Whether you’re starting a business because you want to be your own boss or you’ve come up with a unique money-making idea, it’s an exciting and worthwhile experience. Still, the process of setting up your business can be stressful.
From getting the proper licenses to finding funding, it’s important to get it done correctly from the beginning. These first steps are like the foundation of a house - you want to make sure they’re done properly so that you can build a structurally sound home on top. If you don’t, you might waste time and money correcting issues later on.
The process doesn't have to be difficult. In fact, the steps for starting a business in Illinois are very straightforward. Complete the steps below and you’ll have a strong start to your exciting new business.
10 Steps to Start a Business in Illinois
1. Write a Business Plan
You’ve likely got a product or service in mind, as well as the details of why and how you’ll sell it. Now it’s time to put that in writing and make it official. While you can create a simple business plan that only you will use, you might make it more formal if you plan on getting a business loan. Your lender will ask to see your business plan to make sure your business is a worthwhile investment.
Before you create your business plan, you’ll need to check that your business name is available by searching on the Department of Business Services. If it’s free, you can reserve it for 90 days on the Illinois Secretary of State website.
Next, move on to your business plan, which should include:
- business name
- Executive summary
- Company overview
- Services/products and pricing
- Startup costs
- Earning projections
- Competitive analysis
- Ideal customer
- Employee or contractor requirements
- Marketing strategy
2. Choose a Business Structure and Registered Agent
Your business structure will determine how much risk you take on personally, as well as how you run your day-to-day operations. There are four main options:
- Sole proprietor: This is the easiest and often cheapest way to start, but you’ll assume the most risk if someone sues your business.
- Partnership: This is the simplest option to start a business with one or more partners, but you’ll also assume the most risk.
- Limited liability company (LLC): An LLC protects most of your personal assets by separating your finances from the business. It takes a little more effort to form but could be worth it in the event of a lawsuit.
- Corporation: A corporation provides you with the most personal protection and tax breaks, but also requires the most effort and money to form and manage.
If you are forming an LLC or corporation, you’ll also need to appoint a registered agent in Illinois. This is the person who will accept legal documents on behalf of the business. It can be a person who resides in Illinois, or a company that is legally authorized in Illinois to do business.
3. Register the Business
If you’re a sole proprietor doing business under your legal name, you won’t need to register your business name in Illinois. However, if you’re operating under another name or if you have a partnership, LLC, or corporation, you will need to register. You can register your business name with your county clerk’s office.
You’ll also need to complete a tax registration with the Illinois Department of Revenue (IDOR) if you plan on hiring employees and manufacturing goods. The same applies to you if you will buy or sell retail or wholesale products. This registration allows you to collect sales tax. If you’ll have employees, you must also register for employer withholding taxes with the IDOR.
Some counties and municipalities in Illinois also have their own taxes aside from the state and federal taxes. You can contact your local revenue department to find out if it requires a tax registration.
Finally, you’ll need to get a federal EIN (Employer Identification Number) from the Internal Revenue Service (IRS). If you’re starting out as a sole proprietor without employees, you’re not required to get an EIN. However, an EIN is sometimes required to open a business bank account or for payment processing, so it can be helpful to have.
4. Apply for Licenses and Permits
You’ll need various licenses and permits depending on what type of business you own. Most types of businesses in Illinois require a license from the Illinois Department of Financial and Professional Regulation (IDFPR).
Other licenses cover different factors, like health and safety, building and construction, and the environment. You can read more about what you need based on your business by visiting the Illinois Government website page on registration, licenses, and permits.
5. Find Funding
No matter what type of business you have, you’ll likely need some sort of funding to get started. If you have relatively low costs, you might opt for self-funding and use your savings or income to pay for business costs.
You can also ask your family or friends to lend you capital. You may choose to make it a more professional deal by writing out a repayment plan and signing it for them.
Then there are business grants – these are funds that you don't have to pay back. They’re typically issued by the government and private organizations. Most have qualifications you must meet before applying.
