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Note: Illinois LLC fees have been reduced. If you see higher state fees on another website, that information is outdated. For details on the new fees, please see: Illinois LLC filing fees reduced
Note: Our tax lesson is not as step-by-step as our other Illinois LLC formation lessons, due to the uniqueness and variation among businesses. Taxes are usually not as straightforward as forming an LLC, and therefore, the information below is an overview, and not a comprehensive guide.
You will likely need to hire a local tax professional to make sure you meet all your Illinois tax obligations. We recommend using Thumbtack.
Do it yourself in Illinois
Register with IL Department of Revenue and get a State Tax ID Number
Illinois Revenue: How do I register with the Illinois Department of Revenue?
Personal Property Replacement Tax
Illinois LLCs are required to pay 1.5% of their net income to the IL Dept. of Revenue.
Illinois Department of Revenue: Personal Property Replacement Tax
Sales and Use Taxes
If your Illinois LLC sells goods, you are required to collect and pay sales tax. You can register with the IL Dept. of Revenue as mentioned above. You’ll need to submit sales tax returns on a periodic basis to the state.
Have employees?
If you have employees, you need to:
- Withhold federal, state, and payroll taxes from your employees’ wages
- Get a Federal Tax ID Number for your LLC
- Register with the Department of Employment and withhold payroll taxes
- Get unemployment insurance
- Obey Illinois labor laws for workers’ compensation, temporary disability insurance, prepaid health care, and wage and hour programs
Other Taxes
Depending on your industry, where your business is located, how you are taxed by the IRS, and whether or not you have employees, will determine which additional taxes and forms are due.
Some examples of other taxes and forms due are:
- Use tax
- Individual income tax
- Income withholding tax
- Partnership and LLC tax
- Transient tax
- Accommodations tax
- Rental motor vehicle tax
- Tour tax
- Vehicle tax
- Car sharing tax
- Vehicle surcharge tax
- Cigarette and tobacco tax
- Liquor tax
- Fuel tax
- Local taxes
- And more
You can find more information from the Illinois Department of Revenue.
Our Recommendation
Calculating your tax obligations in Illinois can be complicated and if done improperly can negatively impact your LLC.
We recommend that you get help from a tax professional once your LLC is formed. You can use Thumbtack or Yelp.
Hiring a tax professional will not only help you keep your Illinois LLC in compliance, but it will also give you an advisor to go to for other business questions.
You’ll want someone who’s a good fit for your company, makes you feel comfortable, and is willing to answer all of your questions. It should be someone you like personally as well as professionally. We recommend talking with at least 2-3 people before making your final decision.
References
ILLINOIS LLC GUIDE
Follow the lessons below to form your Illinois LLC.
Thank you so much for a lot of great information about LLC. Can you please also post some information like how to close LLC… ?
Thanks
Hi Tuan, you’re very welcome. We have an existing body of work that we must update and maintain, so we won’t be writing about LLC dissolution for a bit. Thank you for your understanding.
Thank you so much for the step by step guide! You’re the best! Made it so simple for me!!1
You’re super welcome Kaninia! Thanks for the lovely comment :)
Thank you Matt for sharing great information, can you show us more clearly about Sales and Use Taxes?
Such as how to apply for a retail sale tax id or how to get a Certificate of Resale.
Cheers,
Hi Tom, thanks for your suggestion, but this isn’t our area of expertise at this time. LLC filings in all 50 states is keeping us plenty busy. Reseller certificate and sales tax is so much more complicated (from a teaching perspective) since there are close to 10,000 tax jurisdictions in the US. I recommend getting in touch with an accountant. Thanks for your understanding.
Matt,
Thank you so much for your extensive write up about setting up a LLC it really made my life much easier. If i ever see you out I will for sure buy you a beer.
cheers
Duncan, thanks for the awesome comment! I appreciate you! A beer sounds great :)