What Are the Requirements for an LLP?
The state of Illinois has a number of requirements for companies seeking to operate as LLPs.
It is necessary to obtain a Federal Employer Identification Number (FEIN) for your company before filing the necessary paperwork with the Illinois Secretary of State, which is typically done after registering an LLP.
The name of an LLP in Illinois must include “Registered Limited Liability Partnership,” “Limited Liability Partnership,” “RLLP,” “LLP,” “LLP,” or “RLLP.”.
The company must also select a registered agent to receive official documents. An Illinois-based company or individual can act as the registered agent as long as they have a street address in the state.
To become an LLP, a company will also need to fill out and file certain paperwork with the Office of the Illinois Secretary of State’s Limited Liability Partnership Section.
What Paperwork Must I Have to Form an LLP?
To file the required paperwork, you must print the right form, which can be found on the Illinois Secretary of State website, and mail it in with a duplicate to the Limited Liability Partnership Section of the Office of the Illinois Secretary of State. It is mandatory to fill out a Statement of Qualification for an LP being formed in Illinois, which is a domestic LLP.
You must include the company’s FEIN, name, and street address for the chief executive officer on this form.
You must also include:
- The name and address of the registered agent.
- The total number of partners.
- The names and addresses of the partners.
Briefly describe the type of business the LLP will engage in and when it will become active. You must also calculate the filing fee, which is $100 per partner up to $5,000. At least two partners need to sign the form.
An LLP that was originally established abroad will need to fill out a Statement of Foreign Qualification if it is a foreign LLP. The information required on this form is similar to that on a Statement of Qualification. However, the form also asks where the LLP was founded.
You must also provide the name of the LLP that will be operating in Illinois if its current name does not meet Illinois’ naming requirements. A Statement of Foreign Qualification does not require a calculation of the filing fee since the fee is a flat rate of $500, unlike the Statement of Qualification.
Along with filing a Statement of Foreign Qualification, a foreign LLP must also file a Certificate of Good Standing from its home state or country.
How to Form an Illinois Limited Liability Partnership (LLP)
Choose a Business Name
LLPs in Illinois should have unique names. The name must include the type of partnership, as mentioned above: “Registered Limited Liability Partnership,” “Limited Liability Partnership,” “RLLP,” “LLP,” “LLP,” or “RLLP.”
For instance, if you decided to name your business “Sherman’s Boutique” as an LLP, you would need to make sure the name “Sherman’s Boutique LLP” isn’t taken by anyone.
Check the Secretary of State’s website to see if potential LLP names are available.
Partnerships in Illinois can also use individual partners’ surnames. The best practice is to choose a name that isn’t too similar to another registered business since both common law and federal trademark laws protect trademarks.
Fill Out an Assumed Business Name Certificate to Register Your Business Name
Once you have selected the name of your partnership and confirmed its availability, you will need to reserve it formally.
In Illinois, if you choose a name other than the surnames of your partners, you must file an Assumed Business Name Certificate with the county clerk of the county where your business is located.
Additionally, you need to publish the partnership name for three consecutive weeks in your local newspaper, and the publisher should provide you with a certificate that you must file with the county clerk. There is a $5 filing fee.
A Partnership Agreement Should Be Drafted and Signed
Even though Illinois law does not require a Partnership Agreement, it’s wise to ensure all partners are on the same page when handling specific situations. A well-formatted Partnership Agreement can help you and your partners choose how to deal with certain scenarios before they occur.
Partnership agreements should include each partner’s contribution to the partnership, the allocation of earnings, losses, and draws, the partners’ authority and management roles, voting rules for decision making, how to admit new partners, bankruptcy, withdrawal, and death of a partner.
If you change your mind about something in these agreements, you can always amend them.
Obtain the Necessary Licenses, Permits, and Zoning Clearances.
It may be necessary for you to obtain specific business or professional licenses, depending on your type of business. Using the Illinois Business Portal provided by the State of Illinois, you can discover a comprehensive database of each occupation that requires a license. Your city and county governments may require building permits and zoning clearances for your business.
Get an Employer Identification Number from the IRS
For tax reporting purposes, every partnership needs an EIN, which is a nine-digit number issued by the Internal Revenue Service. The IRS website allows you to register for an EIN.
Make Sure All the Paperwork Is Completed
If you’re forming a partnership, you’ll need to visit the Illinois Secretary of State website and find the appropriate forms. Then, print off the forms, complete all fields, and mail them to the Illinois Secretary of State.
The Statement of Qualification must include the company’s EIN, name, address, registered agent’s name and address, number of partners, each partner’s name and address, and the date the registration will become effective. You will need to calculate your own filing fee, which is $100 per partner, not exceeding $5,000. This form must be signed by at least two partners.
What Benefits Does Illinois Give to an LLP?
LLP profits are usually taxed by the individual income taxes of each partner. Illinois has a flat tax rate of 3.75%, which is lower than many other states. LLP partners in Illinois pay a lower tax rate than LLP partners in other states.
What Are the Disadvantages of Illinois LLPs?
Every year, Illinois requires LLPs to file a renewal statement. In addition to the renewal statement, an LLP must pay a filing fee higher than most states’ annual filing fee. The filing fee for foreign LLPs is $300, whereas the filing fee for domestic LLPs is calculated similarly to the initial filing fee, with each partner paying $100.
Should I Hire a Business Attorney?
An Illinois corporate lawyer can provide you with critical assistance when setting up an LLP. It is important to consult with a lawyer before creating an LLP to ensure you are following all of the state’s requirements.
