply to corporations and S-corps). It was created to replace the old personal property tax on businesses. It applies even though Illinois has "no LLC franchise tax." LLCs file PPRT through the Illinois Department of Revenue (IDOR) on Form IL-1065 (multi-member) or IL-1120 (if elected as C-corp).
Does Illinois have an LLC franchise tax?
No franchise tax for LLCs (the corporate franchise tax was repealed in 2021, and it never applied to LLCs the same way). However, Illinois does levy the Personal Property Replacement Tax (1.5% on LLC profits), which functions similarly.
When is the Illinois LLC annual report due?
In the LLC's anniversary month each year. The fee is $75 if filed on time. Filings 60+ days past due incur a $300 penalty. LLCs that don't file for 6 months can be administratively dissolved.
Can a non-resident form an LLC in Illinois?
Yes. Illinois has no residency requirement for LLC members or managers. You only need an Illinois-based registered agent. Out-of-state owners commonly use a commercial registered agent service.
Is Illinois a good state to form an LLC?
For Chicago-based businesses or those with deep ties to the Illinois finance, logistics, or manufacturing sectors: yes. For businesses without a Chicago footprint, the $150 filing + $75 annual report + 1.5% PPRT is more expensive than many neighboring states. Indiana, Wisconsin, and Iowa offer cheaper alternatives if you don't need Chicago specifically.
What's the sales tax rate in Chicago and Illinois?
Statewide sales tax is 6.25%, but Cook County (Chicago) layers additional taxes that can push the combined rate to 10.25% or higher. If you sell taxable goods in Chicago or Cook County, register with the Illinois Department of Revenue through MyTax Illinois.