How to Register a Contracting Company in Illinois

Choose the entity, and know that the statute and the Department are two different sources

DCEO lists the Illinois options as sole proprietorship, general and limited partnership, limited liability partnership, limited liability company, and S and C corporations, and specifically names construction among the businesses for which an LLC is suited. Corporations and LLCs are filed with the Secretary of State's Department of Business Services; DCEO publishes the LLC section at Room 351, Howlett Building, Springfield, and the Business Services corporate offices in Springfield and Chicago.

On fees we are going to be precise about what we are quoting. The Illinois Limited Liability Company Act sets a statutory schedule at 805 ILCS 180/50-10: "Filing articles of organization (domestic), application for admission (foreign), and restated articles of organization (domestic), $150", with $400 for a series LLC, and "Filing an annual report of a limited liability company or foreign limited liability company, $75, if filed as required by this Act, plus a penalty if delinquent". Those are the statute's figures. The Secretary of State's own published fee page was unreachable from our environment throughout this review, so we are not representing these as the Department's current published charges, and you should confirm them with the Secretary of State before you send money.

The annual report timing is worth setting up in your calendar the week you form. 805 ILCS 180/50-1 requires that the annual report, "together with all fees and charges prescribed by this Act, shall be delivered to the Secretary of State within 60 days immediately preceding the first day of the anniversary month". It is an anniversary-month deadline, not a fixed calendar date, so it is different for every company and easy to lose.

Official sources: Illinois DCEO: Step by Step Guide; 805 ILCS 180/50-10 (LLC fee schedule); 805 ILCS 180/50-1 (LLC annual report)

If you are trading under a name that is not your own, that filing is at the county

This is the step Illinois newcomers most often file in the wrong place. DCEO states that when a business name differs from the owner's full legal name, the Illinois Assumed Name Act requires sole proprietorships and general partnerships to register the business name "with their county clerk's office", and it publishes a list of county clerks for exactly that purpose. It is a county filing. Filing something at the Secretary of State does not satisfy it, and vice versa.

The distinction shows up directly in licence applications. IDFPR's Licensed Roofing Contractor packet asks a sole proprietor for "a copy of a letter from the County Clerk where the Assumed Name has been filed", and asks a general partnership for the signed and dated partnership agreement plus "a copy of the approved documentation from the County Clerk where the partnership has been filed". A corporation, LLC or PLLC is asked instead for the filed Articles of Incorporation, Certificate of Authority or Articles of Organization from the Illinois Secretary of State, and if it uses an assumed or fictitious name, the filed application with the Secretary of State to adopt it.

For an LLC specifically, the assumed name fee in the statutory schedule is prorated by the year the renewal falls in: 805 ILCS 180/50-10 sets $150 for a year ending in 0 or 5, $120 for 1 or 6, $90 for 2 or 7, $60 for 3 or 8, and $30 for 4 or 9, with $150 to renew each assumed name and $25 to file an application for change of an assumed name. Again, that is the statutory schedule, quoted because the Secretary of State's own page could not be reached to cross-check it.

Official sources: Illinois DCEO: Step by Step Guide; IDFPR: Licensed Roofing Contractor application packet (DPR-RF); 805 ILCS 180/50-10 (LLC fee schedule)

Register with the Department of Revenue, and learn the construction tax rule early

DCEO states that in Illinois most businesses are required to be registered or licensed by the Illinois Department of Revenue, and that you must register if you plan to hire employees, buy or sell products wholesale or retail, or manufacture goods. IDOR runs registration through MyTax Illinois and publishes a direct registration link on its Businesses page, along with a facility to verify a business's registration status.

Then learn the rule that decides how you price every job. IDOR publishes the answer in its own words: a construction contractor is not required to collect sales tax when incorporating tangible personal property into real estate under a construction contract, because Illinois law treats the construction contractor as the end user of items permanently incorporated into real estate. The contractor instead incurs use tax on the cost price of those items, and must either pay that tax to the supplier or remit it directly to IDOR where the supplier is not registered with the Department.

The exception is where you sell rather than install. IDOR states that construction contractors do incur retailers' occupation tax liability when selling tangible personal property to purchasers "for use without installation", citing 86 Ill. Adm. Code Sections 130.1940 and 130.2075. A contractor who sells a homeowner a water heater over the counter and a contractor who installs the same unit under a construction contract are in two different tax positions. Get that distinction into your bookkeeping before your first quarter closes, not during an audit.

Official sources: Illinois DCEO: Step by Step Guide; Illinois Department of Revenue: Businesses; Illinois Department of Revenue: Must construction contractors collect sales tax?

Employer registrations, and the construction-specific law that punishes getting it wrong

DCEO states the unemployment insurance trigger plainly: a business is typically required to make contributions to IDES if it has either employed one or more workers in each of 20 or more calendar weeks, or paid at least $1,500 in total wages during a calendar quarter. Once you are liable, IDES requires contributions and wage reporting on Form UI-3/40 filed "on or before April 30, July 31, October 31, and January 31". Workers' compensation is separate again: DCEO states that under the Workers' Compensation and Workers' Occupational Diseases Acts an employer is required to provide insurance for accidental deaths, injuries and occupational diseases arising in the course of employment, that temporary workers who do not receive company benefits are still covered, and that companies may apply to the Illinois Workers' Compensation Commission to self-insure.

