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You'll want to make sure your business is legal. The first step is to decide what kind of business entity, or legal structure, is best for you. This will impact how the business is taxed as well as your level of liability in the business. The U.S. Small Business Administration provides a comparison of each option to help you determine the best structure for your business.
Set up your legal structure with the Illinois Secretary of State's Office.
Employers with employees, business partnerships, and corporations must obtain an Employer Identification Number (EIN) from the U.S. Internal Revenue Service. Even if you are a sole proprietor and don’t have employees, it is still good practice to obtain an EIN. You may need it for some government forms, banks often require it for loans and it can be used instead of your personal Social Security Number to protect against identify theft.
Apply for an EIN.
Starting a nonprofit organization? One of the basic differences between non-profits and for-profits is who controls it. A non-profit will generally require a governing body of volunteer directors who will have broad oversight of the paid staff and the power to hire and fire them. Successfully creating a non-profit is much more difficult than a for-profit because the organizers must bring together a lot of people.
Here is a helpful document about how to obtain non-profit status from the Internal Revenue Service.
Three easy steps to starting a business:
When the business name is different from the owner's full legal name, the "Assumed Name Act" requires you to register the business name with your county clerk's office, regardless of the structure of the business.
Find Your County Clerk.
Internal Revenue Service (IRS): The IRS provides tax information and useful tools, such as a checklist for a new business and selecting a business structure. Learn about operating a business with employees, deductions and credits, record-keeping and accounting methods. Additional resources include the Small Business Tax Calendar, Tax Topics for Businesses, and Frequently Asked Questions.You can access all of of these and more here.
You can obtain most IRS forms for your business online, or you can contact:
Illinois Department Of Revenue (IDOR): In Illinois, most business are required to be registered and/or licensed by the IDOR. If you plan to hire employees, buy or sell products wholesale or retail, or manufacture goods, you must register with the IDOR. You can register online or get more information here, or you can contact:
Local Tax Registration and Requirements: Some municipalities and counties impose their own taxes in addition to the state and federal taxes that most businesses are responsible for. New businesses should contact their local revenue department to determine if additional taxes apply to their business activities. Many communities also restrict advertising, regulate pricing or require zoning permits. Contact your city or county clerk for information on local restrictions.
The Illinois Department of Financial and Professional Regulation (IDFPR): The IDFPR is the main licensing agency for the State of Illinois for most professions and requires specific licences and permits from businesses. Individuals must be licensed prior to conducting business as one of the regulated professions listed by the IDFPR.
You must first obtain an Employer Identification Number or EIN (see above). You can also check out resources from the Illinois Department of Labor. They provide information about worker’s compensation, unemployment, and more.