Illinois LLC advantages and disadvantages
Illinois Corporate Income Tax
Illinois LLC Advantages and Disadvantages
- Currently, Illinois’ corporate income tax ranks 23rd in the corporate income tax subindex. HB 750 would raise corporate tax rates and expand the base by eliminating corporate tax “loopholes.” This causes Illinois’ ranking on corporate taxes to fall drastically to 47th.
A Illinois LLC
offers business entrepreneurs the form of corporate organization that provides perhaps the most flexibility to you. An LLC formation, like the alternative corporate forms of organization like a limited partnership
and a Subchapter S Corporation,
are generally prime candidates for a business juststarting. The state of Illinois gives public support to an Illinois LLC.
Should I form a Illinois LLC?
An Illinois LLC satisfies a necessary condition of your business planning developement in that it meets the requirement that you establish a legal form of organization in order to gain the statutory benefits and protection available in Illinois to your LLC. Your Illinois LLC establishes a legal presence within the state, which you can use either as a platform for in-state operations or by registering your Illinois LLC via your agent's physical address in order to meet the purely statutory requirement for tax and filing purposes absent an in state operation.
Advantages and Disadvantages Illinois LLC
Advantages of LLC
- Limited Liability: Owners of a LLC have the limited liability protection of a corporation.
- Flexible Profit Distribution: Limited liability companies can select varying forms of distribution of profits. Unlike a common partnership where the split is 50-50, LLC have much more flexibility.
- No Minutes: Corporations are required to keep formal minutes, have meetings, and record resolutions. The LLC business structure requires no corporate minutes or resolutions and is easier to operate.
- Flow Through Taxation: All your business losses, profits, and expenses flow through the company to the individual members. You avoid the double taxation of paying corporate tax and individual tax. Usually, this will be a tax advantage, but circumstances can favor a corporate tax structure.
Disadvantages of LLC
- Limited Life: Corporations can live forever, whereas a LLC is dissolved when a member dies or undergoes bankruptcy.
- Going Public: Business owners with plans to take their company public, or issuing employee shares in the future, may be best served by choosing a corporate business structure.
- Added Complexity: Running a sole-proprietorship or partnership will have less paperwork and complexity. A LLC may federally be classified as a sole-proprietorship, partnership, or corporation for tax purposes. Classification can be selected or a default may apply.
By Illinois and other state law in order to proceed with forming a llc, you need to prepare a written abstract detailing
your llc purpose, the names of your initial Illinois LLC members, the name and address of your Illinois registered agent, the details of which will be introduced into the body of your LLC operating agreement and related Illinois LLC formation documents assembled for application to the state of Illinois.
Illinois' Corporate Income Tax
Illinois' corporate tax consists of a flat rate of 9.5% on all corporate income . Among states levying corporate income taxes, Illinois' rate ranks among the highest. In 2008, state-level corporate tax collections were $243 per capita, which ranks 10th highest nationally.
Illinois' Individual Income Tax System
Illinois' personal income tax system consists of a flat five percent rate on federal adjusted gross income. That rate is among the lowest among states that levy individual income taxes. Illinois' 2008 state-level individual income tax collections were $806 per person, which ranked 31st highest nationally.
Illinois' Business Tax Climate Ranks 23rd - 2011
Illinois ranks 23rd in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property.
Illinois' State and Local Tax Above National Average
Illinois' 2009 state and local tax burden of 10.0% of income is above the national average of 9.8%. Illinois' tax burden has decreased overall from 10.4% (16th nationally) in 1977 to 10.0% (13th nationally) in 2009.
| Illinois LLC advantages and disadvantages