Registration Requirements in Illinois

Businesses may be required to register with the Illinois Office of The Secretary of State. More information can be found at their website here:

http://www.cyberdriveillinois.com/home.html

Businesses that operate in the state of Illinois will also need to register with the Illinois Department of Revenue. Form REG-1 - Illinois Business Registration application must be filed to obtain an Illinois Tax ID number. Form is at the following link: 

https://www2.illinois.gov/rev/forms/reg/Documents/reg-1.pdf

S Corporation Tax 

While Illinois does recognize the federal S election, it nevertheless requires Illinois S corporations to pay the net replacement tax at a rate of 1.5% of net income, and, as Illinois corporations, the annual corporation franchise tax. In addition, an individual S corporation shareholder will owe tax to the state on his or her share of the company’s income. The replacement tax is computed in the same form as the S corporate annual return.

S corporations file their annual return on Form IL-1120-ST.

Partnership/LLC Tax 

Not required to pay income tax to Illinois. Business income is passed to partners who pay Illinois tax on their personal return. Illinois LLCs and partnerships are however required to pay the net replacement tax, outlined below. The replacement tax is computed in the same form as the partnership return. 

Partnerships and LLC’s file their annual return on Form IL-1065.

Annual Franchise Tax

Illinois businesses are required to pay an annual franchise tax. The tax is based on company’s net worth. The annual franchise tax is administered by the Illinois Secretary of State. The annual forms can be found at the following link. 

http://www.cyberdriveillinois.com/publications/business_services/dfc.html

Composite Tax

As of 12/31/14, composite returns in Illinois will no longer be permitted. 

Individual Income Tax 

Shareholders and partners with income assignable to Illinois may be required to file an individual income tax return that reflects their portion of Illinois income. 

Individual income tax is taxed at a flat rate of 4.95%. 

Due Date

S corporation returns are generally due when the federal tax return is due. Usually on the 15th day of the 3rd month following the close of the tax year. 

Partnership returns are due on the 15th day of the 4th month following the close of the tax year. 

Individual income tax returns are generally due on the day the which IRS individual income tax returns are due. 

Estimated Payments

Pass through entities in Illinois are not required to make estimated payments. If they choose to do so, they can make estimated tax payments on Form IL-1065-V and Form IL-1120-ST-V. These forms can be found at the following links. 

https://www2.illinois.gov/rev/forms/incometax/Documents/currentyear/business/smallbusiness/2018-IL-1120-ST-V.pdf

https://www2.illinois.gov/rev/forms/incometax/Documents/currentyear/business/partnership/2018-IL-1065-V.pdf

Individuals will use Form IL-1040-ES. If an individual believes they will owe more than $500 then they should file and pay estimated payments. Estimated payments are due on the 15th day of the fourth, sixth, and ninth month of the calendar year and a final payment on the 15th of the first month following the end of the tax year. This form can be found at the following link. 

https://www2.illinois.gov/rev/forms/incometax/Documents/currentyear/individual/il-1040-es.pdf

Extension Requirements

S corporations in Illinois are automatically granted a 7 month extension to file. Partnerships and individuals are automatically granted a 6 month extension. This extension does not apply to the payment and if a balance is expected, businesses and individuals must make timely payments using one of the following forms.  

S Corporations

https://www2.illinois.gov/rev/forms/incometax/Documents/currentyear/business/smallbusiness/2018-IL-1120-ST-V.pdf

Partnerships

https://www2.illinois.gov/rev/forms/incometax/Documents/currentyear/business/partnership/2018-IL-1065-V.pdf

Individuals

https://www2.illinois.gov/rev/forms/incometax/Documents/currentyear/individual/il-505-i.pdf

Penalties

Illinois will assess a penalty of the lesser of $250 or 2% of tax due for any returns that are not filed in a timely manner. Late payments will be assessed at a rate of 2% for the first 30 days and 10% for 31+ days that the payment is delinquent. 

More information can be found on Illinois publication 103 at the following link. 

https://www2.illinois.gov/rev/research/publications/pubs/Documents/pub-103.pdf

Additional Information

If your business was formed or is located in another state, but generates income in Illinois, it may be subject to Illinois taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.

Illinois Department of Revenue 

https://www2.illinois.gov/rev/Pages/default.aspx

Illinois Secretary of State 

http://www.cyberdriveillinois.com/home.html

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