Connecticut and Illinois, two distinct states within the United States, each offer their own set of regulations and requirements for Limited Liability Companies (LLCs).
This comparative perspective aims to shed light on key aspects of Connecticut and Illinois LLCs, providing a comprehensive overview of their formation, name requirements, membership structure, management options, operating agreements, annual reporting obligations, and dissolution procedures.
Connecticut vs. Illinois LLC
Both Connecticut and Illinois require filing Articles of Organization and appointing a registered agent to form an LLC.
LLCs in both states are subject to corporate income tax and potential personal income tax on the members’ earnings.
Annual reports and fees must be submitted to the state authorities to maintain compliance for LLCs in both.
| Connecticut LLC | Illinois LLC |
|---|---|
| To form an LLC in Connecticut, you need to file Articles of Organization with the Connecticut Secretary of State and appoint a registered agent. | Forming an LLC in Illinois involves filing Articles of Organization with the Illinois Secretary of State and designating a registered agent. |
| The filing fee for forming an LLC in Connecticut ranges from $120 to $160. | In Illinois, the filing fee for an LLC is approximately $150. |
| Connecticut LLCs are required to file an annual report with the Secretary of State, which costs $20. | Illinois LLCs must submit an annual report and pay a $75 fee to maintain compliance. |
| It imposes a progressive personal income tax with rates ranging from approximately 3% to 6.99%. | For personal income tax, Illinois uses a flat rate of 4.95%. |
| Connecticut LLCs are subject to a flat corporate income tax rate of 7.5% on net income. | In Illinois, regular corporations pay a corporate income tax rate of 9.5%, while S corporations pay a rate of 7.3%. |
| It has a state sales tax rate of 6.35% on the sale of most tangible personal property and some services. | The state sales tax rate in Illinois is 6.25% for most tangible personal property, with additional local taxes possibly applying. |
| Connecticut does not impose a state-level personal property tax, which can be advantageous for businesses with substantial tangible assets. | In Illinois, there may be a state-level personal property tax that businesses need to consider, impacting their overall tax liability. |
Cost Breakdown of The Two
You may use our free LLC cost calculator by state to find out filing fees, tax percentages, income taxes, and more.
Connecticut
The cost to file the Articles of Organization with the Connecticut Secretary of State can range from $120 to $160, depending on the filing method (online or by mail).
Hiring a registered agent service can cost around $50 to $300 per year, depending on the provider and the level of service.
Connecticut LLCs are required to file an annual report, which costs $20 and includes updating the company’s information with the state.
Illinois
The cost of filing the Articles of Organization with the Illinois Secretary of State is typically around $150.
Similar to Connecticut, hiring a registered agent service it can range from $50 to $300 per year.
It must file an annual report, which costs $75 and includes updating the company’s information with the state.
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- Connecticut LLC: Cost Breakdown, Pros and Cons, Requirements
- Illinois LLC: Cost Breakdown, Pros and Cons, Requirements
Similarities Between Connecticut and Illinois LLC
Both states require the same basic steps to form an LLC.
This includes filing Articles of Organization with the Secretary of State, designating a registered agent within the state, and paying the necessary filing fees.
LLCs in both Connecticut and Illinois offer limited liability protection to their members.
This means that the personal assets of the LLC members are generally protected from the company’s debts and liabilities.
In both states, LLCs have flexibility in their management structure.
They can be managed by their members (member-managed) or appoint managers who may or may not be members (manager-managed).
Both Connecticut and Illinois allow for the perpetual existence of an LLC, meaning the company can continue to operate even if its members change or pass away.
Although not legally required in either state, an operating agreement is highly recommended for LLCs in both Connecticut and Illinois.
This agreement outlines the internal workings of the company, the rights and responsibilities of members, and other essential operational details.
Both states mandate annual reports for LLCs to maintain compliance. The reports provide updated information about the company’s address, members, and registered agent.
Connecticut and Illinois both subject LLCs to state-level corporate income tax.
Additionally, LLCs are pass-through entities for federal income tax purposes, meaning profits and losses flow through to the members’ individual tax returns.
Additional Resources:
Steps to Form LLC in Connecticut
Choose a name for your LLC and ensure it complies with Illinois naming requirements.
File Articles of Organization with the Illinois Secretary of State and pay the required filing fee.
Appoint a registered agent with a physical address to receive legal documents on behalf of the LLC.
Prepare an operating agreement outlining the internal structure and management of the LLC (not required but recommended).
Obtain an Employer Identification Number (EIN) from the IRS for tax purposes.
Comply with any additional local and state licensing or regulatory requirements.
File an annual report and pay the required fee to maintain compliance and keep your LLC in good standing.
Steps to Form LLC in Illinois
Choose a name for your LLC that complies with Illinois naming rules.
File Articles of Organization with the Illinois Secretary of State and pay the filing fee.
