Illinois S Corporation Formation
The state of Illinois accepts filings for S corporations, among other business entity
types, at the Department of Business Services of the Secretary of State's office,
found online as Cyberdrive. In order to form an Illinois S Corporation, you must
Articles of Incorporation with the state.
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Steps to Forming an Illinois S Corporation
To form an S Corporation in Illinois, you must draft Articles of Incorporation (review
Illinois Articles of Incorporation) and file them with the Department of
Business Services, or CyberDrive Illinois, of the Secretary of State. The following
information must be provided in your Articles and submitted to CyberDrive:
- The name of your S Corp: You must include one of the accepted corporate endings,
or an abbreviation of an accepted ending, in your corporate name. The name can only
be used if it is distinguishable, other than corporate endings, from other business
names currently registered in Illinois. It's a good idea to do a
business name search prior to filing; ClickAndInc.com can get you name search
results quickly and cheaply.
- Registered agent: Your corporation must have a contact person on file with the state
who is able to accept correspondence and service of process. This person must provide
a physical address, and not a PO box.
- Purpose: You may either keep the default statement provided, "The transaction of
any or all lawful businesses for which corporations may be incorporated under the
Illinois Business Corporation Act," or you may expand on the statement to include
a more specific business purpose.
- Shares: Illinois required that S corporations provide the authorized amount of shares,
issued amount of shares, class of shares, and the total amount of consideration
to be received thereof. Any restrictions or limitations must be explained.
- Directors: An optional Article to include, the list of directors, if included, must
include names and addresses.
- Value: If you wish, you may provide information about the value of property the
corporation owns and the estimated gross amount of business that will be transacted
in the coming year.
- Other provisions: If you have optional additional provisions, you may attach them.
- Incorporator: The name and address of the person responsible for drafting the Articles
should be listed. This person's signature must appear on the form; you may list
multiple incorporators, but must have at least one.
If any of the above information about your business changes, you must file an amendment
to the Articles. It is very important that the state have accurate and up-to-date
information about your business.
Let ClickAndInc.com form your
S Corporation in Illinois for you.
Further Responsibilities of an Illinois S Corporation
You are required to file an Annual Report, which should be returned to the Secretary
of State. Failure to comply with this requirement may result in the state revoking
After your Articles of Incorporation have been filed, you have 75 days to file an
S Corp Election Form (form 2553) with the IRS. This form will give you S Corporation
status and allow you to be taxed accordingly.
More Information about an Illinois S Corporation
Your S corporation:
- Can have up to 100 owners/shareholders, but no more
- May deduct the cost of benefits provided to employers (such as parking permits,
health insurance, and so on)
- Has a board of directors, which oversees the policies of the corporation
- Cannot have more than one class of shares
- Issues limited liability for owners
- Must be owned by US citizens or resident aliens
- Is taxed as owners' income, not as a separate entity
- Allows business losses to be deducted on the owners' individual tax returns
- Must pay payroll tax
For S corporations, only the salary paid to the owner-employee is subject to employment
tax. The remaining income that is paid as a distribution is not subject to employment
tax under IRS rules. Therefore, an owner of an S corporation stands to realize substantial
employment tax savings. However, the salary you give yourself must not be artificially
low; if the IRS finds your salary unreasonable, they may reclassify some of the
distribution funds as salary and require you to pay taxes on it.
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