FAQs

Legal Structures and Business Licenses

1. What is the best legal form of doing business?
   There is no one best form of doing business. All forms have certain advantages and disadvantages, usually in the area of taxes and personal liability. You should consider all the advantages and disadvantages in relation to your individual circumstances. For more information, see our handouts on legal structures. 

2. Do I need a business license?
   Certain occupations and professions are licensed by the state. Additionally, localities require licenses for certain types of businesses. For information on a business license, call your local city, town, or village hall (alderman in Chicago). For information on State of Illinois licenses and permits see www.dpr.state.il.us or call (217) 785-0800.

3. How do I get a Federal Employer Identification Number? Do I need one?
   You can get a Federal Employer Identification Number ("FEIN") by completing IRS Form SS-4, Application for Employer Identification Number, or by calling the IRS at 866-816-2065 and answering their questions about the information on your Form SS-4. To obtain an SS-4 form, call (800) 829-3676, visit www.irs.gov.
   
   A sole proprietorship that does not have any employees is not required to have a FEIN. If desired, the sole proprietor's social security number can be the identification number for tax and bank account purposes. All other businesses must have FEIN.

4. How do I incorporate?
   To create an Illinois corporation, you need to complete Form BCA-2.10, Articles of Incorporation, and file it with the appropriate fee (minimum $100) with the Illinois Secretary of State. For additional information, see our handouts on incorporating or contact us for assistance. For a fee, you may also obtain assistance from a CPA or attorney.

5. Is there an advantage to doing business as an out-of-state corporation?
   There is an advantage for the out-of-state corporation but not for you. You will have to pay a start-up fee and an annual fee to the state where the business is located. Your corporation will have to pay a fee to qualify to do business in Illinois and an annual Illinois business fee.
   
   With an out-of-state corporation, you pay fees both to the state where the business is located and to the state of Illinois. With an Illinois corporation, you only pay fees to the state of Illinois.

6. Can I operate my business from my home?
   Operating a business from your home is an excellent way to keep your overhead down. Check with your city or village, or alderman on business licenses that are required or zoning restrictions.