With its central location in the Midwest and home to Chicago, one of the largest cities in the United States, Illinois is a popular state for small businesses. However, you have several considerations to keep in mind if you’re thinking about starting your own small business in the Prairie State. Learn more about what you need to know so you can take the right steps to open your small business in Illinois.
Climate for Small Businesses in Illinois
Although they’re called small businesses, they actually make up a large portion of businesses in Illinois. In fact, the 1.2 million small businesses in the state actually account for 99.6 percent of all businesses there. Additionally, small businesses make up a large portion of the workforce. Around 2.5 million people in the state work for a small business, which accounts for 45.5 percent of Illinois employees. When 7,597 small businesses hired their first employees, it generated 31,194 jobs.
Popular Industries for Small Businesses
From the retail stores in the heart of Chicago to the specialized services offered in the rural countryside, Illinois has a variety of industries where small businesses are prevalent. One of the most popular industries where you’ll find small businesses is construction. In this industry, 82.7 percent of all businesses are classified as small. Another top industry is accommodation and food services, which includes 62.6 percent of small businesses.
Industries typically associated with a service also have a large number of small businesses. For example, 67.7 percent of businesses in the real estate industry are small businesses. Additionally, 54.1 percent of businesses in the professional services industry are small.
Breakdown of Small Business Owners
With small businesses appearing in different industries around the state, it should come as no surprise that a variety of people are opening them. In Illinois, 10 percent of men and 6.2 percent of women are self-employed workers. Additionally, with 5.3 percent of minorities accounting for self-employed workers, it’s clear to see that people are finding the funding they need to open their businesses. Lastly, 10.8 percent of veterans are self-employed workers in the state.
Advantages of Opening a Small Business in Illinois
If you’re thinking about starting your own Illinois small business, you’ll be pleased to know the state has several advantages over other areas. Chicago is a hub for transportation and connectivity, which makes it a great choice for small business owners who are interested in growing their company and exporting their goods. Chicago is also one of the top metropolitan areas in the country, with average annual revenue of $620,036 for small businesses.
In 2018, CNBC ranked Chicago as the 12th best city in the country to start a small business, and this is up from 19th on the list in 2017.
If you find yourself in need of guidance when you’re operating your small business, Illinois has 17 small business development centers around the state ready to help answer your questions.
Starting a Small Business in Illinois
With all this information in mind, you might be thinking that now is the perfect time to start a small business in Illinois. While you’ll likely be able to complete all the paperwork yourself to register your business, it’s important that you understand the documents and permits necessary to start your business so you can begin operations correctly and legally.
Begin With the Federal Government
Your first step in starting a small business in Illinois actually begins with the federal government. You’ll need to apply for an Employer Identification Number (EIN) with the IRS. The EIN basically serves as a taxpayer identification number for your business. If your business was a person, the EIN would be its Social Security number. Even if your business doesn’t have any employees, you still need to apply for an EIN.
Choose Your Business Structure
Once you have your EIN, it’s time to decide what type of business structure you want for your small business. In Illinois, you have several options available. These options include:
- Sole proprietorship
- General or limited partnership
- Limited Liability Partnership (LLP)
- Limited Liability Company (LLC)
- S Corporation
- C Corporation
If you want to set up your business as a general partnership or sole proprietorship, you’ll need to register it using your own name. To use a name that’s different from your own, you have two options. First, you can file a DBA (Doing Business As) with your local county clerk’s office. Second, you can choose one of the other structures for your business and complete the necessary forms to take on an assumed name.
Complete the Business Registration Application
If you plan on buying and selling products, manufacturing goods, or hiring employees, you must register your business with the Illinois Department of Revenue to pay your proper taxes. The fastest and easiest way to do this is to register online, which has a two-day processing time.
It’s also possible to register your business by mail. In this case, you’ll need to download and complete the proper forms before sending them to the Illinois Department of Revenue. Mailed applications typically have a processing time of six to eight weeks. No matter which option you choose, you’ll receive a state taxpayer ID number and Certificate of Registration once your application is processed.
File for a Professional License
It’s important to keep in mind that Illinois requires you to obtain a license before offering certain professional services. If you need to get a professional license, you can do so by applying with the Illinois Department of Financial and Professional Regulations (IDFPR) before registering your business. Some municipalities and counties may also have additional requirements for professional licenses. Therefore, you should check with the County Clerk’s office in the city where you want to operate your small business to find out if you need to register with the local government.
With this information, you now know the climate for small businesses in Illinois and you understand the steps you need to take if you’re interested in opening your own small business.