The process outlined below is specific to Illinois (actually, specific to Cook County Illinois) but should be fairly similar state-to-state. I documented the process as I went along and rather than keeping it filed away on my computer, I thought that I would share it on Gather. I've included detailed instructions and links to all of the online websites and documents that you would need to use. Incorporating yourself can save thousands of dollars in attorneys fees and provides a great sense of accomplishment.
The key steps to incorporating in Illinois are as follows:
- Select a name for your company
- File your Articles of Incorporation with the state (69 W. Washington Street, Chicago)
- File with the county (118 N. Clark Street, Chicago)
- File and receive your Employer Identification Number (IRS Form SS-4)
- Register with Illinois Department of Revenue (Form REG-1)
- Make election to be an S corporation (IRS Form 2553)
Step 1: Select a name for your company
The name you choose must be substantially different from other companies that are already registered in Illinois. You can search the Real Time Corporate/LLC Database by going to the following web page and clicking on the link at the bottom. You can also call the Department of Business Services in Springfield to have them check on your proposed name.
Real time corporate/LLC Information Search: http://cdsprod.ilsos.net/corp.html
Department of Business Services (Springfield): 217-782-9520
Step 2: File Articles of Incorporation with the state
Fill out form BCA 2.10. You will then need to have two bank checks made out to "Secretary of State". One should be made out for $175, which will cover the filing of the incorporation papers, and the other should be made out for $100, which will expedite the process and allow you to pick up the completed forms in 24 hours. Take completed BCA 2.10 and the two checks to 69 W. Washington Street, Chicago, Room 1240.
BCA 2.10 Form: http://www.cyberdriveillinois.com/publications/pdf_publications/bca210.pdf
Step 3: File Articles of Incorporation with the county
After you pick up the completed paperwork from 69 W. Washington Street, walk across the street to 118 N. Clark Street. Just inside the front door to the right is the Eugene Moore Recorder of Deeds office. You will give them the original copy of the Articles of Incorporation and a check for $26.50. They will eventually send the originals back to you, but in the meantime there is a copier downstairs where you can make a copy first. Take the first floor escalator down to the lower level and follow the hallway through a pair of glass doors. Up ahead on the left will be the Business Center where copies are 50 cents. You need to knock on the door to get entry and they will make the copies for you.
Step 4: Get Employer Identification Number (EIN)
Fill out IRS Form SS-4 and then call the number below to get your EIN. They will ask you to provide answers to the questions listed on the form so it is best to have this filled out before hand. At the end of the call you will be given your EIN number, which is in the format xx-xxxxxxx. It is recommended that you sign the completed form and keep it for your records.
SS-4 Instructions: http://www.irs.gov/pub/irs-pdf/iss4.pdf
SS-4 Form: http://www.irs.gov/pub/irs-pdf/fss4.pdf
Phone Number: 1-800-829-4933
Step 5: Register with the Illinois Department of Revenue
Registering with the Illinois Department of Revenue can be done online or by submitting Form REG-1. You will be issued an Illinois Business Tax Number (IBT), which is similar to the Federal EIN. When registering online you will need to obtain a digital identity first which will be used to sign your online registration form. The website will lead you through the process.
Register online: https://pki.revenue.state.il.us/app/ibr/
Register using Form REG-1: http://www.revenue.state.il.us/taxforms/reg/reg1.pdf
Step 6: Make election to be an S corporation
By electing to be an S corporation the profits of your company flow into your personal tax return and are only taxed once. Without filling out this form you remain a C corporation which is taxed twice - once at the corporate level, and then distributions are taxed again at the personal level.
Fill out IRS Form 2553 and fax it to the IRS Midwest Division in Columbus, Ohio. In 30 days, you can call 859-669-5748 or fax 859-669-5748 to find out the status of your election.
Form 2553 Instructions: http://www.revenue.state.il.us/taxforms/reg/reg1.pdf
Form 2553: http://www.irs.gov/pub/irs-pdf/f2553.pdf
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Comments: 26
Thanks for the concise inormation. It sure made it easier than going through all of the hoops on the SOS 's website.
This information is invaluable I'm getting started right now.
