Annual Tax Filing for Illinois LLC Owners

The Ultimate 2025 Compliance Guide for U.S. Founders & International Entrepreneurs Doing Business in Illinois

Thanks to its well-rounded economy encompassing sectors such as finance, healthcare, tech, logistics, real estate, retail, hospitality, consulting, professional services, and even manufacturing, Illinois is one of the most economically diverse states in the USA. On its own, the city of Chicago pours billions into the U.S economy and hosts thousands of domestic and international LLCs.

However, Illinois’ strong economic activity is paralleled by equally strict compliance requirements.

Every LLC registered or doing business in Illinois must meet yearly tax, reporting, and federal filing requirements, even if the owners reside abroad.

The goal of this article is to provide a comprehensive breakdown of all the taxes, forms, fees, and deadlines your Illinois LLC is required to comply with, so we are going to discuss in detail:

• State-level reporting requirements
• Illinois taxes for all entity types
• Federal filing obligations
• The foreign founder rule
• Penalties
• Sales tax nexus
• Replacement tax
• Employers’ tax obligations
• BOI/FinCEN requirements
• Reinstatement provisions
• Compliance checklist

Even if you are a non-US resident running an LLC remotely, this guide still applies. Bizstartz specializes in managing your yearly compliance and filings from A to Z.

1. Does an Illinois LLC Have Annual Filing Requirements?

All Illinois LLCs are required to do the following each year.

These are the requirements to keep your LLC active and in good standing and protect your legal liability.

For Illinois LLCs, annual obligations are in three categories:

A. Mandatory State-Level Requirements

These apply to every Illinois LLC:

• Illinois Annual Report
• Annual Report Filing Fee ($75)
• Registered Agent maintenance
• Replace Tax (for specific types of LLCs)
• Sales Tax filings (if required)
• Employer payroll filings (if you hire)

B. Mandatory Federal Requirements

• IRS annual income tax return (single-member, multi-member, S-Corp, C-Corp)
• FBAR/foreign account reporting (if required)
• payroll taxes (for employers)

C. Mandatory BOI Reporting:

• Required for every LLC formed in or operating in the United States.
• Applies to both domestic and international founders.

If any piece of these requirements are ignored, this can cause:

• Late fees
• Loss of good standing
• Bank accounts frozen
• Loan applications denied
• Inability to open payment processors
• Administrative dissolution
• Loss of liability protection

2. Illinois LLC Annual Report- Complete Breakdown

For all Illinois LLC’s the Annual Report is the most important of the annual obligations.

It ensures to the Secretary of State that your:

• LLC is in good standing
• Contact details are correct
• Registered agent is current
• Manager/member details are updated

2.1 When Are You Required To Submit An Annual Report?

• Due every year before the first of your LLC anniversary month.

Example:

• LLC started on July 12, 2024 → Annual Report due before July 1 every year.

Illinois is NOT sending notification letters to international founders, so it is very easy to miss.

Bizstartz takes care of automatic filing and reminders for you.

2.2 Annual report filing fee

• $75 standard fee
• $100 late fee
• Additional fines for falling out of good standing

2.3 How to file the Illinois Annual report

You can file in 3 ways:

A) Online Filing

Fastest method

• Processing: 1–5 business days
  
• Immediate confirmation
  
• Credit/debit card payment
  

B) By Mail

Slower method

• Processing: 3–6 weeks
  
• Risk of delays
  
• Must include check or money order
  

C) Through Bizstartz (Recommended for International Founders)

• No U.S. presence required
  
• No SSN needed
  
• We manage deadlines, filings, and compliance
  

Includes reminders and recordkeeping

2.4 Information to included in the annual report

You must include:

• LLC name (exact legal name)
  
• Illinois file number
  
• Principal business address
  
• Registered agent name & office address
  
• Names and addresses of managers/members
  
• Signature (owner, manager, or authorized agent)
  

Even if your LLC did no business, the Annual Report is still required.

3. Illinois taxes for LLC – full detailed guide

There is no taxes LLC in Illinois.

Instead, the tax is based on how the LLC is classified.