Appoint a registered agent with a physical address in Illinois to receive legal documents.
Create an Operating Agreement, outlining the LLC’s internal structure and member roles (optional but recommended).
Obtain an Employer Identification Number (EIN) from the IRS for tax purposes.
Fulfill any additional local and state licensing or regulatory requirements.
Comply with annual reporting obligations and maintain good standing by submitting the required reports and fees.
Feature Comparisons Between Connecticut LLC vs. Illinois LLC
Formation Process and Requirements:
Connecticut: The process of forming an LLC in Connecticut involves filing Articles of Organization with the Secretary of State and appointing a registered agent.
An operating agreement is recommended but not mandatory.
Illinois: Similarly, forming an LLC in Illinois requires filing Articles of Organization and designating a registered agent. An operating agreement is not mandatory but highly advisable.
Taxation:
Connecticut: Connecticut imposes a corporate income tax on LLCs and has a state-level personal income tax, which means LLC profits are subject to both corporate and personal income taxes for the members.
Illinois: Like Connecticut, Illinois has a corporate income tax and a state-level personal income tax, potentially subjecting LLCs to both types of taxes.
Annual Reporting and Compliance:
Connecticut: LLCs in Connecticut are required to file an annual report with the Secretary of State and pay a filing fee to remain in good standing with the state.
Illinois: Similarly, Illinois LLCs must file an annual report and pay a fee to maintain compliance and keep the company active.
Personal Property Tax:
Connecticut: Connecticut does not impose a state-level personal property tax on LLCs, making it advantageous for businesses with significant assets.
Illinois: Illinois does have a personal property tax, which can affect the tax liability of LLCs with substantial tangible assets.
Business Environment and Market Opportunities:
Connecticut: Connecticut offers a diverse economy with a focus on finance, insurance, and technology industries, providing opportunities for businesses in these sectors.
Illinois: Illinois boasts a diverse economy with strong industries in manufacturing, agriculture, and services, making it attractive for various types of businesses.
Business Environment
Connecticut
Connecticut has a diverse economy with strengths in industries such as finance, insurance, healthcare, technology, and manufacturing.
Connecticut’s location near major cities like New York City and Boston offers access to large markets and business opportunities.
The state is known for its well-educated and skilled workforce, providing a competitive advantage to businesses.
Connecticut offers access to various funding sources, including venture capital and state-level grant programs, to support business growth.
Connecticut’s legal system is generally seen as business-friendly, providing a stable environment for LLCs.
Illinois
Illinois has a diverse economy with a strong presence in industries such as manufacturing, agriculture, finance, technology, and healthcare.
Illinois’ central location in the United States allows for easy access to national and international markets.
The state benefits from extensive transportation networks, including major highways, railroads, and international airports, facilitating business logistics.
Illinois is home to several major universities and research institutions, providing a well-educated workforce for businesses.
Illinois offers access to various funding resources and incentives to support business development and innovation.
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Connecticut vs. Illinois Taxes
Connecticut Taxes
Connecticut imposes a state-level personal income tax with multiple tax brackets ranging from around 3% to 6.99%.
The tax rates are progressive, meaning higher-income earners pay a higher percentage of their income in taxes.
Connecticut levies a corporate income tax on businesses, including LLCs, with a flat rate of 7.5% on net income.
The state sales tax rate in Connecticut is 6.35% on the sale of most tangible personal property and some services.
Connecticut has property taxes assessed at the local level, and the rates vary based on the municipality.
Illinois Taxes
It imposes a state-level personal income tax with a flat rate for individuals and businesses. The flat rate is set by the state legislature and may change over time.
Illinois has a corporate income tax rate of 9.5% on net income for regular corporations and a rate of 7.3% for S corporations.
The state sales tax rate in Illinois is 6.25% on the sale of most tangible personal property, but local jurisdictions may impose additional sales taxes.
Illinois property taxes are assessed at the local level, and rates can vary significantly across different areas within the state.
Flexibility in Rules and Regulations
Connecticut
Business-Friendly Environment: Connecticut is known for having a business-friendly environment, with a focus on supporting small businesses and fostering innovation.
No Franchise Tax: Connecticut does not impose a franchise tax on LLCs, which can be an advantage for businesses operating in the state.
No State-Level Personal Property Tax: Connecticut does not have a state-level personal property tax, which can be beneficial for LLCs with significant tangible assets.
Illinois
Access to Incentives and Grants: It offers various incentives and grant programs to support businesses in certain industries or areas, providing opportunities for growth and development.
No Unitary Tax: Illinois does not levy a unitary tax, which is a tax on businesses with multiple locations in different states, making it more appealing for multi-state operations.
Strategic Location: Illinois’ central location in the United States provides businesses with convenient access to major markets and transportation networks.
Key Differences Between Connecticut and Illinois- An Overview
