How to Start a C-Corp in Illinois (Quick Answer)
To start a C-corp in Illinois, file Articles of Incorporation with the Illinois Secretary of State, name a registered agent, and pay the $150 filing fee plus an initial franchise tax, a $25 minimum. Once the state accepts it, your corporation legally exists.
After that, you adopt bylaws, appoint directors and officers, issue stock, and get an EIN from the IRS. Illinois has two costs founders often overlook: a franchise tax tied to your paid-in capital, and a combined corporate tax near 9.5%.
| Filing document | Articles of Incorporation |
| Where to file | Illinois Secretary of State |
| Filing fee | $150, plus an initial franchise tax based on paid-in capital ($25 minimum) |
| Registered agent | Required, with a physical Illinois street address |
| EIN | Required, free from the IRS (Form SS-4 by phone, fax, or mail if you have no SSN or ITIN) |
| Annual report | $75, plus the annual franchise tax on paid-in capital, filed with the Secretary of State |
| Corporate income tax | 7% corporate income tax plus a 2.5% Personal Property Replacement Tax, about 9.5% combined |
| Foreign owner (25% or more) | File Form 5472 with Form 1120 every year, or face a $25,000 minimum penalty |
First-year cost: about $175 to start, the $150 filing fee plus the $25 minimum initial franchise tax, plus a registered-agent service if you use one, commonly $50 to $150 a year.
Illinois still charges a franchise tax on paid-in capital, even though a planned phase-out was reversed a few years ago. It is small for most startups, a $25 minimum, but it is tied to the capital you report, so overstating it raises your cost.
Illinois also has one of the higher effective corporate rates: a 7% income tax plus a 2.5% Personal Property Replacement Tax, about 9.5% combined on a C-corp's income.
TL;DR
- Illinois still has a franchise tax on paid-in capital, its planned phase-out was reversed, plus a combined corporate tax near 9.5%.
- Step 1, name: pick a unique name with a corporate designator (Inc., Incorporated, Corporation, or Corp.) and check it with the Secretary of State.
- Step 2, registered agent: name one with a physical Illinois street address.
- Step 3, Articles of Incorporation: file with the Secretary of State for $150 plus the $25 minimum franchise tax.
- Step 4, bylaws: adopt internal bylaws and keep them with your records.
- Step 5, directors and officers: appoint the board and officers and hold an organizational meeting.
- Step 6, issue stock: authorize and issue shares, keep a stock ledger, and file the 83(b) election within 30 days if your shares vest.
- Step 7, EIN: get a free EIN from the IRS, by Form SS-4 if you have no SSN or ITIN.
- Foreign owner (25% or more): file Form 5472 with Form 1120 every year, or risk a $25,000 penalty.
- Ongoing: a $75 annual report plus the franchise tax on paid-in capital, and the roughly 9.5% combined corporate tax.
Why Form a C-Corp in Illinois?
Illinois gives founders the Chicago market, strong finance and logistics sectors, and a central location.
- The Chicago metro market and a deep professional workforce.
- Strong finance, logistics, and manufacturing sectors.
- Online filing through the Secretary of State.
Weigh the tax side first. If you plan to raise venture capital, investors will most likely want a Delaware C-corp. Illinois carries a franchise tax and a combined corporate rate near 9.5%, so it fits businesses that genuinely operate there.
Step 1: Choose and Reserve Your Corporate Name
- Include a corporate designator such as "Inc.", "Incorporated", "Corporation", or "Corp."
- Search the Secretary of State's business database to confirm the name is available and different from existing entities.
- Illinois lets you reserve a name for 90 days for a fee if you are not ready to file.
Step 2: Appoint an Illinois Registered Agent
Every Illinois corporation must name a registered agent with a physical Illinois street address, available during business hours to receive legal and state documents.
- The agent can be a person or a company, but needs a real Illinois address, not a PO box.
- The address is public record, so many owners use a commercial service.
- A commercial agent commonly costs $50 to $150 a year.
