Known for its low corporate taxes, Illinois is a popular state to start a business in. Starting a business may sound like a complicated process, but with this guide, you will be well on your way to successfully starting your own business in Illinois.
This article will provide a step-by-step guide on starting a business from scratch, covering everything from choosing your idea to marketing your business.
Step 1: Choose Your Idea
Any business, big or small, starts with a single idea. Your business idea will form the foundation on which you will build your business, which is why choosing your business idea wisely is essential.
Here are some questions to ask yourself that will help you formulate a business idea and see if it will actually work.
- Do you have any hobbies or interests?
- Can these hobbies and interests make you money?
- Can you see yourself enjoying running this business?
- Is there a business already out there like yours?
- Is there a gap in the Illinois market for your business?
- How will your business differentiate from those already existing?
These questions should guide you in choosing a good business idea. You can also utilize your friends and family to bounce ideas off them and ask them for their help.
Step 2: Pick A Name
Your business’s name is crucial as it is the first thing potential customers will see and hear. Their first impressions of your business will be based on your chosen name.
When deciding on a name, try to choose something easy to pronounce and read, unique and memorable, and somewhat related to the industry your business is in. Although you want a name that sticks out, you still want it to be relevant enough that people will understand what your company does at a glance.
On top of that, there are Illinois naming regulations you need to be aware of. For example, you cannot use a name already registered with the Secretary of State. Conduct an online search for already-in-use names online to ensure your application doesn’t get rejected for having the same business name as another.
If you are having trouble coming up with a business name, you can try some of these methods to get your gears turning:
- Use an online name generator.
- Brainstorm with friends and family.
- Create a word dump.
Step 3: Write Your Business Plan
Once you have decided on an idea and business name, it is time to write your business plan. Business plans are not necessarily a requirement by the Illinois government. But, this business plan will help you start the business by including all the information you need, your marketing ideas, products, and financial planning. This plan will help solidify your business ideas and planning.
While there are no set guidelines about what needs to be included in your business plan, you should at least answer the following questions:
- What is your business, and what services are you offering?
- Why have you started the business?
- What problem does your business solve for consumers?
- Who are your direct competitors?
- Who is your target audience?
- How do you plan on turning your target audience into paying customers?
- What are the financial costs involved in starting the business?
- Will you need to hire employees?
- What are your financial goals and predictions?
Your business plan should be thorough as you can make it as you can also use it to attract potential investors to your business. You can download ready-to-use business plan templates off the internet if you aren’t sure where to start.
Step 4: Get Funding
To start a business, you need capital. And unless you can fund this money yourself, you will need to get money another way. The three methods to get funding is grants, loans, and investors.
Grants
A grant is the best way to get funding for your business because you do not need to pay this money back. The state offers grants to Illinois businesses, such as the Downstate Small Business Stabilization Program. To see if you qualify, visit their website.
Loans
Getting a grant is not as easy as one may think because of all the strict entry regulations and requirements. If your business does not meet these requirements, your next best option is to apply for a business loan.
This can be done through your local bank, or you could apply for the Illinois Small Business Emergency Loan Fund, which is offered by the state with a low interest rate.
Investors
Attracting an investor to pour money into your account is a great way to get funding. Remember that this may require you to give up a small percentage of profits or shares of your business to your investor.
You could even see if your friends and family would be interested in investing in your business. Make sure to have the agreement in writing to avoid any trouble down the road. You want to ensure all parties fully understand what is being offered.
Step 5: Choose a Business Structure
Choosing the proper business structure for your business is crucial as each structure has different benefits. Here are the different business structures in Illinois you have to choose from:
Sole Proprietorship
This informal business structure is the simplest and easiest business structure and is the best option for small, low-risk businesses. Sole proprietorships have just one owner, and the business itself is not a separate legal entity from its owner. This means that the owner is fully liable for the business.
Partnership
A partnership is also an informal business structure with no separation between owner and business. The only difference between a partnership and a sole proprietorship is that a partnership has more than one business owner with equal shares in the business.