Available Federal Tax Classifications for an Illinois LLC

• Single-Member LLC → Disregarded Entity
• Multi-Member LLC → Partnership
• LLC Opting for S-Corp Election
• LLC Opting for C-Corp Election

Each of these classifications is subject to slightly different filing instructions, filing dates, and tax liabilities.

3.1 Tax for Single-Member LLCs (Default Class Disregarded Entity)

Federal Tax

• With this structure, you will file Schedule C, E, or F with Form 1040.
• This LLC will not file a return on its own.
• All the profits will be distributed to the owner immediately.

Illinois State Tax

• If you are not a U.S. resident and do not have a U.S. presence, you typically do not owe Illinois income tax.
• If you are physically located in Illinois, or if you have employees, you may owe Illinois Individual Income Tax.

Important Notes for International Founders

• Though it may be zero income, you still have to file a federal tax return.
• It is also a requirement to obtain an EIN (This is provided by Bizstartz).
• For filing, if you are not eligible for an SSN, an ITIN is required.

3.2 Tax for Multi-Member LLCs (Default Class Partnership)

Federal Requirement

• For this classification, Form 1065 must be filed each year.
• It is also a requirement for the LLC to distribute K-1 statements to all its members.
• Each member will report their income on a different tax return.

Illinois State Requirement

• Income will be taxed based on the state of origin.
• Therefore, income is subject to Illinois tax if it is earned from Illinois sources.
• Non-resident members are also subject to Illinois taxation on income earned from Illinois sources

3.3, Illinois Replacement Tax (Applies to Certain LLC Types)

Certain pass-through entities are subject to a peculiar business tax in Illinois which substitutes for the corporate income tax.

Who Must Pay Replacement Tax?

• Multi-member LLCs
• LLC taxed as S-Corp
• LLC taxed as C-Corp

Rates

• 1.5% for S-Corps and Partnerships
• 2.5% for C-Corps

What Income is Taxed?

Only the net earnings derived from Illinois are taxed.

Example:

If your LLC is netting $60,000 in Illinois, the tax for your LLC would be:

Replacement Tax = 1.5% of $60,000 = $900

3.4 LLC Taxed as an S-Corporation

Federal Filing

• 1120-S
• Issue K-1 to each member

Illinois Filing

• IL-1120-ST (Small Business Corporation Replacement Tax Return)
• 1.5% Replacement Tax

Why Some Illinois LLCs Choose S-Corp Status

• Saves self-employment tax
  
• More tax-efficient for businesses with $40k–$80k+ profit
  
• Requires payroll setup
  

Bizstartz handles S-Corp election, payroll, and tax filing for international clients too.

3.5 LLC Taxed as a C-Corporation

Federal Filing

• Form 1120, which comes with a 21% Corporate Tax at the federal level.

Illinois Filing

• IL-1120
• 2.5% Replacement Tax

This is the less common structure for small business owners, but it is probably the best for start-ups aiming for in the business for venture capital.

4. Your Illinois Sales Tax Responsibilities

If you sell taxable goods, services, or digital products, you have to:

Register for Sales Tax

• MyTax Illinois, or
• Bizstartz setup services

Sales Tax Filing Frequency

This is based on how much revenue you generate as follows:

• Monthly
• Quarterly
• Annually

Economic Nexus Regulations

You still have to remit sales tax even without a physical presence, and you must collect it if:

• your sales total is $100,000 or more in Illinois sales, or
• you have 200+ transactions in Illinois in a year

This is especially true for Online foreign-owned LLCs and dropshippers.

5. Tax Duties as an Employer if You Hired in Illinois or Remotely

As long as your LLC has employees anywhere in the USA, you must comply with:

Illinois Employer Tax Responsibilities

• Withholding Income Tax
• Unemployment Insurance Contributions
• Workers’ Compensation Insurance

Federal Employer Tax Duties

• Form 941 (quarterly payroll tax)
• Form 940 (annual unemployment tax)
• W-2 and W-3 filings
• Payroll reporting and Withholding

Bizstartz offers a full service payroll setup, including ongoing compliance.

6. Federal Income Tax Requirements for Illinois LLC Owners

Every Illinois LLC must file annual federal tax returns with the IRS.

Filing Requirements Summary

Additional Requirements for International Founders

• ITIN required (Bizstartz handles this)
  
• FATCA reporting if owning foreign assets
  
• FBAR filing if bank balance > $10,000 globally
  
• Must keep clean bookkeeping records
  

Bizstartz provides bookkeeping + tax filing for non-US residents.