Step 3: File Your Articles of Incorporation
The Articles of Incorporation is the filing that legally creates your corporation. You file it with the Illinois Secretary of State.
- It lists the corporate name, registered agent, purpose, and the shares the corporation is authorized to issue, along with paid-in capital.
- The fee is $150, plus an initial franchise tax based on your paid-in capital, with a $25 minimum.
- Paid-in capital matters here. The franchise tax is tied to it, so report only what you actually contribute.
- Once the state accepts it, your corporation exists and its compliance calendar begins.
Step 4: Adopt Corporate Bylaws
Bylaws are the internal rulebook for how the corporation is run. They are not filed with the state, but a corporation is expected to have them, and banks and investors often ask to see them.
- They set out how directors and officers are elected, how meetings and votes work, and how shares are handled.
- They stay with your records, not with the Secretary of State.
- Skipping them can weaken the separation between you and the corporation that liability protection depends on.
Step 5: Appoint Directors and Hold the Organizational Meeting
A corporation is run by a board of directors, who appoint the officers that handle day-to-day work. Right after formation, the incorporator or initial directors hold an organizational meeting, or sign a written consent in place of one.
- Appoint the initial board and elect officers (usually at least a president, secretary, and treasurer; one person can hold several roles).
- Adopt the bylaws and authorize the issuance of stock.
- Keep signed minutes or the written consent with your records.
Step 6: Authorize and Issue Stock
Issuing stock is how founders get their ownership, and it is easy to rush. The board authorizes shares, then the corporation issues them to the founders and any early shareholders.
- Issue shares to each founder and record what they paid (cash, property, or services).
- Keep a stock ledger, a running record of who owns how many shares.
- Report paid-in capital carefully. In Illinois, the figure you report drives the franchise tax, so do not overstate it.
The 83(b) election, and its 30-day deadline: if your founder shares vest over time, you generally have 30 days from the grant date to file an 83(b) election with the IRS.
It lets you be taxed on the small value at grant instead of the higher value as the stock vests. The 30-day window cannot be extended, and missing it can be expensive.
Step 7: Get an EIN, Even Without an SSN
An EIN is your corporation's federal tax ID, needed to file taxes, run payroll, and open a bank account. It is free from the IRS.
- With an SSN or ITIN, apply online and get the EIN in minutes.
- Without an SSN or ITIN, apply on Form SS-4 by phone, fax, or mail.
- The EIN is always free; you never pay the IRS for one.
Open a US Business Bank Account
Once you have the EIN, open a dedicated business bank account before money moves through the corporation.
- Keeping corporate and personal funds separate helps protect the liability shield; commingling them is a common reason courts pierce it.
- Banks usually ask for the filed Articles of Incorporation, the EIN letter, and often the bylaws or a board resolution.
- A separate account also makes bookkeeping and the corporate tax return simpler.
If Your Illinois C-Corp Is Foreign-Owned
An Illinois C-corp that is 25% or more owned by a non-US person has an extra federal filing that many international founders miss.
- The corporation files Form 5472 with its annual Form 1120 to report transactions with the foreign owner, such as money put in or paid out for services.
- It is required every year there are reportable transactions, even with little or no profit.
- The penalty is steep: a missed or late Form 5472 starts at $25,000 per form, per year.
Handle Illinois's Ongoing Compliance
Two obligations run every year: the annual report with its franchise tax, and the corporate income tax.
The $75 Annual Report and Franchise Tax
- Every Illinois corporation files an annual report with the Secretary of State for $75, due before the first day of its anniversary month.
- The annual franchise tax rides with it, calculated on paid-in capital, with a $25 minimum.
- Missing it can put the corporation out of good standing and eventually lead to dissolution.
Illinois Corporate Tax (About 9.5% Combined)
- A C-corp pays a 7% corporate income tax plus a 2.5% Personal Property Replacement Tax, about 9.5% combined on Illinois income.
- Both are filed with the Illinois Department of Revenue, separate from the federal Form 1120.
