If you’ve been working as a freelancer or small business in Illinois, you might not realize you’re required to let the state know you’re doing business there. Everyone who does business in Illinois – from a giant corporation to an at-home Business-of-One – needs to register their business with the state’s Department of Revenue for tax purposes.
That doesn’t necessarily mean you have to set up a complex legal business structure. And, depending on what kind of work you do, it doesn’t necessarily mean you need permits to be allowed to offer your services. But you do have to go through the proper channels to make sure your business is squared away with the state.
Don’t worry — this process isn’t as tough as it sounds. In this guide, we’ll cover everything you need to know about how to get a business license in Illinois, including what it is, who needs one, how much it costs and where to get it.
Do You Need a Business License in Illinois?
The state of Illinois doesn’t require or issue a statewide business operating license – a license that simply permits you to do business in the state. Anyone can start and operate a business without a general license.
But you may need one or both of these types of licenses:
- Local business operating license from your city or county (and anywhere you operate a business), depending on local regulations.
- Certificate of Registration or License (a.k.a. seller’s permit or sales tax permit), either of which gets you a tax I.D. number for the state, tracks the types of taxes you owe, and lets you collect sales tax from customers, if applicable.
Is an LLC a business license?
An LLC and a business license aren’t the same thing, but both are usually part of setting up your new business in a state.
An LLC (limited liability company) is a type of legal business structure that determines financial and legal liabilities. An LLC is a legal entity that’s separate and distinct from the owner or owners. So it protects your personal assets from business liabilities like debt or lawsuits. The structure also lets you change how you’re taxed on business income.LLCs are not considered individuals legally – C Corps are.
“Business license” is a general term that refers to any licenses, permits, or certifications required to sell goods or services. Different types of licenses are required and issued by federal, state, and local government agencies that regulate business activities and services.
Which business licenses your business needs in the state of Illinois depends on where you operate and what kind of business you’re in.
Who needs a seller’s permit in Illinois?
Every business that operates in Illinois needs a Certificate of Registration or License, which some refer to as a seller’s permit. This registration with the Department of Revenue gets you a tax I.D. number and tracks what kinds of taxes you owe the state.
A Certificate of Registration or License is required regardless of what kind of business you do or whether you operate online or in person. For example, you need an Illinois seller’s permit to sell on Etsy or to run a freelance business based in Illinois.
How to apply for a business license in Illinois
Follow these steps to get the business licenses and permits you need to operate your business in the state of Illinois.
1. Form an LLC
Not every business is required to be organized as an LLC, but it has potential legal and financial benefits for your business. If you prefer to operate as a sole proprietorship, you can do that and still get the Illinois business licenses you need. And, yes, you’re still required to complete tax registration and apply for proper licenses and permits, even if you operate as sole proprietor. If you’re going to form an LLC, do that first, then take the steps to get business licenses in the company’s name.
Follow these steps to form an LLC in Illinois and receive your Certificate of Registration:
- Choose an LLC name. Choose your LLC name before going to register, because this will be one of the first questions you have to answer. It has to include “LLC,” “Limited Liability Co.” or something similar that indicates the company’s legal status, and it can’t be used by any other business in Illinois. Search through the Office of the Illinois of Secretary of State to see whether another business is already using the name you want.
- Choose a Registered Agent. LLC registration requires you to list a Registered Agent, the person or company that can accept legal documents on behalf of your company. This can be you – which is common for a Business-of-One – or it can be anyone else you choose.
- File your Articles of Organization. Articles of Organization explain simply what your company does and how it’s organized. You can file online through the Illinois Secretary of State and get your Certificate of Registration and tax I.D. number online within two weeks.
- Get a federal EIN. Getting an Employer I.D. Number from the IRS is free and easy. Once the Illinois Secretary of State accepts your LLC filing and your business is registered, just go online to the IRS EIN Assistant.
Tip: Once you’ve registered your LLC, look into whether you should apply to be an S Corp in Illinois.
