Incorporate in Illinois for FREE^*

Incorporation is the process of registering a business as a corporation and making it recognizable under law as its own legal entity. Incorporating a business can be a complicated process because each state has its own requirements for registering and operating a business as a corporation. Knowing the necessary steps and forms, however, will help keep you organized and stress-free. 

With our easy business registration service, you simply answer a few questions and we create your initial paperwork and file it with the state for you. The first business entity registration is free for Rocket Legal+ members—you pay only the state filing fees. Then, you can make and personalize all the legal documents you need for your business. Store everything online in your Rocket Lawyer account.

What is a C-Corp? 

A C-Corp, or C-Corporation, is a common business entity type. More specifically, a C-Corp is a corporation taxed under Subchapter C of the U.S. Code. Under Subchapter C, corporations are subject to tax at both the corporate and individual level (sometimes called “double taxation”). Depending on the situation, this may result in lower or higher tax burdens for the shareholders. 

C-Corps allow for anyone to be an investor and for an unlimited number of shareholders and multiple share classes.

As with other types of corporations, C-Corporations provide a common and well-known legal structure for businesses and offer their shareholders some limited liability. Except for certain instances of fraud or misconduct, a shareholder is not liable for the debts or obligations of a corporation beyond the shareholder's investment into the corporation.

Corporations are treated as a C-Corp by default, unless another type of tax treatment is selected, such as an S-Corp.

What is an S-Corp? 

Like C-Corps, S-Corps provide a common and well-known legal structure for businesses and offer their shareholders some limited liability. However, S-Corps have two main differences from C-Corps: they are taxed differently and they have more restrictions with shares.

An S-Corporation, or S-Corp, is an IRS election that allows a company to be treated like an LLC for income tax purposes, that is, as a “pass-through" entity. Instead of income taxes being owed at both the company and individual level, the income of an S-Corp is only taxed at the individual level, which means it passes through the company directly to the owners and shareholders. Again, this may result in lower or higher tax burdens for the shareholders depending on the situation.

S-Corps have more restrictions regarding shares and shareholders than C-Corps. Specifically, S-Corps can have no more than 100 shareholders, only one class of shares, and only U.S. residents or citizens as investors.

One area of common confusion is what type of entity can elect S-Corp status. Remember that this election is simply a tax choice, not a governance or legal structure choice. Both limited liability companies (LLCs) and corporations can choose S-Corp status if they qualify under the IRS's guidelines.

There are similarities between an Illinois S-Corp and a C-Corp regarding personal liability, management, structure, and compliance. The differences in Illinois, however, come down to the following:

• Ownership Rules: There are no limits on the number of shareholders and stock classes a C-Corp may have. An S-Corp is limited to one stock class and 100 shareholders. Shareholders in an S-Corp must be citizens or legal residents of the United States.
• Taxes: A C-Corp is taxed as its own entity. This means it files a corporate tax return and it pays taxes on corporate income. Shareholders' dividend payments may also be taxed on their individual tax returns. An S-Corp also files its own tax return, but it doesn't pay corporate taxes. It is a "pass-through" entity and income is reported only on shareholders' individual returns.
• Documents: A C-Corp is the default corporate designation. To establish an S-Corp, you must file IRS Form 2553, Election by a Small Business Corporation.

Your corporation’s name should be unique and make a statement about your business. Make sure it complies with the following Illinois requirements:

• Your name must include "Company," "Incorporated," "Corporation," "Limited," or an abbreviation of one of these terms.
• Don't use a name that implies a business purpose other than what your corporation actually does. For example, don't call your business "The Burger Company" if it is a garden center.
• The name must be unique and not too similar to a name already registered with the Secretary of State.
• Illinois limits the use of words that imply banking or insurance to those businesses authorized by the applicable state agency to conduct such activities. 

Need help coming up with a business name for your corporation? Try the Rocket Copilot™ AI Business Name Generator, a free tool to help you brainstorm business names and get started registering your corporation.