- Federally, the corporation files Form 1120 and pays 21% corporate tax, due the 15th day of the 4th month after year-end.
How Much Does It Cost to Start a C-Corp in Illinois?
| What you pay | Amount | When |
|---|---|---|
| Articles of Incorporation filing | $150 plus an initial franchise tax ($25 minimum) | One time, at formation |
| Registered-agent service (optional) | ~$50 to $150 a year | Yearly, if you use one |
| Annual report | $75, plus the annual franchise tax | Yearly, by your anniversary month |
| Illinois corporate tax | About 9.5% combined (7% income tax plus 2.5% replacement tax) | Yearly |
| Federal corporate tax | 21% of profits | Yearly, with Form 1120 |
How Long Does It Take to Start a C-Corp in Illinois?
- Online filings with the Secretary of State are usually processed within a few business days, and Illinois offers expedited service.
- The EIN follows: minutes online with an SSN or ITIN, or same day to several weeks by Form SS-4 without one.
- Bylaws, the organizational meeting, and issuing stock happen right after the state approves the filing.
Common Mistakes to Avoid
- Assuming the franchise tax is gone. Illinois reversed the planned phase-out, so it still applies on paid-in capital.
- Overstating paid-in capital, which raises both your initial and annual franchise tax.
- Missing the annual report before your anniversary month, which risks good standing.
- Missing the 30-day 83(b) deadline on vesting founder stock.
- Overlooking Form 5472 if the corporation is 25% or more foreign-owned.
How FinStackk Helps
FinStackk is an accounting and tax compliance platform for U.S. businesses, taking you from incorporation through ongoing accounting, tax, and compliance in one place.
We handle Illinois C-corp formation, from the Articles of Incorporation to the EIN, through Fin-Start, including the Illinois registered agent.
Once the corporation exists, Fin-Tax keeps the federal Form 1120 deadline and the Illinois corporate and replacement taxes on a proactive calendar. Complyy tracks the $75 annual report, its franchise tax, and your registered-agent renewal. Book a free demo to see them in action.
FAQ
Does Illinois still have a franchise tax?
Yes. A planned phase-out was reversed a few years ago, so Illinois still charges a franchise tax based on your paid-in capital, with a $25 minimum at formation and again each year with the annual report. Because it is tied to paid-in capital, reporting only what you actually contribute keeps the tax low.
How much does it cost to start a C-corp in Illinois?
About $175 to start: a $150 filing fee plus the $25 minimum initial franchise tax. Add a registered-agent service if you use one. Going forward, the main recurring items are the $75 annual report with its franchise tax and the roughly 9.5% combined corporate tax.
What is Illinois's corporate tax rate?
A C-corp pays a 7% corporate income tax plus a 2.5% Personal Property Replacement Tax, about 9.5% combined on Illinois income, filed with the Illinois Department of Revenue. That is on top of the 21% federal corporate tax on Form 1120.
Is it better to form a C-corp or an LLC in Illinois?
An LLC is simpler and taxed once, though Illinois LLCs pay a higher $150 annual report fee and a lower replacement-tax rate. A C-corp suits founders who plan to raise venture capital or keep earnings in the business. A C-corp is taxed twice, once at the corporate level and again on dividends.
Should I form my C-corp in Illinois or Delaware?
If you plan to raise venture capital, Delaware is what investors expect. If you will operate in Illinois and not raise venture money, forming in Illinois avoids registering and paying in two states, since a Delaware corporation doing business in Illinois still has to register and pay here. Choose based on where you operate and whether you will raise money.
Can a non-US resident start an Illinois C-corp?
Yes. Illinois sets no citizenship or residency requirement to own a corporation. You will need an Illinois registered agent and an EIN, which you apply for on Form SS-4 by phone, fax, or mail without an SSN. If a non-US person owns 25% or more, the corporation also files Form 5472 with its Form 1120 every year, with a $25,000 minimum penalty for missing it.