How to Set up a Sole Proprietorship in Illinois
Create a plan for your Illinois business., Decide if you will run your business under your legal name or under an assumed business name., File an assumed business name certificate with your local county clerk's office., Run a newspaper announcement...
Step-by-Step Guide
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Step 1: Create a plan for your Illinois business.
Even though a sole proprietorship is often seen as an informal structure because you are not required to register it with the state, all businesses require a plan in order to be successful.
Outline your marketing, cost, employee and sales strategies before paying the applicable costs of starting a business. -
Step 2: Decide if you will run your business under your legal name or under an assumed business name.
If you plan to name your business according to its services, you are required to file an assumed name certificate within the county where you conduct business.
You need not file any documents if you conduct all business under your name, as filed on your federal income tax returns.
For example, if a business is listed and billed under "Jamie R.
Hill," then no documents are required for the name.
If a business is listed as "Jamie Hill Lawn care," then an assumed business name filing is necessary. , Call the office or go online to find directions to the assumed business name form.
Fill out personal and business information, sign it and have it stamped by a notary.
Pay a fee to file the form.
These fees vary from county to county.
In Marshall County, the fee is only $5, but it can be around $150 in some municipalities.
A notary public's services usually require a fee as well. , After filing the assumed business name form, you will be required to place a newspaper ad in a paper once per week for 3 consecutive weeks.
This must be done within 15 days of filing and you will be responsible for all costs. , All business owners are required to register at tax.illinois.gov/Businesses/register.
After registering your business and filling out tax schedules, you will receive a tax ID and a certificate of registration.
In addition to a simple business registration for a tax ID, you will also need to apply to pay all applicable taxes according to the type of business you plan to run.
These taxes include liquor, sales, tobacco, electricity, gas and telecommunications tax.
Make sure you fill in a schedule for Illinois business location information, responsible party information and owner, officer and general partner information. , This is an optional step, but it is the first precaution in separating your business and personal assets.
You must bring your official assumed business name certificate in order to open an account with the bank. , These are optional steps if you do not intend to employ others.
There are a number of steps you must take to ensure the safety of your company and your employees.
Apply for an Employment Identification Number (EIN) at IRS.gov.
This will separate your tax filings from your social security number.
Employee wage withholding will be under this EIN.
Some sole proprietors without employees also choose to apply for an EIN as a preventative measure against identity theft.
Register with the Illinois Department of Employment Security.
This is required by law if you plan to have any employees.
Visit the Illinois Business Portal to file electronically.
Report all new employees to the IRS and the State of Illinois.
You must fill out withholding certificates for each new employee.
You can report them online at the "New Hire Reporting" section of the Illinois Business Portal.
Obtain worker's compensation insurance.
Illinois state law requires this insurance for any business with employees.
You can go online and compare quotes from various insurance companies to find the best deal. , You will report all profits and expenses on your personal IRS Form 1040, Schedule C.
You will also need to pay the
13.3 percent self-employment tax, which covers your contributions to social security and Medicare.
Half of the
13.3 percent self-employment tax is deductible when you are calculating your adjusted gross income.
Only the first $106,800 of your earnings are subject to this tax.
Use the same gross income totals for your personal Illinois state tax return. -
Step 3: File an assumed business name certificate with your local county clerk's office.
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Step 4: Run a newspaper announcement in a local paper.
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Step 5: Register for applicable business taxes with the Illinois Department of Revenue.
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Step 6: Open a bank account with your assumed business name.
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Step 7: Register with state and federal agencies if you plan to have employees.
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Step 8: File your taxes either annually or semi-annually
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Step 9: according to IRS guidelines.
Detailed Guide
Even though a sole proprietorship is often seen as an informal structure because you are not required to register it with the state, all businesses require a plan in order to be successful.
Outline your marketing, cost, employee and sales strategies before paying the applicable costs of starting a business.
If you plan to name your business according to its services, you are required to file an assumed name certificate within the county where you conduct business.
You need not file any documents if you conduct all business under your name, as filed on your federal income tax returns.
For example, if a business is listed and billed under "Jamie R.
Hill," then no documents are required for the name.
If a business is listed as "Jamie Hill Lawn care," then an assumed business name filing is necessary. , Call the office or go online to find directions to the assumed business name form.
Fill out personal and business information, sign it and have it stamped by a notary.
Pay a fee to file the form.
These fees vary from county to county.
In Marshall County, the fee is only $5, but it can be around $150 in some municipalities.
A notary public's services usually require a fee as well. , After filing the assumed business name form, you will be required to place a newspaper ad in a paper once per week for 3 consecutive weeks.
This must be done within 15 days of filing and you will be responsible for all costs. , All business owners are required to register at tax.illinois.gov/Businesses/register.
After registering your business and filling out tax schedules, you will receive a tax ID and a certificate of registration.
In addition to a simple business registration for a tax ID, you will also need to apply to pay all applicable taxes according to the type of business you plan to run.
These taxes include liquor, sales, tobacco, electricity, gas and telecommunications tax.
Make sure you fill in a schedule for Illinois business location information, responsible party information and owner, officer and general partner information. , This is an optional step, but it is the first precaution in separating your business and personal assets.
You must bring your official assumed business name certificate in order to open an account with the bank. , These are optional steps if you do not intend to employ others.
There are a number of steps you must take to ensure the safety of your company and your employees.
Apply for an Employment Identification Number (EIN) at IRS.gov.
This will separate your tax filings from your social security number.
Employee wage withholding will be under this EIN.
Some sole proprietors without employees also choose to apply for an EIN as a preventative measure against identity theft.
Register with the Illinois Department of Employment Security.
This is required by law if you plan to have any employees.
Visit the Illinois Business Portal to file electronically.
Report all new employees to the IRS and the State of Illinois.
You must fill out withholding certificates for each new employee.
You can report them online at the "New Hire Reporting" section of the Illinois Business Portal.
Obtain worker's compensation insurance.
Illinois state law requires this insurance for any business with employees.
You can go online and compare quotes from various insurance companies to find the best deal. , You will report all profits and expenses on your personal IRS Form 1040, Schedule C.
You will also need to pay the
13.3 percent self-employment tax, which covers your contributions to social security and Medicare.
Half of the
13.3 percent self-employment tax is deductible when you are calculating your adjusted gross income.
Only the first $106,800 of your earnings are subject to this tax.
Use the same gross income totals for your personal Illinois state tax return.
About the Author
Raymond Palmer
Enthusiastic about teaching crafts techniques through clear, step-by-step guides.
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