Do I need an LLC?Illinois LLC cost: year one and every year after
Short answer. For a solo operator in Illinois, the state cost confirmed on official sites is $225 in year one ($150 Articles of Organization plus the first $75 annual report) and $75 a year after that: the LLC annual report, filed every year even with no revenue. Illinois has no LLC franchise tax that we found, but it does tax your income at a flat 4.95% through your own return. A registered agent is required but has no price we could confirm. Forming in Wyoming instead costs more ($325 confirmed in year one), because an Illinois resident is still admitted in Illinois for $150 and still files the $75 report. Staying a sole proprietor has no state formation fees. City and county taxes and Illinois sales tax on software are not computed in the totals.
Informational only. Not legal or tax advice. Confirmed means read on an official government page on 2026-10-31. Estimates are shown apart and are never added to confirmed totals.
Illinois LLC vs Wyoming LLC vs sole proprietor
| Path | Year one | Each year after |
|---|---|---|
| A. LLC in Illinois | $225 confirmed ($150 Articles of Organization + the $75 annual report that falls due before your first anniversary month; the first-report timing is not verified) + Illinois registered agent: no figure found, not included | $75 confirmed (the annual report, every year, even with no revenue) + Illinois registered agent if you do not serve as your own: no figure found, not included |
| B. LLC in Wyoming + register in Illinois | $325 confirmed ($100 Wyoming + $150 Illinois admission + $75 Illinois annual report) + Wyoming registered agent and Illinois registered agent: no figures found, not included + a certificate of existence from Wyoming (its fee was not checked) and a $2,000 penalty plus $100 a month only if you do business in Illinois more than 60 days without being admitted (not in the total) | $135 confirmed ($60 Wyoming minimum annual report + $75 Illinois annual report) + both registered agents, no figures found |
| C. Sole proprietor (baseline) | $0: free EIN from the IRS, separate bank account + county assumed name filing if you use a business name: not researched, not in the total | $0 in state fees; no LLC annual report (inference, not verified) |
Not in any total above: a registered agent (no commercial price found), the online payment-processor fee on the annual report (amount not stated), expedited service, your federal income and self-employment tax, your Illinois income tax at 4.95%, bank fees, Illinois or Chicago sales or lease tax on software (see the software taxes section below; no amount is in any total), city and county business taxes and licenses (not covered), and any attorney or CPA time.
Illinois LLC fees, line by line
| Fee | Amount | Status | Source |
|---|---|---|---|
| Illinois Articles of Organization (Form LLC-5.5) | $150 | verified | Illinois Secretary of State LLC forms and fees; 805 ILCS 180/50-10 |
| Foreign LLC Application for Admission (Form LLC-45.5) | $150 | verified | Same fee page and statute |
| LLC annual report (Form LLC-50.1) | $75 a year | verified | Same fee page and statute; due rule in 805 ILCS 180/50-1 |
| Penalty for a delinquent annual report | $100, plus $100 per later year | verified | 805 ILCS 180/50-15 |
| Reinstatement after administrative dissolution or revocation (Form LLC-35.40/45.65) | $200 | verified | Illinois Secretary of State LLC forms and fees |
| Penalty for doing business in Illinois without admission (foreign LLC), after 60 days | $2,000 plus $100 per month | verified | 805 ILCS 180/45-45 |
| Illinois registered agent | no figure | unresolved | Required by 805 ILCS 180/1-35; private companies set the price. |
| Newspaper publication | none found | not verified | No requirement found on the official pages read; an absence is not proof |
| Wyoming Articles of Organization | $100 | verified | Wyoming SOS fee schedule, effective July 1, 2026 |
| Wyoming annual report license tax | $60 minimum | verified | Same schedule: $60 or two-tenths of one mill on Wyoming assets, whichever is greater. |
| Wyoming registered agent | no figure | unresolved | Private companies set the price. Wyoming requires an agent (seen in a search excerpt of an SOS guide, not read in full). |
| EIN | $0 | verified | IRS: "You never have to pay a fee for an EIN." |
Why Wyoming does not help an Illinois resident
Illinois charges no franchise tax or flat annual LLC tax that we found, so there is little for Wyoming to save. A foreign LLC must be admitted before it transacts business in Illinois (805 ILCS 180/45-5); the application needs a certificate of existence from the home state. One that is not admitted within 60 days of starting to do business owes a $2,000 penalty plus $100 for each month or fraction thereof, cannot sue in Illinois courts until admitted, and owes the fees it would have paid (805 ILCS 180/45-45). Its contracts stay valid. An admitted foreign LLC also files the same $75 annual report every year (805 ILCS 180/50-1), and it pays Wyoming's $100 and $60 on top. For a solo operator the Wyoming route costs more than forming in Illinois.
