Illinois has five main business-entity laws, and they differ on who may own the business, what is filed and who is personally exposed. The Secretary of State handles most filings, the Illinois Department of Financial and Professional Regulation (IDFPR) or another regulating authority registers medical and professional corporations, and county clerks handle partnership names. Read the tables with the Sign-Pay-Shield Comparison: what you sign, pay and get.
Source: Illinois Secretary of State fee tables and statutes
Formation and owners
| Entity | How it forms | Who may own |
|---|---|---|
| LLC | Articles of organization with the Secretary of State, $150 | Any persons. An IDFPR-licensed profession needs a professional LLC |
| Corporation | Articles of incorporation with the Secretary of State, $150, plus an initial franchise tax | Any shareholders; S election limits are federal |
| General partnership | Forms by conduct; no state filing, but an assumed business name needs a county clerk certificate. An LLP files at $100 per partner, minimum $200 | Two or more persons; by default a new partner needs every partner's consent |
| Medical corporation | Articles ($150, not online), then IDFPR registration ($50 per location) | Only people licensed under the Medical Practice Act; no outside owners or proxies |
| Professional service corporation | Articles ($150, not online), then registration with the profession's regulating authority ($50 per location) | Only individuals licensed in the same service or a listed related combination |
Liability, yearly steps and Illinois tax
| Entity | Personal liability | Yearly state steps | Illinois tax on profit, 2026 |
|---|---|---|---|
| LLC | Not liable just for being a member or manager, but liable for own wrongful acts | Annual report, $75, in the 60 days before the anniversary month | 1.5% replacement tax if taxed as a partnership or S corporation, owners also taxed; 7% plus 2.5% as a C corporation |
| Corporation | A shareholder's only duty on the shares is paying their issue price; directors can be liable for unlawful payouts | Annual report, $75, plus franchise tax of 0.1% of Illinois paid-in capital, first $10,000 of tax exempt since 2025 | C corporation 7% plus 2.5%; S corporation 1.5% replacement tax |
| General partnership | Each general partner is personally liable for partnership debts; an LLP shields partners from debts incurred while it is an LLP | None; an LLP renews yearly at $100 per partner, minimum $200 | 1.5% replacement tax; partners pay income tax on their shares |
| Medical corporation | Physician-patient liability rules stay in place | Corporation filings plus IDFPR renewal, $40 | Same as a corporation |
| Professional service corporation | Each professional stays liable for own and supervised acts | Corporation filings plus IDFPR renewal, $40 | Same as a corporation |
Federal tax follows the election, not the Illinois label: see entity selection and LLC tax classification.
Frequently asked questions
Does an Illinois LLC pay franchise tax?
No. Franchise tax is a corporation tax under the Business Corporation Act. An LLC pays the $75 annual report fee. A corporation with $10,000,000 or less of Illinois paid-in capital owes only that $75 fee, since the first $10,000 of annual franchise tax is exempt.
Can a doctor or other licensed professional use a plain LLC?
Under the LLC Act, a profession licensed by IDFPR needs a professional LLC. Physicians can also use a medical corporation. CPA firms have their own firm-license rules under the Public Accounting Act, and lawyers' entities register with the Illinois Supreme Court.
What happens if an annual report is missed?
An LLC faces a $100 penalty, and dissolution if the default is not cured within 120 days after the notice of delinquency. A corporation faces dissolution if not cured within 90 days after its notice. Reinstatement costs $200 for either. The Secretary of State's LLC guide words the timeline differently, so read your notice.
Official sources
- Illinois Secretary of State: LLC publications and fees
- Illinois Secretary of State: corporation publications and fees
- Illinois Secretary of State: LLP publications and fees
- IDFPR: Medical Corporation, Registered
- IRS: Limited Liability Company
This page is a plain-language summary. The official source controls if there is any difference.