You’ve done the dreaming of your new business idea. Now, it’s time to execute it. You already have the business mindset and attitude, but do you have the proper clearance with the state? Illinois may require you have one or more business licenses or permits. Every small business start-up involves registration; having a business license and insurance is the first and most important step. Plenty of questions about getting the proper licensing arise, such as how much does it cost? How many licenses or certifications are required in your line of business? How many state or federal organizations and regulations do you need to be aware of? The short answer is that it depends on the business you are setting up and your location in Illinois. At the same time, there are several terms to be familiar with when talking about Illinois business licenses.
What does a Business License in Illinois Look Like And Certifies?
When starting up a business in Illinois, let’s look at the very first step. It isn’t to get your business license but to first receive your certificate of registration or business authorization in Illinois from the Secretary of State. Every business, regardless of practice or service, needs this registration as it certifies that they can do business and file taxes for such. Now, an Illinois business license is what you’ll require to operate a certain business or skill.
The business license itself is specific to the occupation and places you in the driver’s seat for all your business’ work and decisions. It’s also required to work with customers in most industries and show them that you are a trusted professional offering high-quality work. They may go by different names or titles depending on the type of business you are in, but they all work consistently as a license. We’ll be getting into the specific types of business that would require a license later on. However, the foremost authority on business licenses in Illinois would be its First Stop Business Information Center which is reachable by their number, 800-252-2923, or their website.
What Are The Different Resources For Starting a Business in Illinois?
There is one more sort of prerequisite to discuss before diving into what makes an Illinois business license tick. And, that is the numerous organizations and services in Illinois whose job it is to assist business owners and those looking to become one. Naturally, there’s the Secretary of State (SOS), which you may already be familiar with as you’ve had to file a business registration with them.
Other more specialized business services and organizations include:
- Illinois Department of Commerce and Economic Opportunity (IDOC) - The IDOC website has, by far, the most amount of information and resources on starting and managing a business in Illinois. Everything from financing to marketing is covered along with the legal requirements to operate smoothly.
- Illinois Small Business Development Center (SBDC) - The SBDC helps just as much as the IDOC, except they work part of a larger network and sometimes even with the IDOC itself. They specialize in one-on-one business consulting and assistance.
- U.S Small Business Administration (SBA) - The SBA is a nationwide government agency founded by Dwight D. Eisenhower to support small businesses. They offer funding programs, loans, and disaster assistance.
- Illinois Department of Financial and Professional Regulation (IDFPR) - The IDFPR regulates all professions and occupations in the state. They are especially helpful for researching the license requirements of your desired business. Their website offers a list of all their regulated occupations and the clearance they need.
How to Get a Business License in Illinois
With a general surface knowledge, you’re now ready to read about the process of getting a business license in the state of Illinois. The previously mentioned organizations and agencies are always ready to assist you at any time during this process.
Here’s a step-by-step guide to procuring a business license:
- Apply for business authorization - Before a business license can be issued, you’ll have to complete a registration with the Illinois Department of Revenue. It can be completed online at the MyTax Illinois website or by mail to the closest Department of Revenue office.
- Look at occupation-specific licenses and certifications - This is where the process starts to vary based on your business industry. Even getting a business license may not be necessary for your business if it falls under certain occupations. The IDFPR has a list on its website of all these regulated occupations.
- Heed the local business requirements - Aside from state licenses, there are federal and local as well. The five largest cities in Illinois, Chicago, Aurora, Naperville, Joliet, and Rockford, may have local licenses their businesses must have.
- Complete any prerequisites - Some occupations or industries require additional qualifications like hairstyling, and home inspectors may require occupation exams or a certain level of education.
- Submit the business license application - Submitting the business application is straightforward. You’ll need to include personal information, your Illinois business authorization, and a certificate of business insurance if you have it (that can come later).
How Much Do Business Licenses Cost in Illinois?
