Forming an LLC in Illinois

An LLC is a hybrid business structure that combines the benefits of limited liability with the ease of a partnership. The entity itself is not taxed. Instead, the profits or losses are passed through to the members of the LLC. These profits and losses are then reported on the members' individual tax return each year. There are several standards that need to be met when forming such a company.

First, the company must have a different name than any other LLC already established in the state. The company must also have the words limited liability company or some other wording in its name to indicate that it is an LLC. Finally, companies doing business as an LLC may not be able to use certain words in their name depending on state law.

There must generally be an operating agreement that governs how the company will be run. Such an agreement will often determine the size of each member's interest in the company as well as their rights and responsibilities. Even if the operating agreement is not required, it is still a good idea to have one if a company is going to have multiple members. In addition to having an operating agreement, the LLC must file Articles of Organization with the state prior to beginning operations.

Prior to the formal formation of a company, it may be worthwhile to consider how it will be structured. This may ensure that all owners have limited liability and other rights that will protect them and the company from a financial perspective. Small businesses that need assistance during their formative period may wish to talk to an attorney. An attorney may be able to draw up legal documents that may be used to resolve some or all disputes in the future.

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