How to a Convert Sole Proprietorship to an LLC in Illinois

By Salvatore Jackson

As the owner of a sole proprietorship, you may at some point find it necessary to convert your business to a limited liability company, or LLC, structure. An LLC combines the pass-through taxation and simple filing requirements of a sole proprietorship with the limited liability protections of a corporation. Under Illinois business law, businesses that intend to conduct extensive commerce in the state must register with the Illinois Department of Business Services. Converting a sole proprietorship to an LLC in Illinois requires filing an Articles of Organization to register the LLC.

As the owner of a sole proprietorship, you may at some point find it necessary to convert your business to a limited liability company, or LLC, structure. An LLC combines the pass-through taxation and simple filing requirements of a sole proprietorship with the limited liability protections of a corporation. Under Illinois business law, businesses that intend to conduct extensive commerce in the state must register with the Illinois Department of Business Services. Converting a sole proprietorship to an LLC in Illinois requires filing an Articles of Organization to register the LLC.

Step 1

Download the Articles of Organization form from the Department of Business Services website, or access the online filing system (see Resources). Illinois law does not require sole proprietorships to register with the Department of Business Services, which means you do not have to file an Articles of Conversion. Additionally, because you are the sole owner of a sole proprietorship, there is no need to conduct a vote among owners.

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Step 2

Fill out the Articles of Organization. Provide the name of your LLC and the primary address where LLC records are kept. Choose the effective date for filing. Provide the name and address of your LLC’s registered agent, which is the business or individual who will receive service of process if your company is sued or subpoenaed. If your LLC will provide professional services, list the address where professional services will be provided. Indicate whether managers, who do not own part of the LLC, or members, who are owners of the LLC, will conduct the day-to-day management of your LLC. Provide your name and address, and sign the Articles of Organization.

Step 3

File the Articles of Organization. As of 2010, the filing fee is $500. If filing online, follow the on-screen directions for filing and pay by credit card. If filing by mail, pay by certified check addressed payable to the Illinois Secretary of State. The filing address is Secretary of State, Department of Business Services, Limited Liability Division, 501 S. Second St., Rm. 351, Springfield, IL 62756.

Step 4

Transfer assets and debts from your sole proprietorship to your new LLC by preparing an asset transfer agreement. Set forth all sole proprietorship assets and debts, as well as their value. Indicate that they are being transferred from the sole proprietorship to the LLC. Sign the asset transfer agreement, and also have any other co-owners of the LLC sign the form.

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How do I Get an Illinois State ID Number for an LLC Company?

References

Resources

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