Start-up costs vary from company to company. License fees and others often make up a part of that cost. A specific and well-known example is that any cigarette distributor must pay a $250 fee to register with the IDPFR. A couple more examples of license and start-up fees would be $125 for roofers, $75 for architects, $500 for locksmiths, and $2,500 for real estate companies. Usually, you’ll be made aware of the license fee(s) while you are preparing your application. However, for most cases, the license fees average around $250.
What Kind of Insurance Do Business Owners Need?
A bonus for every license application is providing proof of business insurance. Like with auto insurance policies, there is general liability coverage for businesses that protect you and your company from third-party damages that occur on your premises, like accidents. Having insurance may be required for your license to be issued along with certain coverage limits.
A contractor, depending on their area, would need to carry anywhere from $500,000 to $1,000,000 or perhaps more. General liability for businesses averages around $53 a month, with worker’s compensation at $86 and an owner’s policy at $84. A general liability $1,000,000 policy would cost anywhere from $300 to $1,000 in a year. Even when business coverage isn’t required, many owners still opt to carry insurance to be protected from costly lawsuits.
How to File Additional Records For Your Small Company
A business can be labeled as a corporation or LLC. Typically, these businesses have to file additional information with the Secretary of State (SOS). Their website has these forms at the ready. As previously mentioned, the IDFPR regulates select occupations. Additional documents would have to be filed with them in addition to the SOS to receive a license. The SOS is the organization that handles registering business names and trademarks as well. You should also be vigilant of regulatory licenses and permits depending on your business. An example would be getting an environmental permit for a certain business through the Illinois Environmental Protection Agency and the Department of Labor. Chicago is known to have its own unique licensing and record requirements. You can look more into what your specific business requires by consulting the IDFPR website. You always should know the number of licenses you need to get.
How to Register a Business Name And Trademark
Creating a name for your business adds a unique identity to it, and customers are drawn to uniqueness. Naturally, a name or trademark must be registered with the state. Business names are officially known as DBA or trade names and must register with the SOS while the owner(s) register with the county clerk. There may be some associated fees when registering with the SOS. Business names can be changed after registration or during the registration process by filing a BCA-4.15/4.20 form.
Trademarks, or service marks as they are known, have a registration process as well. A trademark is different from a business name since they legally have to make it distinguishable from other businesses in the same occupation. The SOS also handles trademark registrations and register hundreds each day. More information on trademark requirements can be found on its website.
How to Incorporate in Illinois
Incorporation is the process of constituting a legal entity that separates the company’s assets from its owners or any investors. The process is similar to starting up a business and getting a license but with a few more measures.
Incorporating a company in Illinois is done by:
- Picking a business name - As is customary for all businesses, you should first select an assumed name. The name typically includes the words Co., Corp., or Limited, along with several more. Keep in mind; there may be certain words like Engineer or Banker that you may not be able to use.
- File with the Secretary of State - Articles of incorporation that include the corporate directors, stock, company information, and agents should be submitted to the SOS.
- Apply for an EIN - An EIN, employer identification number, can be applied to on the federal website, incorporate.com.
- Pay fees - There are incorporation fees like a franchise tax of $1.50 per $1,000 on paid-in capital for the minimum tax of $25. There is also an incorporation fee of $125.00.
- Complete Application - You complete the REG-1 business registration application with the Department of Revenue. You’ll then be given a certificate of registration that must be displayed in the open. Now, you can hire employees.
- File an annual report - On the first day of the month after the first business year, an annual report must be filed with the SOS with a $75 filing fee. A cumulative report will also need to be filed if the corporation faces any change in shares or capital paid-in.
What Else is There to Know About Starting a Small Business?
Starting a business or company is a lot to take in, as you’ve probably gathered from this post. Starting a small business where you are the sole proprietor has fewer requirements. If you’re the only proprietor, then there’s no required filing to operate. All you would have to do is submit a profit and losses report on your tax return. Other forms include a 1040 form, a schedule C, and federal and state income tax payments. If the small business is a collaboration between more than one partner, the management becomes a shared responsibility. Many small business owners operate a limited liability (LLC) company to start off since it protects them from liabilities or debts. As we previously discussed, there’s always the possibility of incorporating. Whichever way you choose to start up, there are several legal and strategic resources.