How to Move an LLC to Illinois

An out-of-state LLC can change its state of organization to Illinois through statutory domestication. An Illinois LLC domestication is a legal process that changes an LLC’s state of organization, the state whose law primarily governs the company. An out-of-state LLC, also called a foreign LLC, that domesticates to Illinois becomes an Illinois LLC governed by the Illinois Limited Liability Company Act.

The LLC is the same company before, during, and after a domestication. Whether domestication can proceed also depends on the laws of the state the LLC is leaving. To find out whether your LLC qualifies and what the process involves, request a free analysis of your LLC move.

Some states use the name conversion for the legal procedure that changes an LLC’s state of organization, also called its domicile. In Illinois, the term conversion has a different meaning. An Illinois conversion changes a business from one entity type to another (for example, an Illinois corporation might convert to an LLC).

Illinois law allows Illinois LLCs to convert to out-of-state corporations and vice versa. An Illinois LLC cannot use the conversion process to become an out-of-state LLC, because a conversion must change the business’s entity type. An Illinois LLC changes into an out-of-state LLC through domestication.

Why Business Owners Move LLCs to Illinois

A business might want to change its domicile to Illinois for a variety of reasons. A domestication may have a business-related purpose, or it may be practical for the owners. Common reasons an out-of-state LLC might domesticate to Illinois include:

• Owner convenience. Owners who move to Illinois may find it more convenient for the company and its owners to have the same home state. Government offices that the business deals with are more likely to be nearby, so face-to-face meetings are more practical. The consistency helps avoid confusion over which state’s law governs in which scenarios.
• Greater selection when hiring professionals. An Illinois resident can more easily hire local accountants, lawyers, and other professionals with expertise in Illinois law. An Illinois LLC will have more qualified attorneys and accountants to choose from in Illinois.
• Reduced annual fees and reporting. Domestication sometimes reduces paperwork and filing fees. A company that does business in Illinois but is domiciled in another state must meet both states’ annual reporting and fee requirements. Domestication to Illinois may let an LLC avoid annual filing and fees in the original state if it does little or no business there.
• Avoiding taxation by multiple states. An LLC’s obligation to pay income taxes to a state requires a connection (or taxable nexus) between the business and the state. An LLC that domesticates to Illinois may avoid taxation by the original state if domestication ends the taxable nexus. This is especially true if the out-of-state LLC does most of its business in Illinois and little in its domicile state.
• Legal advantages. Domestication could be a good strategy if Illinois law is a better fit for the company’s business plan. The advantages might be in legal areas specific to the LLC’s field or in areas relevant to the administration and management of LLCs.

Illinois LLC Domestication Requirements

An out-of-state LLC’s domestication to Illinois must satisfy Illinois law and the law of the current state. Illinois law specifically governs the filing requirements in Illinois and the legal effects of the domestication under the Illinois Limited Liability Company Act.

The other state’s law governs whether domestication is possible (the other state must allow domestication), whether a written plan of domestication is required and what it must contain, the standard for approval of the plan by the members or managers, and the documents filed in the other state and what they must include.

Eligibility for Illinois LLC Domestication

Domestication to Illinois is not possible for every out-of-state LLC. First, the company must be currently in a state that allows LLC domestications. The name domestication is not essential; some states call the process conversion. What matters is that the out-of-state LLC’s current state must have a statutory procedure that lets LLCs change their domiciles.

The company’s business also needs to be permissible for Illinois LLCs. Illinois law gives LLCs broad authority to engage in any lawful business except insurance. LLCs in some states cannot provide professional services, which generally means services that require a professional license or equivalent authority.

An Illinois LLC can provide professional services, but only if the company is formed as a professional limited liability company (PLLC). An out-of-state LLC can domesticate to Illinois as long as it has all required licenses and otherwise complies with the Illinois Professional Limited Liability Company Act.

Required Documents for Illinois LLC Domestication

The Illinois LLC domestication process involves preparing and adopting several domestication documents that must satisfy both states’ requirements. The domestication documents memorialize the terms of the domestication and control the company when the domestication takes effect.

• Plan of Domestication. A Plan of Domestication designed to comply with the requirements of both Illinois law and the law of the state that the LLC is moving from.
• Illinois Statement of Domestication. The Illinois Statement of Domestication with all information and any related documents needed for filing with the Illinois Secretary of State’s Department of Business Services.
• Articles of Organization. The Articles of Organization for filing with the Illinois Secretary of State to establish the LLC as a domestic Illinois entity.
• Domestication Document for Filing in Prior State. Depending on state law, this document may be called articles of domestication, statement of domestication, articles of conversion, certificate of conversion, statement of conversion, or a similar term.
• Illinois Operating Agreement. A state-specific Operating Agreement to properly structure the LLC as an Illinois LLC, provide rules for profit distributions and decision-making, clarify the federal income tax classification, and help provide maximum liability protection.
• Resolution Authorizing Domestication. A resolution approving the transaction and adopting the Illinois organizational documents as the LLC’s governing documents.

