Business · Illinois
Business Formation Attorney: LLCs, Corporations and Partnerships, Set Up With the Tax Plan Attached
A business formation lawyer who is also a CPA: filing the articles takes twenty minutes, but deciding what to file, how the profit will be taxed and what the owners have agreed to is the part that lasts. Khatib Law LLC does both, from one office in Palos Heights.
Firm particulars
- Attorney
- Hani H. Khatib, Attorney at Law · CPA · LL.M. (Taxation)
- Office
- 6600 W College Dr, Ste 207, Palos Heights, IL 60463
- Hours
- Monday to Friday, 9:00 a.m. to 5:00 p.m.
- Telephone
- (708) 722-2222
- info@khatiblaw.com
- Accreditation
- BBB Accredited since April 2022 · A+
Start here
Is this you?
You and a partner are opening a business in the southwest suburbs and want the ownership split, the buy-out terms and the tax treatment settled before the first invoice goes out.
You already run the business as a sole proprietor, revenue has grown, and your accountant says it is time to form an entity.
You hold a professional license — dentist, physician, architect, engineer — and have been told an ordinary LLC will not work.
You are buying rental property and want to know whether to hold it in an LLC, a series LLC or a land trust.
You filed with an online service, received the certificate, and now the bank, a landlord or the IRS is asking for documents you do not have.
A business formation lawyer starts before the filing, not at it. The first conversation is about who the owners are, what the business will do, how profit will come out, whether real estate or a license is involved, and what happens if an owner leaves; the answers decide the entity, the tax classification and the owners' agreement; only then are the Articles filed with the Illinois Secretary of State.
At Khatib Law LLC, where formation is one part of the business practice, a formation engagement typically includes:
- Entity choice, with the Illinois tax figures on the table — the 1.5 percent replacement tax on partnerships and S corporations, 9.5 percent on C corporations, and self-employment tax on an owner's share. See the entity selection page.
- The filing itself — Articles of Organization (Form LLC-5.5) or Articles of Incorporation (Form BCA 2.10), after a name check in the Secretary of State's database.
- The owners' agreement — operating agreement, bylaws and shareholder agreement, or partnership agreement — drafted for the actual owners rather than copied from a form.
- The EIN, applied for online the same day; it is free and issued immediately.
- Federal tax classification, including the S-corp election on Form 2553 when the profit supports it, filed within the deadline so it takes effect in the first year.
- Illinois registrations — the Department of Revenue through MyTax Illinois (Form REG-1) before any sales or hiring, and the Department of Employment Security within 30 days of becoming an employer.
- Local licenses and assumed names — a City of Chicago or village business license, and an assumed-name filing if the business will trade under another name.
- The first records — organizational consents, the membership or stock ledger, and a compliance calendar for the annual report, covered on the corporate records page.
If you only want the procedure for a simple single-owner LLC, the guide to starting an LLC in Illinois sets it out step by step, with a table of every fee and timeline.
Illinois law offers more forms than most owners need. The ones that come up in practice:
General partnership
Forms automatically whenever two or more people carry on a business for profit as co-owners, whether or not they meant to (805 ILCS 206/202). No filing is required, and that is the problem: each partner is personally liable for the partnership's debts, and without a written agreement the statute's default rules govern profits, management and a partner's exit.
Limited partnership, LLLP and LLP
A limited partnership has a general partner who manages and is liable and limited partners whose exposure is capped at their investment; registering as a limited liability limited partnership extends the shield to the general partners. Both are used mainly for investment and family-holding structures. An existing partnership can instead register as a limited liability partnership ($100 per partner, minimum $200, maximum $5,000, renewed annually), which shields the partners from most partnership obligations while keeping partnership taxation.
Limited liability company
The default choice for owner-operated businesses. Members are not personally liable for the company's debts, and the Act does not treat a failure to observe internal formalities as a ground for personal liability by itself (805 ILCS 180/10-10). An LLC can be taxed as a disregarded entity, a partnership, an S corporation or a C corporation; the entity selection page compares them with the Illinois replacement tax included.
Low-profit LLC (L3C)
A for-profit LLC organized primarily for a charitable or educational purpose, with "L3C" in its name; it has no tax exemption, but it can attract program-related investment from foundations.
S corporation
Not a separate Illinois entity but a federal tax status that a corporation or an LLC elects on Form 2553: no more than 100 shareholders, one class of stock, and only individuals, estates, certain trusts and exempt organizations as shareholders, none of them non-resident aliens. Illinois taxes the S corporation at the 1.5 percent replacement tax rate. Annual shareholder meetings and minutes are required of every Illinois corporation, not only those with an S election.