You may also apply for a business loan, which you’ll need to pay back with interest. Some loans require that you put up collateral in order to get approval. Finally, you could get a business credit card. In this case, be sure to look for a 0% APR to pay less interest and fees.
6. Open Financial Accounts
Regardless of what type of business you have, it’s a good idea to keep your personal and business finances separate. This helps you protect your personal assets, like your home or car, in the event that a person sues your business. It also makes taxes and bookkeeping easier.
You can open a business bank account online. Most banks ask for your EIN or Social Security number, an estimate of revenue, business name, and business structure. If you haven’t already opened a business credit card for funding, you may consider getting one at this point to cover smaller day-to-day purchases.
Lastly, you might sign up for accounting software to help you track your earnings and expenses. Or, you could set up your own system using a simple spreadsheet. Whatever you choose, you’ll need to consistently utilize the software to properly complete your taxes at the end of the year.
7. Get Business Insurance
There are several types of business insurance, and you won't necessarily need any of them. If you have a sole proprietorship and no employees, there are no insurance requirements. If you do have employees, you’ll need to get workers’ compensation insurance.
You may opt for general liability or professional liability insurance. These policies can help cover legal fees and other costs related to a lawsuit. This includes claims related to property damage, bodily injuries, data security breaches, and more.
To get business insurance, reach out to an insurance agent. They can provide you with more specific recommendations based on your business structure and type.
8. Get Paid with a Payment System
With the legalities of opening a business taken care of, it’s time to give your customers a way to pay you. It’s best to choose a payment system that’s easy for both you and your customers to use.
Pay.com is super user-friendly. The onboarding process is quick and straightforward, with fast approval. Pay.com lets you accept many different payment methods, so your clients can pay you however it’s convenient for them.
Using the Pay Dashboard, you can manually enter payment details via the Pay Virtual Terminal. This is a great option for businesses operating offline, whether you sell in person or over the phone. You can also send Pay Links to customers who’d like to pay online. Plus, with Pay Checkout, you can send direct payment requests.
The Pay Dashboard provides you with a variety of important tools. You can view reports and analytics, update customer details, track payment status, and add payment methods to your website.
9. Create a Website
The majority of today’s shoppers research businesses online before making a purchase. Even if you plan on selling in person, it’s important to have a website where your customers can find you. It builds trust and makes you appear more credible.
Luckily, setting up a website is fairly simple. You can use a website builder, like Squarespace or Wix, to set up a professional site in just a few hours. This is your place to tell your customers all about your business and differentiate yourself from the competition, so get creative.
There are some fees associated with having a website. You’ll pay a monthly fee for hosting the website, as well as a yearly fee to reserve your domain name.
You can use Pay.com to set up a customized checkout page to match the rest of your site, to provide your customers with a smooth payment experience.
10. Find Customers
The marketing strategy you created in your business plan should bring in customers. However, some marketing tactics require a lot of lead nurturing, and the process of building a customer base might start slowly. To be successful, you need to find customers right away.
There are a few ways to start. Regardless of your type of business, it’s always helpful to talk with your friends and family. Tell them about your business - ask if they know anyone who could benefit from your product or service. Share about your business on your personal social media.
You can also network elsewhere. Join online groups for people who provide the same service or product. Some businesses, especially service-based businesses, may be looking to offload clients who aren’t the best fit for them.
Lastly, aim to spend time where your ideal customers go. If you’re selling handmade items, you might open a booth at the farmer’s market to make sales. If you provide car detailing services, check out local car enthusiast groups.
The Bottom Line: Starting a Business in Illinois
Starting a business is an exciting – though potentially overwhelming – opportunity. Although it might seem complicated, it doesn’t have to be. By taking the time to complete the above steps correctly, you’ll avoid dealing with bigger issues further down the line.
When you choose a user-friendly payment system like Pay.com, you ensure that your customers always have a quick, easy, convenient way to pay you for your product or service. With those funds, you can grow the business of your dreams.