Sole Proprietorship Laws in Illinois

By Elizabeth Rayne

For individuals looking to start a business without partners, a sole proprietorship is a common business entity because it is straightforward to set up and has minimal tax and reporting requirements. In Illinois, as in other states, you do not have to register your sole proprietorship with the state. However, you are required to register an assumed business name, if you use one, and depending on the nature of your business, you may also be required to obtain other permits and licenses.

For individuals looking to start a business without partners, a sole proprietorship is a common business entity because it is straightforward to set up and has minimal tax and reporting requirements. In Illinois, as in other states, you do not have to register your sole proprietorship with the state. However, you are required to register an assumed business name, if you use one, and depending on the nature of your business, you may also be required to obtain other permits and licenses.

Business Name Registration

In Illinois, if you want to operate your business under a name other than your own, you must file a certificate for an assumed business name. The filing is completed with the County Clerk in the county where your business is located and any other counties where you intend to conduct business. You can look up contact details in the Illinois County Clerk Office Directory (link in Resources) and then call your County Clerk's office or visit the website to obtain the required form. After you have registered, you must publish a legal notice of your assumed business name in a county newspaper. The notice must be published once a week for three consecutive weeks, and you must then submit proof of publication to the County Clerk.

Ready to start your LLC? Start an LLC Online Now

Name Availability

Although not a requirement for sole proprietorships, you may search the Illinois Secretary of State website and county records to determine if the business name you've chosen is already being used. To see if an existing corporation or LLC is using the name, browse to the Certificate of Good Standing search page on the Secretary of State's website (link in Resources). For locally registered sole proprietorships and partnerships, check with your County Clerk to see if your name is already being used by another business.

Licenses and Permits

Depending on your type of business and location, you may be required to obtain various licenses, permits and zoning clearances. All Chicago businesses must obtain a city business license; in other Illinois municipalities, you may be required to apply for a restaurant permit, taxi driver permit or other licenses based on the nature of your business. All professional businesses must be licensed with the state; and if you plan to build or remodel, you must apply for appropriate zoning and construction permits. The State of Illinois website, as well as city and county websites, provide a list of licenses and permits that may apply to your business.

EIN Registration

If you have employees or are required to pay federal taxes such as alcohol or tobacco tax for your business, you must apply for an employer identification number (EIN) from the Internal Revenue Service. An EIN is a unique number for your business that you will use on all federal tax filings. You can apply for an EIN online at the IRS website (see Resources).

Tax Registration and Insurance

All Illinois businesses, including sole proprietorships, must register with the Illinois Department of Revenue. You may register online using the Illinois Business Gateway. You must complete this registration before you make any purchases, sales or hire any employees. In addition, because sole proprietors are personally liable for the debts of their businesses, you may want to obtain general liability insurance.

Ready to start your LLC? Start an LLC Online Now
The Requirements of a Sole Proprietor in Pennsylvania

References

Resources

Related articles

How to Register a Sole Proprietorship in Anaheim, California

A sole proprietorship is a popular type of business type because it is relatively simple to set up, and it has fewer registration requirements than other types of business entities. As a sole proprietor, you are personally responsible for the management and the debts of your business, and as such, you must ensure that you are properly registered with the city. While sole proprietorships do not need to be registered with the state of California, you must register with the city and county, and you may be required to obtain further permits, depending on the type of your business.

How to Set Up a New Sole Proprietorship in Indiana

Sole proprietorships are owned by a single individual who operates the business as an extension of his personal affairs. In Indiana, sole proprietorships and general partnerships are classified as informal associations; they are not required to file formation documents with the secretary of state to obtain permission to do business. A sole proprietor, such as a professional photographer, can start his business and operate it within the state at his own discretion. However, if a sole proprietor wants to use an assumed business name, operate in a state-regulated industry, collect sales taxes, hire employees or is located in certain areas of the state, he may have to submit special registrations to conform with requirements in those areas.

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

Illinois law governs the formation and acts of businesses registered in Illinois, including limited liability companies, or LLC’s. Forming an Illinois LLC requires filing a document, called the articles of organization, with the Illinois Secretary of State. Additionally, an Illinois LLC must obtain a certificate of registration and taxpayer identification number from the Illinois Department of Revenue. Obtaining an Illinois tax identification number requires filing an Illinois Business Registration Application with the Illinois Department of Revenue.

LLCs, Corporations, Patents, Attorney Help

Related articles

How to Register a Business Entity

It is essential that you register your business properly to avoid fines and penalties from the federal government and ...

Alabama Sole Proprietorship Rules

A sole proprietorship is a common business structure because it is simple to set up and has few filing and tax ...

How to Open a Sole Proprietorship Business in Florida

Compared to other business structures, sole proprietorships are relatively straightforward to set up. A sole ...

Sole Proprietorship in Georgia

A sole proprietorship is a common business entity because it is relatively simple to set up and allows for a great deal ...

Browse by category