The Advantages of Sole Proprietorship in Illinois

By Heather Frances J.D.

Your decision about how to structure your business is one of the first and most important decisions you make as a business owner. Though sole proprietorships expose their owners to increased risk of liability, an Illinois sole proprietorship has a number of advantages that may fit your situation better than other business structures.


In Illinois, a sole proprietorship does not have to register with the Secretary of State’s office. Other types of businesses must register and comply with filing deadlines throughout the life of their business. This lack of registration also means the sole proprietor does not have to wait for formation paperwork to be mailed and processed before beginning his business. However, Illinois does require all businesses, including sole proprietorships, to register with the Department of Revenue and receive a tax identification number before making purchases, sales or hiring employees.


It’s usually less expensive to start a sole proprietorship in Illinois than it is to start another type of business. If you have a sole proprietorship, you do not have to pay to have your startup documents drafted, and you won’t have to pay state filing fees. You may also have fewer administrative costs while running your business, because you don't have to file any regular reports with the state.

Ready to start your LLC? Start an LLC Online Now


Sole proprietorships are legally inseparable from the owner as an individual. This opens you to an increased risk of liability: your personal assets can be taken to satisfy business debts, but this also means you do not have to follow any business formalities to separate the business’ assets and liabilities from your own, though it may be wise to do so for federal and Illinois tax purposes. Additionally, you do not have to follow by-laws as a corporation or limited liability company might, and you aren't required to have formal board meetings, since your business is not managed by a board.


An Illinois sole proprietorship does not have to file an annual report for tax purposes and does not have to file a separate state or federal income tax return just for the business. You may be required to file a special form for taxes you collect during your business, such as sales taxes. Income from the business is reported along with the owner’s personal income tax forms, and the owner pays taxes on his business's income -- because his business income is his personal income.

Ready to start your LLC? Start an LLC Online Now
Sole Proprietorship in Georgia


Related articles

Difference in Business License & Registering a Business

Starting a business can be complicated. In addition to hiring employees, finding a location and establishing clientele, new business owners must also ensure they properly register with government authorities and obtain all necessary government licenses. Without the proper registration and licensing, a business can face fines and penalties. Registration and licensing requirements vary between states and localities.

How to Form a Sole Proprietorship in Ohio

Many Ohio businesses are formed as sole proprietorships because this type of business is relatively simple to set up, and the individual owner maintains complete control over the management and profits of the business. A sole proprietorship may be formed without any official registration with the state, but there may be additional licensing and registration requirements depending on the type of business.

Closing a Sole Proprietorship in Tennessee

The process of closing a sole proprietorship in Tennessee is straightforward, but business owners must follow the procedures carefully to ensure that no business debts or obligations remain unpaid. A sole proprietorship is essentially an alter ego of the business owner, who is personally liable for its debts. In Tennessee, sole proprietorships do not have to register with the state but may be required to register with tax authorities or other local agencies.

LLCs, Corporations, Patents, Attorney Help LLCs

Related articles

Sole Proprietorship Laws in Illinois

For individuals looking to start a business without partners, a sole proprietorship is a common business entity because ...

Setting Up a Sole Proprietorship in Texas

One of the first decisions you must make when starting your own business is to choose which business form you want to ...

The Requirements of a Sole Proprietor in Pennsylvania

Sole proprietorships are common business entities because they are simple to set up, and have relatively few filing ...

How to Start a Sole Proprietorship in Maryland

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

Browse by category
Ready to Begin? GET STARTED