Illinois taxes: what an LLC does and does not change
The IRS treats a single-member LLC as "disregarded as separate from its owner": you report profit on Schedule C and pay self-employment tax as a sole proprietor would. Illinois taxes individual net income at a flat 4.95% (Illinois Department of Revenue tax rates), and for a disregarded LLC the income goes on the owner's Form IL-1040: "The LLC has no Illinois income tax filing requirements" (Illinois Department of Revenue, how Illinois taxes an LLC). Illinois estimated-payment dates were not verified in this build; federal estimated tax for 2026 is due April 15, June 15, September 15 and January 15, 2027 (Form 1040-ES). See the annual report page for the yearly filing.
What is different about forming in Illinois: software taxes on an app business
The state fees above are the same whether you sell software or anything else. What changes for an app or SaaS founder here is how Illinois and Chicago tax software. This is what the official pages say, read 2026-10-31, and none of it is added to any total above. An LLC does not change any of it, because these taxes attach to the sale or lease, not to the type of entity.
- Cloud-delivered software is not taxed by the state. An Illinois Department of Revenue general information letter says Illinois does not tax subscriptions of software as a service, and that software "provided through a cloud-based delivery system is not subject to tax," meaning it is never downloaded onto the customer's computer and is only accessed remotely. The Department treats a SaaS provider as a serviceman, not a retailer. (Illinois Department of Revenue, ST 24-0044-GIL, December 16, 2024)
- Downloaded software and agents are treated differently. The same letter says software downloaded onto a customer's computer in Illinois is tangible personal property subject to Retailers' Occupation Tax, and that if a SaaS provider hands the customer an API, applet, desktop agent or remote access agent, "it appears the subscriber is receiving computer software that is subject to tax." If your product ships a desktop client or agent, that line matters. The letter does not discuss mobile app stores. The letter is a general information letter, which the Department says is not binding on it. (same letter)
- Chicago taxes remote use of software as a lease. The city's Personal Property Lease Transaction Tax applies to a lessor or lessee of personal property used in Chicago. From January 1, 2026 the rate is 15% of receipts or charges for all leases, "including the non-possessory lease of a computer to input, modify, or retrieve data supplied by the customer." It was 11% in 2025 and 9% from 2021. The page lists an exemption for property leased outside the city and primarily used outside it. Whether and how this applies to your subscriptions, or to the cloud tools you pay for while working in Chicago, was not worked out here. (City of Chicago Department of Finance, Personal Property Lease Transaction Tax (7550); Tax Rate Changes as of January 2026)
Not verified: who must collect the Chicago tax from a customer, registration thresholds, and whether Chicago treats your particular product as a lease. Check with the City of Chicago Department of Finance before you sell to Chicago customers. Informational only, not legal or tax advice.
What this Illinois page doesn't tell you
Whether you need an LLC yet, which line of the table applies to you, your own annual report window, or whether to ask a CPA about an S-corp. The calculator takes your answers and returns a verdict, your numbers and a dated checklist you can download as a PDF and calendar file.
Illinois LLC questions
How much does it cost to form an LLC in Illinois?
The confirmed state cost in year one for a solo operator is $225: $150 for the Articles of Organization (Form LLC-5.5) plus the $75 annual report, which falls due before your first anniversary month. A registered agent is required, but no commercial price was found, so none is included.
What does an Illinois LLC cost every year?
The confirmed recurring state fee is $75, the LLC annual report, filed every year in the 60 days before the first day of your anniversary month, even with no revenue. A registered agent costs extra if you do not serve as your own, and that price is not included.
Is a Wyoming LLC cheaper for an Illinois resident?
No. An Illinois resident forming in Wyoming still has to be admitted in Illinois for $150 and still files the $75 Illinois annual report, on top of Wyoming's $100 formation fee and $60 minimum annual report, so the total is higher. An LLC that does not get admitted within 60 days of starting to do business in Illinois owes a $2,000 penalty plus $100 per month.
Do I need a registered agent in Illinois?
Yes. Every Illinois LLC must continuously keep a registered agent and a registered office in Illinois. The agent must be an individual resident of Illinois or another person authorized to transact business in Illinois. No commercial agent price was found.
Does Illinois require newspaper publication for an LLC?
We found no publication requirement for Illinois LLCs on the official pages we read, but an absence on a page is not proof, so this is not verified. Check with the Secretary of State or an attorney.
Do I pay less income tax with an LLC?
Not by default. A single-member LLC is disregarded for federal tax, so you report profit on Schedule C and pay self-employment tax as a sole proprietor would. Illinois taxes your income at a flat 4.95% on your own IL-1040, and the LLC itself files no Illinois income tax return.