2. Apply for a Certificate of Registration or License
If you don’t register an LLC with the state, you’ll have to individually register your business with the Illinois Department of Revenue. The easiest way to register is through MyTax Illinois, which lets you enter all of your information online and gets you a Certificate of Registration or License within two business days.
Alternatively, you can register through the mail with Form REG-1, the Illinois business license application, which will take six to eight weeks to process.
To register, you’ll provide:
- Federal EIN or your personal Social Security number
- Business name and any DBA (doing business as) or trade names
- Business address
- Business type (proprietorship, LLC or corporation)
- Your Illinois state I.D. or driver’s license number
- Name, email and phone number for you or another contact person
- Name, address and Social Security number for each business owner
- Description of business activities
The State of Illinois Department of Financial and Professional Regulation (IDFPR) can help you find out which business licenses your type of business needs, plus where to get them.
3. Determine which local licenses you need
Each county or municipality in Illinois has its own licensing requirements and processes — but most do require an operating license or permit for all businesses, including one-person, home-based businesses.
Before you start operating, you might also need other permits, like building permits, health license permits, and others. The process and requirements vary by city, but for most you can apply online.
To find which permits you need:
- If you do business within a city or town’s limits, check with the municipal and county governments.
- If you operate in an unincorporated area, check with the county government.
- If you have bases of operations (like a store or office) in more than one city or county, check with each one for their requirements.
Note that if you work from home, your business location is generally your home address, unless you’ve adopted a unique address for the business, like with a coworking space or other mailing address service.
4. Apply for federal licenses and tax treatment (as necessary)
Like the state of Illinois, the federal government doesn’t require a nationwide, general business operating license. But some types of businesses are regulated by one or more federal agencies, and those might require a federal license or permit. You might need a federal license if you operate in these areas:
- Agriculture
- Alcoholic beverages
- Aviation
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics
Check out the federal agency in charge of the activities relevant to your business to find out which licenses you need to run your business. You can find a list of all federally licensed activities, along with which agencies to go to for more information, through the U.S. Small Business Administration.
How much does it cost to get a business license in Illinois?
There’s no fee to receive a Certificate of Registration and activate your MyTax Illinois account. But if you plan to register an LLC, you’ll pay a $150 fee to file your Articles of Organization, plus $75 every year to file an annual report.
Industry-specific licenses and permits from local, state and federal governments will likely come with application or filing fees you have to pay when you first apply and each time you have to renew (usually every one to three years, depending on the license).
Where to register your business in Illinois
Bookmark these resources to help you through the process of registering your business in Illinois and keeping up to date with your business licenses and permits.
Illinois business license resources
- Office of the Illinois Secretary of State
- Filing your LLC articles of organization in Illinois
- MyTax Illinois by the Illinois Department of Revenue
- Apply for an Employer Identification Number (EIN) Online
- City of Chicago business licensing guide
- Illinois local government index
- Illinois business license registration
- State of Illinois Department of FInancial and Professional Regulation
Collective guides to getting a business license
- How to Get a Business License
- Everything You Need to Know about Business Licenses
- Business Entities for Freelancers: Which One Is the Best?
- Started an LLC? These Are the Most Important Things to Do First
Illinois business license renewal
According to the Illinois Department of Revenue, your Illinois business licenses will expire every one to three years, depending on your industry and the type of licenses you have.
The Certificate of Registration for retailers expires every year and is automatically renewed as long as your tax account is current. If you distribute tobacco products, your license expires every year, and you have to apply to renew it at least 30 days before expiration.
Certificates for other wholesalers, distributors and manufacturers expire every three years and have to be renewed manually. Some types of Illinois business licenses don’t expire. Check the fine print on your license to make sure you know whether you’ll need to renew.
TL;DR: Get your Illinois business license
Like in most states, you don’t need a statewide license to operate your business in Illinois. But you probably need a local business license, and you definitely need to register your business for tax purposes and receive a Certificate of Registration or License from the Department of Revenue.
Getting the Illinois business licenses you need is fairly simple. You can register for your state Certificate of Registration or License online for free, find out which local licenses you need through your city or county government.