C corporation: when to incorporate in Illinois
A corporation that has not elected S status. It pays federal income tax at 21 percent and Illinois tax at 9.5 percent (7 percent income tax plus 2.5 percent replacement tax), and its shareholders are taxed again on dividends. Owners incorporate in Illinois as a C corporation for unlimited shareholders, multiple classes of stock, or the qualified small business stock exclusion.
Professional entities
An LLC that will provide a service licensed by the Illinois Department of Financial and Professional Regulation — medicine, dentistry, accounting, architecture, engineering and others — must be organized under the Professional Limited Liability Company Act (805 ILCS 185) and obtain the Department's certificate of registration before it opens (805 ILCS 180/1-25). A law firm is different: lawyers are licensed by the Illinois Supreme Court, and a law-firm LLC registers with the Court under Supreme Court Rule 721. The corporate equivalent is a professional service corporation, and ownership is restricted to licensed persons, which affects succession planning from day one.
The Articles of Organization ask whether the LLC is managed by its members or by managers. In a member-managed LLC every member can act for the company; in a manager-managed LLC only the named managers can, and the operating agreement defines what the members vote on. The choice matters when one owner runs the business and the others have invested or hold interests for estate-planning reasons; it is set at formation and can be changed by amendment.
Every Illinois LLC and corporation must name a registered agent with a street address in Illinois to receive service of process and Secretary of State notices, including the annual-report reminder and any delinquency notice. An owner who misses those notices because the agent address was a former apartment is the usual route to administrative dissolution, so use an address that will still be good in five years and update the agent ($25) the week an address changes.
Illinois allows a series LLC: one company whose operating agreement establishes separate series, each with its own assets, members and liabilities, so a judgment against one series cannot reach the assets of another (805 ILCS 180/37-40). The protection holds only if the Articles give notice of the series structure, each series files a certificate of designation ($50), and separate records and accounts are kept. The Articles cost $400 rather than $150, and the annual report is $75 plus $50 per series. Real-estate investors with several properties are the typical users; separate books are the price.
Unless it elects otherwise on Form 8832, an LLC takes the IRS default classification described in the LLC guide: disregarded for one member, partnership for two or more. An LLC that wants S-corporation treatment files Form 2553 instead, and the IRS treats that filing as the corporate classification election as well. The deadline for a first-year election is two months and fifteen days after the start of the company's first tax year, so the decision belongs in the formation meeting. The S-corp election page covers when it saves money, the reasonable-compensation rule, and late-election relief.
As of October 2026 a newly formed Illinois LLC or corporation has no federal beneficial ownership (BOI) filing, because FinCEN's final rule effective August 14, 2026 exempts entities created in the United States. The rule has changed more than once, so the firm confirms the current status at each formation; the corporate records page carries the current position.
The difference
Why an attorney who is also a CPA
The election is made at the right time, in the right document
The S-corp election, the distribution clause that keeps it valid, and the owner's salary plan are drafted together instead of being discovered by an accountant the following April.
The Illinois replacement tax is in the comparison
Entity recommendations made without the 1.5 percent and 2.5 percent Illinois figures, or the 9.5 percent combined rate on a C corporation, are incomplete.
Privilege covers the planning
The tax analysis done as part of the formation engagement is attorney-client communication — the filed Articles, the EIN application and any election form are not. The attorney-CPA page explains where that line falls.
Process
How it works
Intake call
Week one · about 30 minutes · by phone
Owners, business, property, licenses, expected profit, and whether anyone outside the family will invest; half an hour usually narrows the entity choice.
Written recommendation and fee basis
Usually within a week of the call · before anything is filed
Entity, tax classification, management structure and the documents needed, with the government fees itemized.
Filing and documents
Usually weeks two to three · after the engagement letter is signed
Name check, Articles filed, EIN obtained, operating agreement or bylaws signed, Form 2553 filed if elected.
Registrations and hand-off
Usually weeks three to four
MyTax Illinois and IDES registrations, local license applications, a set of records, and a compliance calendar showing the first annual-report window.
Questions
Questions we are asked
Do I need a lawyer to form an LLC in Illinois?
No. The Illinois Secretary of State accepts Articles of Organization online from anyone, and the step-by-step guide on this site walks through it. A lawyer earns the fee on the things the filing does not include: an operating agreement that fits the owners, the federal tax classification decision, the S-corp election if the numbers support it, state tax and employer registrations, and the first set of records. A single-owner LLC with no employees and no real estate may not need any of that. Two owners, a building, or a licensed profession usually do.
What does an attorney do that an online filing service does not?
A filing service files what you type. It does not tell you whether an LLC or a corporation fits, whether the business must be a professional LLC because of your license, or whether the operating agreement it generates will disqualify an S election by allowing non-pro-rata distributions. It does not register you with the Illinois Department of Revenue or the Department of Employment Security, file Form 2553, or explain the Illinois replacement tax. And nothing you tell a filing service is privileged, while what you tell a lawyer to get legal advice is. Those gaps are the work.
