Illinois law allows a business to incorporate and be identified as its own legal entity. An incorporated business acts in its own name, whether buying and selling property, agreeing to contracts or exercising legal rights. The office of the Secretary of State is the agency that receives applications for incorporation in Illinois, and they must be completed in conformity with specific guidelines.
Benefits of Incorporation in Illinois
Certain advantages inure to a business in Illinois that has incorporated over one that has not. First, a corporation's liabilities can never go beyond the amount invested in the business by the owners. Without incorporation, the personal property of business owners is at stake should the company become unable to pay its debts. A corporation might also find it easier to finance itself through loans, allowing creditors in the Chicago area to evaluate their investment by assessing the corporation rather than the individual credit-worthiness of its owners. Finally, a corporations charter requires that ownership be divided into stakes or "shares" of stock, all of equal size. This makes the process of transferring control much more practical.
Costs of Incorporation
There are costs associated with incorporation, both short and long term. First, businesses in Illinois might be charged a fee to incorporate. Also, a corporation is taxed as its own entity. The individual incomes of owners who are paid disbursements from the corporation's earnings are still taxed as well. This is called double taxation, but it may be avoided with proper planning and assistance from a local Chicago lawyer.