At a certain point in your business’s growth, there may come the ideal time to form a corporation. To incorporate in the state of Illinois, you’ll need to follow some fairly specific steps.
Reasons to Incorporate
Forming a corporation has many potential benefits. Some of the main reasons it’s beneficial to incorporate include the following:
- Protect personal assets from corporate liability.
- Beneficial tax structures and benefits.
- Fringe benefits, such as health insurance programs limited to corporations.
Requirements for Corporations in Illinois
In the state of Illinois, as with most places, there are a number of requirements that must be met in order to create a corporation. The main requirement is to create and file articles of incorporation, which include details about the organization.
In addition, specific types of structures have their own requirements. For instance, S corporations are limited to up to 100 shareholders who must all be U.S. residents, and they can deal in only one class of stock.
Steps to Incorporate in Illinois
To incorporate in the state of Illinois, the following steps should be followed when getting started:
1. Choose a Name
First off, choose a name for your corporation. It needs to be distinguishable from other names already on file, and it must include the word (or an abbreviation of) “Corporation,” “Company,” “Limited,” or “Incorporated.”
2. Appoint a Registered Agent
A registered agent is an individual or corporation who agrees to accept legal papers on behalf of your company. You must have a registered agent with a physical street address in Illinois.
3. Determine Your Stock Structure
You’ll need to determine the classes or series of stock your corporation will have as well as the number of shares you’ll offer. Make sure you detail how each class differs, what its advantages/disadvantages are, and so forth.
If you hope to organize as an S-Corp, you’ll need to limit it to only a single class of shares.
4. Draft and File Articles of Incorporation
The above items all need to be outlined in your articles of incorporation, which is a document that must be filed with the Illinois Secretary of State along with a filing fee. Your articles of incorporation should include the following information:
- The corporation’s name and street address
- The corporation’s purpose
- Your stock structure
- Your registered agent and their office
- The names and addresses of your incorporators
5. Prepare Bylaws
The ground rules by which your corporation will be governed are set forth in your bylaws. These aren’t filed with the state, but they are still necessary to legitimatize your business.
6. Appoint Directors and Hold a Board Meeting
After filing your articles of incorporation and preparing your bylaws, you’ll need to appoint directors and hold your first board meeting. During this meeting, you’ll appoint officers, adopt your bylaws, choose a bank, authorize the issuance of stock, and so on. Also, take minutes on the meeting’s proceedings. Those are needed to cement your corporation’s legitimacy.
7. File Annual Reports
Every year on your corporation’s anniversary date, you’ll need to file an annual report with the Secretary of State. A filing fee is also required.
8. Get Tax Information Together
Finally, you’ll need an employer identification number (EIN) from the IRS. You’ll use this number on tax documents.
If you have questions about incorporating in Illinois, a corporate attorney can help you through the process. Contact Hart David Carson LLP to get started.