Business Overview
Illinois features a diverse economy anchored by Chicago, a global business center. Key industries include financial services, manufacturing, transportation, and technology. The state offers excellent infrastructure, a skilled workforce, and access to global markets through its transportation networks.
Key Facts & Figures
| Category | Details |
| Capital | Springfield |
| Major Cities | Chicago, Aurora, Naperville, Joliet, Rockford |
| State Sales Tax Rate | 6.25% |
| Local Sales Tax Rate | Up to 4.75% additional local taxes |
| Corporate Income Tax | 6.925% flat rate |
| Physical Nexus Threshold | Physical presence through employees, offices, or inventory |
| Economic Nexus Threshold | $100,000 in annual sales or 200 transactions |
Did you know?
Chicago is the third-largest metropolitan economy in the United States, with a diverse economic base including finance, manufacturing, and technology.
Setup & Compliance
Illinois business formation involves multiple state agencies and specific compliance requirements.
Starting a Business in Illinois:
- Select Your Business Structure: Consider Illinois tax implications for different entity types.
- Register Your Business: File formation documents with the Illinois Secretary of State.
- Obtain Tax Registrations: Register with the Department of Revenue for sales tax and withholding.
- Secure Business Licenses: Research and obtain necessary state and local licenses.
- Register as an Employer: Register with the Department of Employment Security if hiring employees.
Key Compliance Considerations:
- Annual Reports: Most Illinois entities must file annual reports with the Secretary of State.
- Sales Tax Collection: Businesses must collect state (6.25%) and local sales taxes on applicable transactions.
- Franchise Tax: Illinois corporations pay annual franchise tax based on paid-in capital.
- LLC Annual Fee: LLCs pay $75 annual fee, due with the annual report.
- Local Business Requirements: Municipalities often impose additional licensing and regulatory requirements.
Hiring & Payroll
Illinois has implemented several worker protections that exceed federal requirements.
Illinois Payroll Taxes:
- Unemployment Insurance: Rates from 0.725% to 7.625% on first $12,960 of wages.
- State Income Tax Withholding: Flat 4.95% of federal adjusted gross income.
- Workers’ Compensation: Required for all employers.
Illinois Employment Laws:
- Minimum Wage: $13.00 per hour (increasing to $14.00 on January 1, 2024, and $15.00 by 2025).
- Paid Sick Leave: Chicago and Cook County have local ordinances requiring paid sick leave.
- Equal Pay Registration: Employers with 100+ employees must obtain certificate.
- Final Paycheck: Due at time of separation if possible, otherwise next scheduled payday.
- Illinois is not a right-to-work state.
State Incentives
Illinois offers comprehensive economic incentives to support business innovation.
Key Business Incentives:
- EDGE Tax Credit: Encourages job creation and retention.
- Economic Development for a Growing Economy (EDGE) Program.
- Research and Development Tax Credit: Supports innovative company development.
Small Business & Startup Support:
- Illinois Small Business Development Center: Comprehensive business consulting.
- Minority and Women-Owned Business Certification Program.
- Opportunity Zones: Tax benefits for investments in designated areas.
Regulatory Considerations
Illinois maintains comprehensive regulatory standards across business sectors.
Key Business Regulations:
- Data Privacy: Stringent laws protecting business and consumer information.
- Environmental Compliance: Detailed regulations for urban and industrial operations.
- Professional Licensing: Mandatory licensing for various professional services.
Additional Regulatory Areas:
- Financial Services Oversight.
- Technology and Innovation Compliance.
Business Overview
Illinois features a diverse economy anchored by Chicago, a global business center. Key industries include financial services, manufacturing, transportation, and technology. The state offers excellent infrastructure, a skilled workforce, and access to global markets through its transportation networks.
Key Facts & Figures
| Category | Details |
| Capital | Springfield |
| Major Cities | Chicago, Aurora, Naperville, Joliet, Rockford |
| State Sales Tax Rate | 6.25% |
| Local Sales Tax Rate | Up to 4.75% additional local taxes |
| Corporate Income Tax | 6.925% flat rate |
| Physical Nexus Threshold | Physical presence through employees, offices, or inventory |
| Economic Nexus Threshold | $100,000 in annual sales or 200 transactions |
Did you know?
Chicago is the third-largest metropolitan economy in the United States, with a diverse economic base including finance, manufacturing, and technology.
Setup & Compliance
Illinois business formation involves multiple state agencies and specific compliance requirements.
Starting a Business in Illinois:
- Select Your Business Structure: Consider Illinois tax implications for different entity types.
- Register Your Business: File formation documents with the Illinois Secretary of State.
- Obtain Tax Registrations: Register with the Department of Revenue for sales tax and withholding.
- Secure Business Licenses: Research and obtain necessary state and local licenses.
- Register as an Employer: Register with the Department of Employment Security if hiring employees.
Key Compliance Considerations:
- Annual Reports: Most Illinois entities must file annual reports with the Secretary of State.
- Sales Tax Collection: Businesses must collect state (6.25%) and local sales taxes on applicable transactions.
- Franchise Tax: Illinois corporations pay annual franchise tax based on paid-in capital.
- LLC Annual Fee: LLCs pay $75 annual fee, due with the annual report.
- Local Business Requirements: Municipalities often impose additional licensing and regulatory requirements.
Hiring & Payroll
Illinois has implemented several worker protections that exceed federal requirements.
Illinois Payroll Taxes:
- Unemployment Insurance: Rates from 0.725% to 7.625% on first $12,960 of wages.
- State Income Tax Withholding: Flat 4.95% of federal adjusted gross income.
- Workers’ Compensation: Required for all employers.
Illinois Employment Laws:
- Minimum Wage: $13.00 per hour (increasing to $14.00 on January 1, 2024, and $15.00 by 2025).
- Paid Sick Leave: Chicago and Cook County have local ordinances requiring paid sick leave.
- Equal Pay Registration: Employers with 100+ employees must obtain certificate.
- Final Paycheck: Due at time of separation if possible, otherwise next scheduled payday.
- Illinois is not a right-to-work state.
State Incentives
Illinois offers comprehensive economic incentives to support business innovation.
Key Business Incentives:
- EDGE Tax Credit: Encourages job creation and retention.
- Economic Development for a Growing Economy (EDGE) Program.
- Research and Development Tax Credit: Supports innovative company development.
Small Business & Startup Support:
- Illinois Small Business Development Center: Comprehensive business consulting.
- Minority and Women-Owned Business Certification Program.
- Opportunity Zones: Tax benefits for investments in designated areas.
Regulatory Considerations
Illinois maintains comprehensive regulatory standards across business sectors.
Key Business Regulations:
- Data Privacy: Stringent laws protecting business and consumer information.
- Environmental Compliance: Detailed regulations for urban and industrial operations.
- Professional Licensing: Mandatory licensing for various professional services.
Additional Regulatory Areas:
- Financial Services Oversight.
- Technology and Innovation Compliance.