LLC or corporation in Illinois — which should I choose?
For most owner-operated businesses in Illinois the LLC wins on flexibility: fewer required formalities, a choice of tax treatment, and the ability to add the S-corp election later without changing the entity. A corporation makes sense when outside investors will want preferred stock, when the business expects to keep profit inside the company at the 21 percent federal corporate rate, or when the qualified small business stock exclusion is a realistic goal. The entity selection page sets the two side by side with the Illinois tax figures.
What does it cost to form an LLC in Illinois?
The Secretary of State charges $150 to file Articles of Organization, or $400 for an LLC with the power to establish series; expedited processing is an additional $100. The annual report is $75 a year. An EIN from the IRS is free. Beyond those government fees, the cost is professional time: the operating agreement, the tax election and the registrations. Khatib Law LLC states the fee basis for formation work in writing before starting; the amount depends on the number of owners and whether an S election or real estate is involved.
How long does it take to form an LLC or corporation in Illinois?
The Secretary of State processes online LLC and corporation filings in the normal course, and offers expedited processing for an additional fee. The EIN is issued immediately when applied for online. Registration with the Illinois Department of Revenue through MyTax Illinois is processed in roughly one to two business days. The step that takes longest is usually the owners agreeing on the operating agreement or shareholder agreement, which is also the step most worth not rushing.
Should my LLC be member-managed or manager-managed?
Member-managed means every owner has authority to act for the company; manager-managed means only the named managers do, and the other members are investors with voting rights set by the agreement. A single-owner LLC is almost always member-managed. A multi-owner LLC where one person runs the business day to day, or where some owners are passive investors or family members, is usually better as manager-managed, because it keeps a non-operating owner from binding the company and makes the authority clear to banks and counterparties.
Do I need a registered agent, and can I be my own?
Every Illinois LLC and corporation must continuously maintain a registered agent and registered office in Illinois. The agent is the person or company that receives lawsuits and official notices. You can serve as your own registered agent if you have an Illinois street address (not a post-office box) where you are reliably available during business hours. Owners who work off-site, move often, or do not want their home address in the public record use a commercial registered agent instead. A change of agent is filed with the Secretary of State for $25.
Which entity should hold a rental property?
It depends on how many properties you own, whether a lender's due-on-sale clause is a concern and how the rental income will be taxed; the choice is usually between an LLC, a series LLC and an Illinois land trust, which gives privacy but no liability shield. The entity selection page compares the three, and the land trust vs LLC article works through a rental example.
Related
Related services
How to get an LLC in Illinois
How much does it cost to start an LLC in Illinois?
To start an LLC in Illinois you choose a name that ends in LLC, appoint an Illinois registered agent, file Articles of Organization (Form LLC-5.5) with the Secretary of State for $150, get a free EIN, sign an operating agreement, settle the tax treatment and register with the Illinois Department of Revenue.
Name, agent, Articles, EIN, taxesEntity selection
LLC or S corp — which is better for a small business?
Business entity selection is two decisions wearing one name: what shields you from the business's liabilities, and how its profit is taxed. This page separates them, puts the Illinois figures beside the federal ones, and shows where each form fits.
LLC, S corp or C corp, side by sideS-corp election
What is an S-corp election and who should make it?
An S-corp election can cut an owner's self-employment tax, or it can add payroll, a second return and Illinois replacement tax for no net saving. The difference is arithmetic, and the deadline is short. Khatib Law LLC runs the numbers and files the form.
Form 2553, deadline and salary rule
Your attorney
Hani H. Khatib
Attorney at Law · CPA · LL.M. (Taxation)
Founder and managing attorney of Khatib Law LLC, established in Palos Heights in 2017. An attorney licensed in Illinois and a Certified Public Accountant, he concentrates his practice in estate planning, real estate, tax controversy and small-business matters. About Hani Khatib
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Tell us what you are facing.
A sentence or two is enough to start. We will tell you what the first meeting involves, and whether there is a charge for it, before you commit to anything.
(708) 722-2222
Monday to Friday, 9:00 a.m. to 5:00 p.m. · 6600 W College Dr, Ste 207, Palos Heights
What happens next
Your message goes to the firm’s office, not a call centre.
If you mention a deadline, it is read first.
We run a conflicts check and, if we can help, call or email you to set a time.
We confirm the kind of matter and what the first meeting involves, including whether there is a charge for it.
If we go forward, you receive a written engagement letter.
Scope and fee basis in writing before any work begins. Please do not email documents until we have confirmed an engagement in writing.
What to bring to the first meeting
- The owners' names, home addresses and the percentages you have in mind.
- Whether anyone holds a professional license, and the address the business will use.
- A rough profit estimate for year one, and whether anyone outside the family will invest.
- Any filing already made, if you started with an online service, and the certificate it sent you.