Documents and Forms Needed for Illinois Sole Proprietorship Laws

by Joe Stone

Illinois law requires a sole proprietorship to register with various state and local government agencies as a condition of doing business. All sole proprietors must register with the Illinois Department of Revenue and obtain a business license in the city or county where the business is located. Additional registration requirements depend on other factors, such as whether the sole proprietor uses an assumed name, also known as a DBA, or if the business has employees.

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Department of Revenue Registration

All sole proprietors doing business in Illinois must register with the Illinois Department of Revenue by filing an Illinois Business Registration Application, called Form Reg-1. The sole proprietor can download the application from the department's website and file by mail, or submit the application online. The sole proprietor must file the form before making any purchases or sales, and before hiring an employee. After processing the application, the department returns a certificate of registration, which the sole proprietor must prominently display where the business operates.

Local Business License

Local municipalities require a license for any business operating within its jurisdiction. In most instances, the license requirement is specific to the type of business operation, such as operating a filling station or handling hazardous materials. If a license is not specified for a particular type of business, a general business license is required. A local business license is generally valid for a specific period of time; the sole proprietor must renew it before it expires to continue doing business in the municipality.

Assumed Business Name Application

Illinois law requires every sole proprietor using an assumed name for his business to register the assumed name with the county clerk where the business is located. The county clerk provides the application to register the assumed name. After filing the application with the clerk, the applicant must take receipt of the application to an approved newspaper and publish it as a legal notice once a week for three consecutive weeks. The applicant completes the process by filing a certificate of publication prepared by the newspaper with the county clerk.

Employer Registration

If a sole proprietor's business involves hiring employee, the sole proprietor must file a form UI-1, a Report to Determine Liability Under the Illinois Unemployment Insurance Act, with the Illinois Department of Employment Security. The sole proprietor must file this form within 30 days of starting business. The form is available for download from the IDES's website. The purpose of the form is to determine whether the sole proprietor is required to pay contributions to the IDES under the Illinois Unemployment Insurance Act.