Illinois LLC Tax Registration & Requirements

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.

Matt Horwitz

Founder & Educator, LLC University®

Matt Horwitz has been the leading expert on LLC education for the past decade. He founded LLC University in 2010 after realizing people needed simple and actionable instructions to start an LLC that other companies weren't offering. He's cited by Entrepreneur Magazine, Yahoo Finance, and the US Chamber of Commerce, and was featured by CNBC and InventRight.
 
Matt holds a Bachelor's Degree in business from Drexel University with a concentration in business law. He performs extensive research and analysis to convert state laws into simple instructions anyone can follow to form their LLC - all for free! Read more about Matt Horwitz and LLC University.