7. FinCEN BOI Reporting for LLCs is Required

In the United States, all LLCs will be required to complete FinCEN Beneficial Ownership Information Reporting for the LLC starting January 1, 2024.

Deadlines for Reporting

• For Newly Formed LLCs (2024 and After): Within the first 90 days after the LLC is formed.
• For Existing/Previously Formed LLCs: Due ONE time (before January 1, 2025).
• For Address, Name Ownership Changes: Within 30 days of the change.

Fines

• Fines of $500 PER DAY (civil fines)
• Possible criminal fines for failing to comply willfully

For all of our clientele, Bizstartz does all the work for BOI reporting

8. Consequences for Ignoring and Not Reporting Your Illinois Annual Reporting Requirements

Illinois has some of the most unfavorable consequences for failing to comply with reporting requirements.

These include things such as:

• Loss of good standing
• $100 late reporting fees
• Ineligibility for loans, grants, and government contracts
• Possible account suspension by payment processors
• Freezing of bank accounts
• Administrative dissolution of the Illinois LLC

Cost to Reinstate

• All overdue annual reports
• Reinstatement fee of $200 to $500
• Updates to registered agent
• Possible identity verification

Bizstartz is able to fully reinstate your dissolved Illinois LLC without problems.

9. Complete Compliance Checklist For Illinois LLC Owners

STATE LEVEL

✔ Illinois Annual Report ($75)

✔ Change Your Registered Agent

✔ Replacement Tax (if applicable)

✔ Sales Tax Returns (if applicable)

✔ Keep Your Books

FEDERAL LEVEL

✔ Your Annual Return

✔ Payroll Taxes (if you are an employer)

✔ Estimated Taxes (if applicable, you pay them quarterly)

BOI/OTHERS

✔ BOI filing (required)

✔ BOI Update within 30 days after any change

✔ Renew Your Business Licenses (if any are required for your industry)

Bizstartz can take care of the entire process for you.

Conclusion

Illinois is an amazing place to do business, but the compliance system is strict. Missing deadlines, Notes of Compliance such as Taxes or your Annual Report can damage your LLC.

Bizstartz Services include but are not limited to:

• Annual Report Filing
• Taxes (Illinois State)
• Taxes (Federal)
• BOI Submission
• ITIN/EIN (setup)
• Compliance (Bookkeeping)
• Payroll
• Complete Compliance Management for Founders Outside the US

Frequently Asked Questions (FAQ)

1: Do all Illinois LLCs need to file an Annual Report?

Yes. Every Illinois LLC must file an Annual Report once every year, preceding the month of the LLC anniversary. Neglecting to do so results in a $100 penalty and not being in good standings.

2. What are the consequences of missing the Annual Report deadline?

Your LLC will:

• no longer be in good standing.
• lose access to state contracts and bank loans.
• get dissolved by the state.

In the event of state dissolution, you will be required to pay the fee, as well as submit a reinstatement form.

3. Do international owners of an LLC in Illinois have to file taxes?

Yes. Every LLC registered in the state, regardless of ownership, must submit a federal tax filing.

Depending on how the business is structured, you may also have an Illinois tax obligation if you have income from an Illinois source.

4. What is meant by the Replacement Tax in Illinois?

This is an additional tax that applies to certain business entities.

You have to pay it if your LLC is any of the following:

• a multi-member LLC
• C-Corp for tax purposes
•  S-Corp for tax purposes

The rates may vary, commencing from 1.5% to 2.5% of net income.

5. Are single-member LLCs subject to the Replacement Tax in Illinois?

No. Single-member LLCs that are classified as disregarded entities are not subject to the Replacement Tax.

6. Is it necessary to collect sales tax in Illinois?

If you sell services or goods that are taxable in Illinois or you satisfy economic nexus criteria:

If you have sales of at least $100,000, or you have 200 or more transactions with Illinois.

7. Which federal tax form do I file with my Illinois LLC?

It depends on your LLC type:

• Single-Member → Schedule C
  
• Multi-Member → Form 1065
  
• S-Corp → 1120-S
• C-Corp → 1120