Business & Work

Business entity

There are several ways to open and run a business in Illinois. This is called your business "entity." 

Sole proprietorship

If you are the only owner of the business, you are a sole proprietor. There is usually no government filing or approval required to operate your business as a sole proprietor, if the business name is the same as the owner's full legal name. Certain businesses might require permits or other approvals. For example, home child care and food services. If the business name is not the owner's full legal name, then the Illinois Assumed Name Act requires the sole proprietor to register with the local county clerk's office for registration under the Assumed Name Act.

In all cases, the sole proprietor must report the profits and losses from the business on your tax return on IRS Form 1040 on a separate sheet called Schedule C. Also, if the business earns a profit, you must pay your federal and state income taxes.

Partnership

If you have a business partner, the business is a partnership. That means that you and your partner share responsibility for running the business and share the profits and losses. Exactly how you want to do this should be spelled out in a partnership agreement.

Learn more about creating a business partnership. 

Limited Liability Company/Limited Partnership/Corporation

Many business owners decide to operate as a limited liability company (LLC), a limited partnership (LP), or to incorporate their businesses. It is not required, but it may be a good idea because operating as an LLC, an LP, or a corporation helps protect you personally from debts and liabilities connected with the business. 

You can create a corporation or LLC even if there is only one owner. If it is a corporation, the owner is called a shareholder. If it is an LLC, the owner is called the LLC member. 

You can create an LP with at least two people who are partners in the LP. The person responsible for managing the affairs of the LP is the general partner. Additional partners in an LP are limited partners.   

Getting help

There are resources and grants available for people looking to start small businesses in Illinois. Use the links below to learn more and get the help you need:

• Business information center
• Cook County Small Business Source 
• Lawyers for the Creative Arts (A pro bono Legal work done for little or no cost legal service organization that helps artists and arts organizations with their legal issues.)
• Step-by-step guide
• Starting your business in Illinois handbook
• Small business assistance