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 file Articles of Incorporation with the state.

Incorporate Now

Select Your State
Select Entity Type

Steps to Forming an Illinois S Corporation

To form an S Corporation in Illinois, you must draft Articles of Incorporation (review sample 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; 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 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 your status.

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.

Illinois Startup Quicklinks