Starting a Business in Illinois


Opening and running a business in Illinois can have its pros and cons. Even though Illinois has hurdles such as an enormous budget deficit and a large business tax burden, it also has many advantages to offset the liabilities. Illinois is logistically located in the center of the US with access to almost all markets. It also has a highly skilled workforce due to its diverse population and some of the best higher education institutions in the country. After starting a business in Illinois, securing an Illinois business license will be required if you have an office front location. If you are looking to secure business financing through traditional means than an FEIN may be required. Illinois companies can benefit from a plethora of benefits incentives. The most common are incentives that are given through tax credits, exemptions, and grant/loan programs. Also, companies who reside inside an Illinois Enterprise Zone qualify for special incentives. The Illinois Department of Revenue is tasked with setting the policies and regulations that govern sales tax collection protocol. The Illinois Secretary of State has various rules overseeing businesses activities. After securing an EIN number, you can register online for an Illinois Business Tax Number. Once you have applied for a seller’s permit, and in order to meet your compliance obligations, you can look for the appropriate Business Licenses for your company to operate lawfully. At this point, filing a form crt-61 or REG-1 will not be necessary. You can just move on and look at some of the Illinois incentive programs which are available:
  • A major tax credit that Illinois offers is the Replacement Tax Credit. This credit is applicable to new or used tangible personal property that is depreciated through its useful life of 4 or more years. It can be used for any tangible personal property that is used in business operations within Illinois.
  • One of the most well-known Job opportunity tax credits available is the Economic Development for a Growing Economy Tax Credit. This tax credit provides annual corporate income tax credits to a business that is able to meet minimum employment requirements. For companies with over 100 worldwide employees, an investment of $5 million is required as well as the creation of 25 full time Illinois jobs. For companies with less than 100 employees the threshold moves down to a $1 million investment and the creation of 5 full time Illinois jobs.
  • Two other job reimbursement programs are the Data Center Tax Exemption Project and the Employer Training Investment Program. Reimbursements are given to a data center business that invests at least $250 million and creates a minimum of 20 full time jobs over 5 years. Sales Tax Exemptions can be taken against building materials as well as tangible personal property that is used in daily operations. Before you can take exemptions, you will need to register for a sales tax permit. The employer training program is a bit simpler and provides reimbursements in the form of grants worth $500 for every full time job created.
  • The Illinois Enterprise Zone Program provides various benefits to incentivize businesses to relocate to economically distressed areas. The objective is to cultivate both monetary and human capital and bring them to these underdeveloped areas. Some of the benefits under the program include a tax exemption on certain utilities, a tax credit on qualified properties located in the in River Edge Redevelopment Zones and an Illinois Sales Tax Exemption taken against building materials. This exemption can be taken by applying for a Building Materials Exemption Certificate through the Illinois Department of Revenue.
  • Another program that parallels the Enterprise Zone initiative is the Illinois High Impact Business Program. Businesses located outside of enterprise zones are given various incentives very similar to those offered in the enterprise program. These include a Sales Tax Exemption on utilities, investment tax credits on qualified properties, and a Sales Tax Exemption taken against building materials as well as personal property that is used in the manufacturing process and operation.
  • The Large Business Development Program was created to stimulate job growth by providing grants to businesses that relocate to Illinois. As implied in the name, this program is geared towards business that can create at least 500 new jobs. Grants can be used to finance land or structures as well as equipment and machinery. In contrast to the large business program, Illinois offers a loan program available to new small business with loans ranging from $20,000 to the high six figures.