The Illinois Limited Liability Company Act, 805 ILCS 180, governs the formation and operation of limited liability companies in Illinois. This statute affects all business owners and entrepreneurs who wish to form an LLC in the state, with a minimum filing fee of $500.
The effective date of this statute is January 1, 1994, with amendments made pursuant to Public Act 93-0324.
Illinois LLC Formation
Under 805 ILCS 180/5-5, the formation of an LLC in Illinois requires the filing of articles of organization with the Secretary of State, with a filing fee of $600 within 30 days. The articles must include the name and address of the LLC, the name and address of the registered agent, and the purpose of the LLC. In plain terms, this means that business owners must provide detailed information about their company to the state. The LLC must also have a minimum of one member, with no maximum number of members, as per Section 10-1 of the Act.
This is where the law gets teeth, as the failure to file the required documents can result in a fine of up to $1,000, as stated in Section 50-1 of the Act. The court may also impose a penalty of $100 per day for each day the LLC is in non-compliance, with a maximum penalty of $10,000 within 60 days. In practice, this means that LLCs must prioritize compliance to avoid significant financial penalties.
The Illinois Secretary of State has the authority to review and approve the articles of organization, with a review period of 10-15 business days, as per the Illinois Administrative Code. If the articles are approved, the LLC will be issued a certificate of organization, which is valid for a period of one year, with a renewal fee of $250, as stated in Section 50-5 of the Act.
Illinois Contract Requirements
Written Contracts
Pursuant to 810 ILCS 5/2-201, all contracts in Illinois must be in writing to be enforceable, with a minimum contract value of $500. This includes contracts for the sale of goods, with a statute of limitations of four years, as stated in Section 2-725 of the Act. In plain terms, this means that businesses must ensure that all contracts are properly documented to avoid disputes.
The contract must include the terms of the agreement, the price, and the delivery date, with a maximum payment term of 30 days, as per Section 2-310 of the Act. The contract must also include the name and address of the parties, with a minimum font size of 10 points, as stated in Section 2-606 of the Act.
Under 810 ILCS 5/2-206, the contract must be signed by both parties, with a minimum of two witnesses, to be enforceable. The contract must also include a provision for dispute resolution, with a maximum arbitration fee of $5,000, as per Section 2-501 of the Act.
Illinois Tax Compliance
Under 35 ILCS 5/1501, all LLCs in Illinois are required to file an annual report with the Secretary of State, with a filing fee of $250, within 60 days of the anniversary of the LLC’s formation. The report must include the name and address of the LLC, the name and address of the registered agent, and the purpose of the LLC, with a minimum of 100 words, as stated in Section 1505 of the Act.
The LLC must also obtain an Employer Identification Number (EIN) from the Internal Revenue Service, with a minimum tax payment of $100, within 30 days of formation, as per Section 3401 of the Act. The LLC must also file a tax return with the Illinois Department of Revenue, with a minimum tax payment of $500, within 6 months of the end of the tax year, as stated in Section 201 of the Act.
In practice, this means that LLCs must prioritize tax compliance to avoid penalties and fines, with a maximum penalty of $10,000, as stated in Section 2501 of the Act. The LLC must also maintain accurate and complete records, with a minimum retention period of 3 years, as per Section 2505 of the Act.
Illinois Legal Process
Under 705 ILCS 35/2-101, all disputes arising out of or related to an LLC must be filed in the circuit court of the county where the LLC is located, with a minimum filing fee of $200, within 30 days of the dispute. The complaint must include the name and address of the parties, the nature of the dispute, and the relief sought, with a minimum of 100 words, as stated in Section 2-302 of the Act.
The court may impose a penalty of up to $5,000 for each day the LLC is in non-compliance, with a maximum penalty of $50,000, as stated in Section 2-501 of the Act. The court may also impose a fine of up to $10,000 for each violation, with a maximum fine of $50,000, as per Section 2-601 of the Act.
In plain terms, this means that LLCs must be prepared to defend themselves in court, with a minimum of 2 witnesses, as stated in Section 2-701 of the Act. The LLC must also be prepared to pay any judgment or settlement, with a minimum payment term of 30 days, as per Section 2-801 of the Act.
Illinois Penalties and Consequences
Under 805 ILCS 180/50-1, the failure to file the required documents can result in a fine of up to $1,000, with a maximum penalty of $10,000, as stated in Section 50-5 of the Act. The court may also impose a penalty of $100 per day for each day the LLC is in non-compliance, with a maximum penalty of $10,000, as per Section 50-10 of the Act.
The LLC may also be subject to dissolution, with a minimum notice period of 30 days, as stated in Section 35-1 of the Act. The LLC must also pay any unpaid taxes, with a minimum payment term of 30 days, as per Section 35-5 of the Act.
In practice, this means that LLCs must prioritize compliance to avoid significant financial penalties, with a maximum penalty of $50,000, as stated in Section 50-20 of the Act. The LLC must also maintain accurate and complete records, with a minimum retention period of 3 years, as per Section 50-25 of the Act.
Illinois Compared to Other States
Compared to other states, Illinois has a relatively high filing fee for LLCs, with a minimum filing fee of $600, as stated in Section 5-5 of the Act. However, the state also offers a relatively low annual report fee, with a minimum filing fee of $250, as per Section 1501 of the Act.
For example, California has a filing fee of $800, with a minimum annual report fee of $350, as stated in Section 17053 of the California Corporations Code. New York has a filing fee of $500, with a minimum annual report fee of $200, as per Section 203 of the New York Limited Liability Company Law.
Practical Steps for Illinois LLCs
In practice, LLCs in Illinois must prioritize compliance to avoid penalties and fines, with a maximum penalty of $10,000, as stated in Section 50-1 of the Act. The LLC must also maintain accurate and complete records, with a minimum retention period of 3 years, as per Section 50-25 of the Act.
The LLC must also file the required documents with the Secretary of State, with a minimum filing fee of $600, within 30 days of formation, as stated in Section 5-5 of the Act. The LLC must also obtain an EIN from the IRS, with a minimum tax payment of $100, within 30 days of formation, as per Section 3401 of the Act.
Recent Changes to Illinois Business Laws
Recently, the Illinois General Assembly passed Public Act 102-0167, which made several changes to the Illinois Limited Liability Company Act, effective January 1, 2022. The new law includes changes to the filing fees and requirements for LLCs, with a minimum filing fee of $600, as stated in Section 5-5 of the Act.
In plain terms, this means that LLCs in Illinois must be aware of the changes to the law and take steps to ensure compliance, with a minimum notice period of 30 days, as stated in Section 35-1 of the Act. The LLC must also maintain accurate and complete records, with a minimum retention period of 3 years, as per Section 50-25 of the Act.
The Illinois General Assembly is currently considering several bills that would make further changes to the Illinois Limited Liability Company Act, with a minimum effective date of January 1, 2024. LLCs in Illinois should monitor these developments closely to ensure compliance with any new requirements, with a minimum notice period of 30 days, as stated in Section 35-1 of the Act.
- Internal Revenue Service. relevant tax guidance
- Office of the Law Revision Counsel. relevant federal tax or estate statute
- U.S. Courts. probate and estate court procedures
