LLC Statutes in Illinois

By Joe Stone

In 1997, the Illinois Limited Liability Company Act was enacted and established the governing LLC statutes in Illinois, cited as 85 Illinois Compiled Statutes (ILCS) 180. The act authorized the formation of LLCs as new business structures that are designed to give business owners the advantages of a corporation -- limited liability -- and a partnership -- flexibility in management and pass-through taxation. In August 2005, the act was amended to authorize a new type of LLC called a "series LLC" and amended again in 2010 to provide for a new type of LLC called a "low-profit LLC.”

Domestic LLC

The act authorizes Illinois business owners to form a separate legal entity called a domestic limited liability. The act specifies that a new Illinois LLC comes into existence after filing articles of organization with the secretary of state. The articles must include certain minimum information such as a name for the LLC that includes “limited liability company” or the abbreviation "LLC," the LLC’s principal address, the name and address of the LLC’s organizer and registered agent for service of process, a date of dissolution for the LLC or a statement that it is perpetual until voluntarily dissolved, and a statement whether the LLC will be managed by a single manager, more than one manager or all the members. The articles of organization are filed with the secretary of state’s office, which also provides an optional fill-in-the-blank form for use.

LLC Organization

Even though filing the articles of organization satisfies the basic requirement to form an LLC, a further step is typically taken to address how the LLC shall operate and the relationship among the members. This is done through preparation of an operating agreement. If the members choose not to prepare an operating agreement, then the default provision of the Illinois LLC statutes will govern the affairs of the LLC, which are set forth at 805 ILCS 180/15-5. Although multi-member LLCs can have a written or oral operating agreement, single member LLCs must put the agreement in writing.

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Series LLC

Illinois is one of only eight states that amended its LLC statutes to provide for a series LLC. This type of LLC is authorized to create within its structure separate series or cells, each with its own members, interests and liability. A series LLC would typically be created for a real estate business that owns a number of rental properties. Within the LLC, a separate series could be established for each property, which would provide for a separation of liabilities and obligations from each property, as well as differing members.

Low-Profit LLC

Illinois is only the fifth state authorizing the formation of low-profit LLCs, also referred to as an L3Cs. A low-profit LLC is designed to combine certain aspects of a for-profit and nonprofit business. It can only operate for charitable or educational purposes and is designed to use both philanthropic and private investment.

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Florida LLC Laws

Florida enacted its first LLC laws in 1982 and they were restated in new legislation passed in 1999, known as the Florida Limited Liability Company Act. The restated laws were in response to then-recent changes in federal and state tax laws. The act provides for the formation of domestic LLCs and professional service LLCs, as well as registration of LLCs formed outside of Florida, called foreign LLCs. The Florida Department of State oversees enforcement of the act and provides online services and information to facilitate the compliance of business owners. Owners of an LLC are known as members.

How to Relocate an LLC to North Carolina

Relocating your LLC to North Carolina can be done in several ways. North Carolina law allows an out-of-state LLC, also called a foreign LLC, to register to do business in North Carolina while keeping the LLC active in the state where it was formed. The law also permits the foreign LLC to convert to a North Carolina LLC, if it will cease to be active in its state of formation. You can also dissolve your foreign LLC and reorganize it as a new North Carolina LLC.

What Is the Difference Between a Series LLC & a Restricted LLC?

The relative newness of the limited liability company business structure has allowed some states to create innovative types of LLCs that offer unique business options and special tax benefits. The series LLC and restricted LLC are among these innovations. LLCs in general are formed under state law and combine the tax benefits of a partnership with the limited liability of a corporation. Each state has its own LLC statute that contains similar but not identical provisions.

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