New business owners must face and overcome a number of challenges to get their company off the ground. From securing finances, to finding a location, and hiring personnel, aspiring business owners have a lot on their plate. Unsurprisingly, some may feel that they don’t have the time or the know-how to file for articles of incorporation in Illinois. However, the truth is, almost anyone can incorporate their business –– with the right help and guidance, of course.
Here, we’ll explain everything you need to know about incorporating your new business, including what information you have to divulge, what procedures you have to follow, and the many benefits incorporation provides.
Articles of Incorporation Stipulations and Requirements
In order to successfully file articles of incorporation in the state of Illinois, business owners must first list several important pieces of information about their business. They are:
- Company Name
- Company Purpose
- Company Stock Structure
- Incorporator’s Name(s) and address(es)
- Director’s Name(s)
- Registered Agent’s Name(s)
- Registered Office
In addition, to file for articles of incorporation a business owner must 1) be over the age of 18 and 2) the business in question must be located in Illinois. (Note, incorporators do not need to be residents of Illinois to apply for incorporation –– nor do they even have to be US citizens.)
Before you get your heart set on a particular name for your new business, it’s important that you check for its availability first. In order to incorporate successfully, your company’s name has to be completely unique and separate from any other entity in Illinois. That includes all other businesses, but it also encompasses non-profit organizations and other such entities. Furthermore, names that are very similar to other entities in either sound or nature won’t be permitted. It’s good practice to first check the Illinois’ Secretary of State website for name availability. You can do that by clicking here. You may also reserve a name for up to ninety days if you’re not quite ready to incorporate yet.
Lastly, the state of Illinois requires all corporations to use one of these phrases in their official name: Co., Company, Corp., Corporation, Inc., Incorporated, Limited, Ltd. Other phrases like “bank” or “union,” however, are not allowed.
Incorporators vs Directors
An incorporator of a business is, in the legal sense, the person (or persons) who signs the articles of incorporation. It’s also possible for another company to be listed as an incorporator of a new business. In layman’s terms, incorporators are often the “founders” of a company, and they must list their names and addresses in order to incorporate a business.
A director, meanwhile, is an elected or appointed member of a company’s board of directors who manages a company’s strategy and acts on behalf of the stockholders. Illinois law stipulates that every corporation must have at least one director –– though that director does not have to be an Illinois resident or a shareholder themselves.
Incorporators may act as a director as well, though this isn’t necessary.
Registered Agent and Registered Office
A registered agent for a corporation is the person designated to receive official correspondences from the state. Typically, this involves legal documents, such as tax forms, legal summons, or the notice of a lawsuit. Registered agents don’t have to live in Illinois themselves, however, their office (the registered office) must be located in Illinois.
Most experts advise corporations to designate a third-party to act as your registered agent, but as is the case with the position of director, an incorporator may also fill the role of registered agent.
Company Stock Structure
A corporation’s stock structure can affect that business’s prospects in a number of ways, such as stock performance, liquidity, and price behavior to name a few. In regard to filing for articles of incorporation, the State of Illinois requires new corporations to list the nature of their stock structure and also to catalogue the number of shares issued at the time of incorporation. It’s worth noting that if you decide to file articles of incorporation online, all stocks will be classed as “common stocks.” (In essence, that means your corporation will enter the free market and individuals can purchase stock to become shareholders.)
Some businesses will want to designate different classes and varieties of stocks that vary based on payout time and voting rights. Any and all of these designations must be listed in articles of incorporation. What’s more, if you (an incorporator) know that you’re going to be instituting special share designations, but are uncertain of the details of such changes, you must also indicate that and follow up with the Illinois Secretary of State in the form of a resolution once the terms have been set. And finally, the articles of incorporation must state the number of shares sold as well as the considerations (i.e. cash or other items of value) paid in return for shares in the corporation.
Company Purpose Statement
A company purpose statement is NOT a mission statement. Rather, it is more-or-less a legal formality that ensures your business can conduct business transactions in the state of Illinois. In fact, the state’s website uses this particularly vague template for all incorporations filed online: “The transaction of any or all lawful purposes for which corporations may be incorporated under the Illinois Business Corporation Act.” In English, this translates to: “This company exists for all of the reasons a company may legally exist.”
Articles of Incorporation Fees
Fees for filing articles of incorporation in Illinois run from $175-$275. Keep in mind that this fee must be paid with a credit card and it does not encompass the entire cost of starting a business.
Benefits of Filing Articles of Incorporation
There are a number of reasons why it makes sense to file articles of incorporation. To begin with, incorporating allows business owners to separate their personal assets from their business debts. This also serves as a critical bit of legal protection. That’s why lawsuits, like wrongful termination, are filed instead against a given company rather than an individual (or set of individuals).
In addition, incorporation helps businesses save money on taxes and deduct health insurance premiums. Plus, incorporated entities typically find it easier to raise capital, apply successfully for loans, and gain traction in their given industry.
For Further Help
Have a question or concern about incorporating your business in Illinois? Then don’t hesitate to contact a professional. At Sivia Law, we have the experience and the skills to handle any and all queries you may have. We’ll help you navigate the legal obstacles you face, and let you focus on what you do best –– running your business! Contact us here to get started.