Illinois Corporation and Partnership Law
Structure your small business to protect personal assets and maximize tax savingsStarting a new Ilinois business requires deciding whether you should incorporate in Illinois, form an Illinois partnership, or create some other type of legal entity. This decision is critical as it controls the amount of business debt that you personally assume, it determines the number of investors you may have and therefore influences your access to capital, and it establishes your tax and regulatory obligations.
Illinois incorporation is usually the preferred option as it is attractive to investors and it provides the most personal liability protection. However, if you do not have outside investors, this structure might not be preferable because profits will be subject to taxation at both the business and personal income levels.
Creating an Illinois partnership under Illinois corporation laws eliminates the double taxation issue as business income from a partnership is subject only to personal income tax, but individual partners remain liable for joint business debts.
You can form a company under Illinois corporation laws as an:
1. Illinois corporation (business or non-profit)
2. Illinois limited liability company (LLC)
3. Illinois partnership (general or limited)
4. Illinois association (professional, co-op, agriculture, cemetery, or national)
Select the best structure: Illinois partnership or corporation
Make Illinois incorporation a realityIllinois corporation law, including Illinois LLC law and Illinois partnership law, requires the filing of registration forms with the Secretary of State and the payment of associated fees to incorporate in Illinois or form Illinois partnerships. Depending on how you decide to structure your business, you might also have to file Articles of Incorporation and/or by-laws.
Sweat the small stuff when incorporating in IllinoisFollow all Illinois incorporation requirements to the letter. Illinois corporation law requires Illinois companies and partnerships to comply with all respective formation, operating, reporting, and disclosure requirements specifically set forth in each state statute.
Illinois General Assembly website.
- Individual state laws vary, so conduct your own research or find an attorney who can advise you as to whether Illinois corporation laws will be most advantageous to your business needs.
- Illinois LLC law allows you to form limited liability companies (LLCs), which are regulated like corporations and provide similar liability protection, but are taxed like partnerships.
- Unlike some states, Illinois law does not provide for limited liability partnerships. These entities protect partners from liability for debts and obligations assumed by other partners while offering operational freedoms of a partnership. You should take this into consideration when deciding to form an Illinois partnership.
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