Now the part that is specific to your industry. Illinois has a construction-only misclassification statute, the Employee Classification Act at 820 ILCS 185, and it starts from a presumption against you. Section 10(a) deems an individual performing services for a contractor to be an employee of that contractor unless an exception is met. The three-part test in Section 10(b) requires all three of: freedom from control or direction over performance both under the contract and in fact; that the service performed is outside the usual course of services performed by the contractor; and that the individual is engaged in an independently established trade, occupation, profession or business, or qualifies as a legitimate sole proprietor or partnership.

That second element is the one that defeats most subcontracting arrangements in construction, because a framing sub working for a framing contractor is by definition inside the usual course of the contractor's services. Section 10(c) then provides an alternative twelve-criterion route for a sole proprietor or partnership, requiring among other things a substantial investment of capital beyond ordinary tools and a personal vehicle, ownership of the capital goods with the risk of profit and loss, services marketed continuously to the public or the business community, income reported as an independent business on federal returns, work performed under the proprietor's own name, independently obtained licences and permits in that name, and the right to perform similar services for others.

The penalties are per person per day. Section 40 authorises civil penalties up to "$1,000 for each violation found in the first audit" and up to "$2,000 for each repeat violation found by the Department within a 5 year period", with each violation for each person and for each day counted separately, recoverable by the Director of Labor administratively or in circuit court. Ten percent of a recovered penalty goes to the affected employee. On a crew of six over a season, the arithmetic gets serious quickly.

Official sources: Illinois DCEO: Step by Step Guide; IDES: Quarterly Filing Requirements; 820 ILCS 185/10 (Employee Classification Act; employee status); 820 ILCS 185/40 (Employee Classification Act; penalties)

Only then go for the licences, because they will ask for the filings

The order matters because licence applications demand entity documents. IDFPR's roofing application requires a corporation to attach the entire Articles of Incorporation as filed with the Illinois Secretary of State, or a Certificate of Authority for an out-of-state corporation, and an LLC or PLLC to attach the Articles of Organization as filed, or the Application for Admission to Transact Business for a company located in another state. It goes further and dictates language: the purposes section of your Secretary of State application must include either "To provide limited roofing services, pursuant to the Illinois Roofing Industry Licensing Act" or the equivalent unlimited wording. Forming the entity with a generic purpose clause and then applying for the roofing licence means amending the entity.

Plumbing has a parallel dependency running the other way. 225 ILCS 320/13.1 requires the annual plumbing contractor registration to be filed on or before the last day of September, and requires that the business name, structure, location and ownership details be kept current with the Department, with advance notice of changes involving the licensed plumber named on the application. IDPH also requires the registration to carry the insurance and the $20,000 indemnification bond or letter of credit described in that section.

Municipal licensing has the same appetite for paperwork. Chicago's general contractor application requires proof that the applicant is authorised to do business in Illinois, which the City waives only for sole proprietors, plus an Assumed Name Certificate issued by the county clerk if the applicant is doing business under an assumed name, a statement of financial solvency, proof of insurance at the level required by the class applied for, certification that the insurer is rated B+ or better by A.M. Best, and government-issued photo identification for the responsible individuals. There is no version of this in which the licence comes first.

One last thing to have in place before you sign a customer: the Home Repair and Remodeling Act duties attach from your first residential job, not from your first licence. Section 15 requires a written contract for work over $1,000 with the total cost and the parts and materials listed with reasonable particularity, and Section 25 requires the liability and property damage minimums. Build those into your contract template while you are still doing paperwork, because retrofitting them after a complaint reads badly.

Official sources: IDFPR: Licensed Roofing Contractor application packet (DPR-RF); 225 ILCS 335/3 (application for roofing contractor license); 225 ILCS 320/13.1 (plumbing contractors registration); IDPH: Plumbing; City of Chicago: General Contractor License; 815 ILCS 513/15 (written contract); 815 ILCS 513/25 (insurance required)

Check the official page yourself before you file or sign

Illinois spreads contractor rules across more agencies than most states: IDFPR for roofing, IDPH for plumbing, the Office of the State Fire Marshal for fire sprinkler work, the Illinois Department of Revenue for tax registration, IDES for unemployment insurance, the Secretary of State for entity filings, your county clerk for an assumed name, and your own municipality for the licence that actually lets you pull a permit. No single page carries all of it, and each one changes on its own schedule.

Two practical consequences. First, before you file an application or sign a contract, open the specific agency page for your trade, confirm the figure you are relying on, and keep a dated copy of what you read. Second, call your municipality before you assume it has no rules: Illinois has more units of local government than any other state, and the absence of a state licence for your trade tells you nothing about whether your village requires one. DCEO runs a Business Information Center on 800.252.2923 for exactly this kind of question.

Official sources: Illinois DCEO: Begin Here; Illinois DCEO: Step by Step Guide