LLC Statutes in Illinois

By Jennifer Kiesewetter, J.D.

LLC Statutes in Illinois

By Jennifer Kiesewetter, J.D.

The Illinois Limited Liability Company Act (Act), initially enacted in 1993, governs limited liability companies (LLCs), which allow for the tax advantages of a partnership with limited personal liability of corporations. One or more persons, including trusts, estates, and other business entities, may form an LLC by filing Articles of Organization (Form LLC-5.5) with the Illinois Secretary of State.

Coworkers collaborating around a table

The Act has been amended allowing for series LLCs and low-profit LLCs. Additionally, the Act was overhauled in 2017, impacting both established LLCs and newly formed LLCs.

General LLC Statutes

Under the Act, a business owner can organize a domestic LLC entity, which means the LLC forms under Illinois state laws as opposed to other state laws. The LLC must have a name that is distinguishable from other registered Illinois companies. Owners, called members, can check with the Illinois Secretary of State to see if their desired name is available.

The Act also requires an LLC to appoint an Illinois registered agent. The registered agent receives important papers on behalf of the LLC and transmits these documents between the company and the Secretary of State.

The LLC must file Form LLC-5.5, which states the names and business addresses of all managers and members of the LLC, and pay a filing fee. After the first year of formation, the State of Illinois requires the LLC to submit an annual report to maintain its existence on its anniversary date.

Finally, an LLC should draft an operating agreement to govern the management of the LLC. If the LLC doesn't implement an operating agreement, the Act governs the LLC.

Series and Low-Profit LLCs

In August 2005, the Act was amended to allow for series LLCs. A series LLC consists of one umbrella LLC with one or more subsidiary-type LLCs, called series. Each series has its own members, business functions, assets, and liability. This structure offers personal liability as regular LLCs do in addition to protecting the series from the debts and lawsuits of the other series. Further, series LLCs are also taxed as partnerships.

In January 2010, the Act was amended again to allow for low-profit LLCs (L3Cs). The L3C is another variation on the regular LLC. It is only available to for-profit businesses whose primary goal is socially beneficial, such as for charitable or educational purposes. An L3C combines the benefits of an LLC with those of a nonprofit organization by offering flexible ownership structure, the tax benefits of an LLC, and the benefits of limited liability without being bound by nonprofit organizational regulations.

2017 Amendments to the Act

On July 1, 2017, the Act was significantly overhauled, affecting established and newly formed LLCs. These amendments bring the Act in closer conformity with the Revised Uniform Limited Liability Company Act, which many other states have adopted.

Here is a nonexhaustive list of some of the extensive changes:

  • All LLCs are member-managed unless otherwise designated.
  • The Act recognizes oral and implied operating agreements.
  • Operating agreements may alter or eliminate specific fiduciary duties.
  • The LLC may limit the authority of members or managers by filing a Statement of Authority with the Illinois Secretary of State.
  • Members are not automatically agents of the LLC.
  • The process for an LLC's dissolution has changed.

Whether you're initially forming an LLC or making changes to your business, the consequences of not thinking through the implications of the law could negatively impact your business. For more assistance, you may want to hire an online service provider or attorney. An online service provider or Illinois-licensed business attorney can help you understand your options under Illinois law.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.