How to Get a Business License in Illinois

If you’re starting a business in Illinois, you should know that companies don’t need a general business license, but businesses that owe sales tax or other state taxes need to register with the Illinois Department of Revenue (IDOR). Also, various types of businesses, such as those that sell food or liquor, need to file additional paperwork and secure extra permits. So, to ensure you get your new venture off the ground, let’s break down how to get small business licenses and permits in Illinois.

As an entrepreneur, starting a business means figuring out details like market competition, supply chains, and consumer demand. However, before you can start selling your products or services, you have to ensure you’re compliant with state, local, and federal regulations. So, one of the most important processes of starting a new business is securing the right licenses and permits. 

The purpose of business licenses and permits in Illinois

Although filing paperwork with the state government may seem costly and onerous at first, there are a few critical reasons why licenses and permits are necessary. First, they offer security for consumers, as every company is publicly listed. So, if something goes wrong or a customer needs to sue a business, they can find out the right information for their lawsuit.

Similarly, permits and licenses that require training or compliance can ensure that each company can meet the needs of its customers.

Another purpose of licenses and permits is to generate revenue for the government. Because the government runs on taxes, it’s imperative for each business to submit tax earnings, such as sales tax. 

Business licenses vs permits

Although the terms “license” and “permit” may seem interchangeable, there are two crucial differences between these terms. 

First, a license is for your business, and it’s likely related to general operational activity, such as collecting sales tax or conducting business within the state. By comparison, permits are often for a specific activity, such as selling cooked food or acting as a vendor at an event. 

Second, permits may be temporary, while licenses are not. Even though you may have to renew a license annually, it’s designed to keep your business in good standing for as long as you operate within the state. Permits, however, may only be for a short period, such as a weekend festival or seasonal operations. That said, some permits may also offer yearly renewals. 

Types of business licenses and permits you might need for your Illinois business

In Illinois, companies don’t need a general business license to operate in the state. Instead, businesses that sell taxable goods, have employees, or owe other state taxes must register with the Illinois Department of Revenue (IDOR). Registration is free. Fortunately, entrepreneurs can file the proper form (REG-1) online at MyTaxIllinois. Alternatively, you can mail the form to the IDOR or visit an office in person to get assistance. Online registration typically takes 1–2 business days, while a mailed form can take 4–6 weeks to process (IDOR suggests allowing 6–8 weeks). 

State and local business licenses and permits

In addition to a standard business regulation application, Illinois requires separate forms for different types of businesses. According to the IDOR, other industries can include: 

• Liquor licenses
• Cigarettes and tobacco
• Medical cannabis and cultivation
• Marketplace facilitators
• Telecommunications
• Third-party tax filing
• Motor fuel distribution or supplier

Also, food service establishments, general contractors, and other professional services, such as insurance agents, require specialty licensing from various departments. For example, restaurants and pop-up food stands must get licensed by their local (city or county) health department. Insurance agents must get licensed from the Illinois Department of Insurance. 

Some Illinois cities and counties may also require licensing if you’re based in those locations. For example, all Chicago-based companies must register with the city before starting operations. Similarly, the city of Rockford requires licensing for specific types of businesses, such as door-to-door sales or liquor stores. 

If you’re doing business in Chicago, you’ll need to register with the city, which issues its own business licenses through the Department of Business Affairs and Consumer Protection (BACP). Cook County business licenses apply only in unincorporated areas of the county. Most counties in Illinois don’t have separate business license requirements, but sole proprietors and partnerships using an assumed name must register it with the county clerk (for example, Madison County charges $31, plus the cost of publishing a newspaper notice). 

Overall, before starting your business, check with the local city and county to see if there are unique business license or permitting requirements. As a rule, larger counties with higher populations might have specific rules, while smaller counties do not. Also, keep in mind that these licenses might be necessary if you’re doing business in these locations, even if you’re based in another part of the state.

For example, you might be registered in Chicago but sell products or services across the state, so you may need licenses from other cities or counties. 

Specialty specific federal business licenses and permits

Most businesses need only state and local registrations. However, some industries also require federal licensing, such as: 

• Agriculture
• Alcohol Manufacturing or Wholesaling
• Aviation (e.g., operating an airfield or charter plane service)
• Firearms 
• Mining and Drilling

You can check the Small Business Administration for the industries that require federal approval. Typically, you’ll need to secure your state and local licenses first, then apply at the federal level. 

How to obtain business licenses and permits in Illinois

Step 1: Determine which licenses and permits your business needs

First, register your business with the Illinois Department of Revenue if it sells taxable goods, has employees, or owes other state taxes. However, depending on the type of business you’re conducting, you’ll likely have to get special permits or licenses to operate within the state. Some common permits can include: 

• Alcohol and Tobacco Sales
• Food Service
• Contracting
• Insurance Provider
• Manufacturing
• Mining
• Bookkeeping
• Healthcare Provider

In some cases, you may need federal, state, county, and city licenses to do business. If that happens, you’ll typically need to register with the IDOR first and secure any specialty permits with the state before moving onto county, city, and federal licenses. 

Step 2: Submit all required documents and fees

Registering your business with the Illinois Department of Revenue is free for every entity type. If you form an LLC, the Illinois Secretary of State charges a separate $150 fee to file your Articles of Organization. If you apply for LLC in Illinois, you might have to submit additional documents, such as reserving a business name, changing your registered agent, or an amended application. 

Specialty permits, such as food service licenses, are often dependent on the size of your storefront and the type of food you sell. Again, you may have to submit applications to the city and county to operate your business, so keep track of all associated costs and fees. 

Thankfully, most of these permits and fees can be submitted online for added convenience. 

Step 3: Track the status of your application and approval

In Illinois, LLC filings made online are typically processed faster than filings sent by mail. If you pay for expedited service (a $100 fee), you can receive approval the same day or within 24 hours. Also, if you’re forming an LLC series (e.g., setting up multiple offices or agencies within the state), the registration fee is $400 ($500 for expedited). 

If you file online, you will create an account with the Illinois Secretary of State and can check the status of your application through the portal. If you file via mail, you’ll receive a paper confirmation in the mail once you’re approved, which takes longer than filing online. 

Step 4: Renew as needed

Generally speaking, a retail Certificate of Registration from the Illinois Department of Revenue is valid for one year and renews automatically if your tax filings and payments are current. If you have a reseller business, your certificate is good for three years, and you renew it using the renewal packet IDOR mails you, or by email or phone. 

The renewal date for specialty licenses may be different. For example, insurance permits are renewed every two years, not annually. Also, keep in mind that LLCs in Illinois must submit an annual report every year to maintain a good standing with the Secretary of State. 

Conclusion

Overall, getting licensed and permitted in Illinois can be time-consuming, but the process is relatively straightforward. However, if you don’t want to miss a deadline or overlook a particular permit, it might help to work with a third-party consultation service.

Consultants can help you figure out which permits you need, which departments issue them, how to fill out the paperwork correctly, and when to renew each document. While you can potentially handle this all yourself, it’s easy to forget deadlines and submission requirements, so having a backup plan is always smart. 

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