Limited Liability Company
The limited liability company, or LLC, is one of the most commonly used business structures amongst small businesses. This is because this business structure is a hybrid between a sole proprietorship or partnership and a corporation, offering the best of both worlds. An LLC has the flexibility of a sole proprietorship with the liability protection of a corporation.
C or S Corporation
This is a formal business structure that large companies with multiple shareholders usually favor. Corporations are separate entities from the owners, and this structure offers many tax benefits.
Step 6: Register Your Business
Once you have chosen the proper business structure for your business, you will need to register it with the State.
Sole Proprietorship
Although a sole proprietorship is not a formal business structure, you may still be legally required to register your business. Check with the Illinois Department of Revenue to see if you will be required to register with the DOR. If so, you can easily register online by following the instructions.
If you wish to operate under a name other than your personal name, you must file an assumed name with the state.
Partnership
While there is no formal paperwork to register a partnership, you must register the business through the Illinois Department of Revenue for tax purposes.
If you wish to operate under an assumed name, you must register one with the Secretary of State.
Limited Liability Company
Registering an LLC with the Illinois Secretary of State is a surprisingly easy process. To do so, you will need to download and complete the Articles of Organization, which can be submitted online for a one-time fee of $150.
C or S Corporation
Registering a corporation is very similar to registering an LLC. You will need to download the Articles of Incorporation, complete them, and submit them online to the Illinois Secretary of State for $150.
Step 7: Set Up Your Finances & Accounting
Setting up your finances before you begin doing business is highly recommended. To set up your finances, you should open a bank account for the business, apply for credit cards, and set up a payment method for customers. Many banks can provide you with a credit card machine and help you set it up.
If you plan to have employees, installing a payroll system is a good idea to ensure their salaries and taxes are correct. Hiring an accountant to assist you with the above can be a huge help, especially if this is your first time handling finances in a business. Accounting can become more complicated as your business grows, so hiring an accountant is highly recommended. You’ll be thankful for this come tax season!
Step 8: Get Business Insurance
Obtaining business insurance is not required by the State of Illinois. But, every long-time business owner will advise you to get business insurance. While there are lots of different policies to choose from, you should at least get a general insurance policy. This is a broad policy that covers your day-to-day running of the business as well as any injury or damage to your property.
In addition, there are many other types of insurance policies to choose from, such as:
- Commercial auto insurance
- Commercial property insurance
- Workers compensation insurance
- Professional liability insurance
- Business owner’s insurance
Speak to a professional insurance broker for advice on the best choice for your business.
Step 9: Obtain Any Permits or Licenses Needed
While Illinois does not offer a statewide business license, some counties and cities may have different requirements. You can visit the Illinois Secretary of State’s searchable index to see what your local government requires.
Businesses must also register with the Illinois Department of Revenue for tax purposes before they can do business. Companies will also need to apply for a Seller’s Permit, also known as a Certificate of Resale. You can apply for this through the Illinois Department of Revenue.
You may need additional permits and licenses depending on the type of business you own.
Step 10: Build a Website
Every business needs a good website, and making one yourself has never been easier. Many programs and businesses can guide you in making a website, or you can choose to use a subscription-based service with ready-made templates.
You need to keep a few things in mind when building your website.
- Your business name should be visible and easy to read.
- All fonts must be neat.
- Include a call to action.
- Avoid clutter and unnecessary graphics.
Step 11: Hire Employees (If needed)
As your business grows, you’ll find handling all of the responsibilities more difficult. When this happens, it may be best to consider hiring employees to assist you. When hiring employees in Illinois, it is a legal requirement that you report the new hires to the Illinois Department of Employment Security within 20 calendar days of hiring them.
When hiring employees, ensure they have what you are looking for in terms of experience and personality.
Step 12: Market Your Business
The final step in starting a business in Illinois is to market your business. Nowadays, there are many ways to market your business successfully, regardless of your budget.
Here are some of the best and easiest ways to market your business:
- Make use of the business website.
- Advertise and engage with customers on social media.
- Create a Google Business profile and advertise on Google.
- Attend local networking events.
- Host fun events.
- Run competitions and giveaways.
There are so many creative ways to market your business. Plenty of online guides break down how to market a business successfully if you’re at a loss for where to start. Alternatively, you could hire a marketing expert.