Illinois Corporation and Partnership Law Key Terms

Decipher state law regarding the different types of corporations and partnerships

By Trisha Schulz

If you're starting a new business, there are many decisions to make. Legally, you must decide which business structure you want to use for your company. Illinois corporation and partnership law spells out the requirements and functions of each business type. You'll need to carefully weigh your options as each business structure has its own unique features regarding liability and tax breaks. Studying the following key terms may help you distinguish the differences between business structures.

Illinois C corporation

Incorporating your business in Illinois legally makes it a C corporation, the most common business structure. Most large companies are incorporated. In a corporation structure, a business' legal identity remains separate from that of its owners, usually the shareholders.
Try: C Corporations are defined by Weincorporate.com.

Illinois S corporation

A sole proprietorship, or an S corporation, is similar to a C corporation with a few differences. Although the basic structure acts like an incorporated company, an S corporation can claim some of the tax advantages of a partnership business structure. Smaller businesses usually choose this business form.
Try: Read through this list of advantages to declaring an S corporation structure for your Illinois business through Residual-Rewards.com.

Illinois limited liability partnership

Two individuals who go into business together in Illinois form a partnership. In a limited liability partnership, one of those partners performs the day-to-day business activities and can be held liable. The other partner acts more or less as a business investor.
Try: Get answers to your questions about Illinois limited liability partnerships through BizFilings.

Illinois limited liability company

Filing as a limited liability company (LLC) provides the benefits of both a corporation and a partnership. Limited liability companies have limited liability, but they are also awarded tax benefits and given management flexibility. The Illinois law regarding limited liability companies allows no limit to the amount of owners, or members, of the business. However, some businesses, such as banks or insurance companies, are not allowed to form as a limited liability company under the law.
Try: Check out this Nolo article about forming an Illinois limited liability company.

Illinois professional corporation

If your Illinois business performs and delivers only one type of service, you can choose to form as a professional corporation. These types of corporations are usually regulated by professional organizations and are allowed to choose taxation as either an S or a C corporation. This type of arrangement works best for businesses such as a law firm or medical office. However, a medical office must adhere to other Illinois statutes, and such a professional corporation can only be formed for medical services.
Try: Legalzoom.com explains how a professional corporation can be formed in Illinois.

Illinois non-profit corporation

The largest benefits of filing as a non-profit corporation include access to federal and state grants and tax exemptions. This type of business structure also provides limited liability. Businesses such as community health care clinics, domestic violence shelters or child care centers may want to consider this business structure.
Try: Illinois Legal Aid offers a look at the main differences between a for-profit and non-profit corporation.