Each state has its own personnel requirements for incorporating. In Illinois, your corporation must have at least one director, but there is no age requirement for directors of a corporation, and Illinois does not require that directors or owners live in the state.

Every corporation must appoint a registered agent. A registered agent is responsible for receiving tax, legal, and government documents for your corporation during normal business hours. A registered agent can be a person or a business, but must have a physical address in Illinois. We can help you designate a registered agent when you incorporate with us. Your agent's name and address must be listed in your Articles of Incorporation.

You must also include the following in your Articles of Incorporation in Illinois:

• The corporation's purpose, which can be for the transaction of any or all lawful business allowed under the Business Corporation Act of 1983.
• The name and address of each incorporator.
• The number of shares the corporation is authorized to issue.
• If the shares are divided into classes, the class designation and number of shares per class.

You may also include any other provisions that are consistent with Illinois law, such as defining or limiting the powers of your corporation's director and shareholders, and an estimate of the value of property the corporation will own in the following year. If you wish to deny cumulative voting rights in the selection of directors, the Articles must state this.

Nearly every state has standard processing times, but not all provide expedited processing for corporations. In Illinois, there are a few fees that you may be charged when you register your business as a corporation. They include the following:

State fee: $175.

• Fee to expedite your filing: $110.

Rocket Lawyer filing fee: $0 $99.99.

• First filing FREE* for Rocket Legal+ members (excluding state fees).
• Get additional filings HALF OFF with Rocket Legal+.

Processing time: 12-15 business days.

•  Expedited processing time: 2-3 business days.

Note: The above state fees and processing times (including expedited processing fees and times) are provided as a summary and may or may not encompass various fees mandated by your state or local authorities. Your state may also change these fees and processing times over time and without notice. If you have questions, speak to a Rocket Lawyer Business Pro to understand the costs and processing times that apply to your specific filing.

Businesses can save up to $2,500 per year with a Rocket Legal+^™ membership. This calculation is based on total savings on an initial business registration and registered agent, trademark, and business tax filing services for Rocket Legal+ members (a total cost of $924.97) compared to Rocket Legal members (a total cost of $1,949.96). This is in addition to savings on the average cost of 5 hours for document preparation by a non-Rocket Lawyer network attorney at the average attorney hourly rate in the U.S. of $300 (an estimated cost of $1,500 when purchased without any form of Rocket Lawyer membership) compared to unlimited use of customizable business documents for both Rocket Legal+ and Rocket Legal members at no extra cost.

Yes – taxes are a part of life, so you should be prepared to pay them for your corporation. Before opening your doors for business, get an employer identification number, or EIN, from the IRS. This federal ID is similar to an individual's Social Security number. All companies with employees must have one. Here is more information to help you understand the different tax structures of C-Corps and S-Corps. 

Corporations must also pay a personal property replacement tax in Illinois. This tax is based on the business's net income. S-Corps pay taxes on a lower percentage of income than C-Corps. Your corporation must file an annual report and pay a franchise tax and license fee each year in Illinois. These are generally due 60 days before the first day of your corporation's anniversary month.

Illinois requires that you create and keep certain corporate records to maintain your corporate status:

• Corporate Bylaws define how your corporation is structured and how it operates. You may include any provisions you like in your Bylaws, as long as they are consistent with your Articles of Incorporation and with Illinois law.
• You must record Corporate Minutes for every meeting of shareholders and directors. The Minutes provide a record of all decisions and actions taken during the meeting.

You don't have to file either document with the state, but you should keep them with your other corporate documents. We can help you compare Corporate Meeting Minutes requirements and Bylaws requirements from state to state.

We wish you success with your new Illinois corporation! You can count on Rocket Lawyer for all the business, tax, and legal help you need at a price you can afford.

If you are planning to operate in another state, you may need to register a corporation in that state. Rocket Lawyer can help you determine which states you should register in.

Other states may have their own rules for foreign corporations that originate in Illinois or domestic corporations that also operate in Illinois. Talk to an attorney to understand the legal and tax requirements for the state(s) in which you plan to operate.