Five Considerations for the Multi-State Firm
Some people living outside of Illinois have been drawn to the market potential of the Chicago area after starting a business in their home state. The potential entrant should be aware of a few considerations.
1. New entity, or multi-state entity?
Assuming a substantial presence or interaction in Illinois, transacting business in a new state suggests the question of whether to do so under the existing entity, or whether to form a new affiliated entity in Illinois. Some potential advantages to starting a new entity include having a natural partition for liability purposes, and a separateness of records for employment, tax and accounting purposes. However, this may result in higher costs for insurance and the operations of two businesses rather than one. Business can also be done by the out-of-state company, but it must register with the Illinois Secretary of State and receive authority to transact business in Illinois.
Entities transacting business in multiple states may incur tax liability to Illinois, as well as the counties and municipalities in which it operates. These may include, at a minimum, income and sales taxes. They also may target unemployment, if the firm maintains staff in Illinois, licensing costs, and other particular goods or services.
3. Licenses and bonds
Professionals practicing in many types of industries and occupations must be licensed to practice in Illinois, and some must obtain a bond. At present, these types of registrations typically do not transfer from other states. Where there is reciprocity, the professional may need to register with the appropriate governing body in Illinois before practicing in this jurisdiction.
4. Registered agent
Whether acting as an out-of-state entity authorized to transact business in Illinois, or whether forming an Illinois entity, the firm will be required to have a registered agent in Illinois. A registered agent is an Illinois person who receives service of process and communications from the Secretary of State on behalf of the entity.
5. Welcome to Illinois
Selling goods and services in Illinois, and otherwise transacting business, can and usually does subject a firm to the laws of Illinois. Give us a call for assistance in navigating through your Illinois legal obligations. We want your entrance to Illinois to be as seamless as possible.