Thanks,
Andre Dixon
David
http://www.cyberdriveillinois.com/publications/pdf_publications/c17919.pdf
it gives you a overview of the form BCA 2.10 used in step 2.
Oh well off to set up a corporation today!
Is there some advantage to incorporating in Illinois rather than Massachusetts?
You can incorporate almost anywhere without needing to have a physical presence there. But you did need to have a mailing address within the state. People can hire an attorney in the state to handle that.
I was filling out the 2553 and part III (Qualified Subchapter S Trust) has me confused. Do I need to fill this out? I am the only stock holder of the company. I do not have any money in a trust.
It's actually been a long time since I set up my consulting business but ended up closing it down last year when I took a job at Gather.
Good luck with your business.
David, Thank you VERY much for this tutorial, I was looking at having a lawyer do it for $620, and that's without the S-corp stuff or filing the rest of the stuff, that was just for him to register the corp name to me...oh and that "corporate kit and seal"...what ever that is. I really appreciate the time you took, I hope you know it doesn't go unappreciated. A lot of people were telling me it can't be done without a lawyer, or that it's better to do it with a lawyer. I was feeling over whelmed with the thought of it. Thanks again for laying it out.
I bought a kit that included a standard set of bylaws. It's been quite a while so I can't remember all the specifics but I never used an attorney. I just did a lot of research online and bought some kits where I could.
David
Hope that helps.
Also, I received a pamphlet from the US Treasury Dept. to sign up for Electronic Federal Tax Payment System (EFTPS). I assume they sent me this before I elected to become an S Corporation. From what I understand S Corporations do not pay Federal Taxes…correct??
I'm actually a CPA about to graduate from law school, and know alot of this stuff just kind of routinely. But, out of laziness, I was putting off everything I needed to do and the info I needed to gather up (i.e., where to file, how much, and so on,...) This is a great little list. You are awesome!!
As far as you Wonderwoman, please understand I am not offering you any legal advice and no attorney-client privilege is being formed here. But, I would suggest just calling the IRS number and ask them how you can get that S-Corp status. It shouldn't be a big deal. As far as taxes are concerned, you are right, S corporations don't pay corporate taxes. In fact, the net earnings of the company flow through to your personal/individual 1040 through a schedule.
However, they will be required to pay other forms of tax like sales tax. Or, if you have employees, for example, the S-Corp is required to withhold federal income taxes; and you need to pay this to the government based on an IRS schedule that is a little complicated for non-accountants (and even accountants). This would be one reason to use the EFTPS to send the government their cash. You should contact an accountant and ask them the best way to do this because if you withhold the government's money (which legally you are required to do) and fail to pass it through to it (the Gov), you can be charged significant fees (and if fraudulent--possibly criminal sanctions).
As a matter of knowledge gathering, just ask the IRS people at that general number (ask to be forwarded to the business part of the IRS) about what you can use the EEFTPS for, and they should give you a nice little list. Write it down. Remember, make sure you pay the Gov their money when it is due. The Gov doesn't like losing its money.
Hope this is helpful.....
-Mike "The Hammer" Green
As far as Bylaws go, Articles of Incorporation, and any other forms of documentation (minutes, and so on...) remember, the general forms are nice. But, the reason you pay lawyers is to tailor those general forms to your business. Many lawyers start with these general forms and then modify them. So, although you can get these forms by any general search and pay some fee, realize they are probably not perfectly tailored for your company. This could leave you potentially vulnerable down the line. So, if your biz makes some good money, I would suggest having your lawyer take a look at it and make sure its not missing anything--or has a provision in there that you could eliminate to reduce your risk exposure.
That said, hey, if you can't afford the legal expense, I get it. Do what you gotta do. Just know, though, that lawyers will give you protection for unforeseen issues that you can't predict because of ignorance of the law. That's where they are really valuable. So, get the general forms and do what you gotta do--but you're probably at greater exposure. It's a cost/benefit thing. If you make a few bucks, maybe you can absorb a little more cost (legal) to reduce your risk (reward).
Anyway...just some food for thought that I think y'all might want to consider.....
Click on the Corp Articles of Incorporation link at the top in the middle. The total cost to file online is $281.25 as the state charges $6.25 for a credit card transaction fee.