The Illinois Statement of Domestication requires a manual (wet) signature and cannot be e-signed. However, the Articles of Organization can be e-signed. The Statement of Domestication must be filed by mail or in person with the Illinois Secretary of State (no e-filing). The Articles of Organization may be e-filed, though Articles filed with a Statement of Domestication are typically submitted as an attachment to the Statement, which is filed by mail or in person.

The LLC also completes several administrative tasks to implement the domestication.

• conducting a preliminary name search with the Illinois Secretary of State to determine whether the LLC’s name is available in Illinois (if the name is unavailable
• a slight name change may be required); obtaining signatures on the Statement of Domestication; obtaining signatures on the Articles of Organization; filing the Statement of Domestication with the Illinois Secretary of State;
• filing domestication documents with the Secretary of State or equivalent agency for the state that the LLC is moving from

Benefits and Legal Effects of Illinois LLC Domestication

There are alternative methods of moving an existing business to a new state. However, the domestication process (when available) is almost always the most efficient and least disruptive approach. An LLC that completes an Illinois domestication continues to be the same entity the entire time.

It still uses the same Employer Identification Number (EIN), and its history as a taxpayer stays with the business. Keeping the same fundamental identity avoids unnecessary confusion and reduces the administrative burden involved in changing states.

An out-of-state LLC that domesticates to Illinois can continue its ordinary operations throughout the process. Day-to-day business operations are unimpeded. The business does not have to pause revenue-generating activities, and physical locations can stay open. Domestication does not affect the company’s existing business contracts.

There is no need to renegotiate or re-sign agreements; the current contracts are still valid and enforceable. Employment relationships are also intact; a domestication does not interfere with employer-employee relationships and releasing and re-hiring staff is unnecessary.

The domesticating LLC owns all the same property that the out-of-state LLC owned before domestication. The company does not need to sign documents to transfer assets, so there is less paperwork. The company can also keep all the same bank accounts, which avoids the extra legwork of closing accounts and opening new ones.

An Illinois LLC domestication does not involve dissolving the company in the original state and reforming in Illinois. The procedure transfers the same company from the old state to the new state. The domestication process is designed to minimize changes to the entity. Illinois law provides that the formerly out-of-state LLC is an Illinois LLC governed by the Illinois Limited Liability Company Act.

If the out-of-state LLC was authorized to do business in Illinois as a foreign LLC, the authorization is automatically cancelled because the LLC is no longer foreign in Illinois. The LLC’s new Illinois articles of organization and operating agreement take effect at the same time as the domestication and become binding on the members.

The company’s liabilities survive the domestication. Debts that the out-of-state LLC owed before domestication are now owed by the Illinois LLC. Members have no liability for company debts for which they were not already liable before domestication. Any legal cases or administrative proceedings involving the LLC continue uninterrupted. If the company’s name changes as part of the domestication, the new name is simply substituted for the old name.

Members’ ownership interests in the out-of-state LLC are converted to ownership interests in the Illinois LLC, unless the members agree to a different treatment of ownership interests in the plan of domestication. Domestication does not affect members’ liability or rights of contribution.

An Illinois LLC domestication is not considered a dissolution of the company, and there is no need for the LLC to wind up its affairs. Domestication also does not trigger member, manager, or third-party rights that kick in if the LLC goes through dissolution, liquidation, or winding up.

Cost of Moving an LLC to Illinois

An LLC that domesticates to Illinois incurs domestication costs for labor, filing fees, and the cost of hiring a commercial registered agent (if the LLC chooses to hire one). The documents and filings described above require professional preparation to comply with both states’ requirements, and coordinating submissions with two separate state agencies adds further complexity. The precise amounts vary by domestication and company. To find out what your specific move will cost, request a free analysis of your LLC move.

In addition to professional service costs, the Illinois Secretary of State charges a $100.00 filing fee for the Statement of Domestication and a $150.00 filing fee for the Articles of Organization. The total Illinois filing fee for inbound domestication is $250.00. These fees are paid to Illinois and are in addition to any filing fees that must be paid to the LLC’s original state. Most states charge a separate fee for LLCs domesticating out of state.

An out-of-state LLC that domesticates to Illinois will also incur labor costs and, if applicable, registered agent fees. Labor costs are the amounts charged by the service provider the LLC retains to manage the Illinois domestication.

Service providers may charge a flat fee or charge by the hour, with fee amounts varying by provider. Work that goes into a domestication includes obtaining and organizing information, drafting the domestication documents, communicating with the business owners and state agencies, and filing domestication documents with state agencies.

A domesticating LLC will incur registered agent fees if it elects to hire a commercial registered agent. Illinois law requires LLCs that do business in Illinois to appoint a registered agent with authority to accept service of process for the company.

The Articles of Organization list the registered agent’s name and address. Businesses sometimes hire a commercial registered agent to avoid listing an owner or employee’s personal information. Commercial registered agents also help keep service consistent, and the cost is relatively low (typically $50.00 to $150.00 per year in Illinois).

Processing Time for Illinois LLC Domestication Filings

The LLC domestication process typically takes less time to implement than other methods of changing an LLC’s domicile. The length of the process depends on the parties’ timeframe to complete each step. The Illinois Secretary of State’s office estimates around ten business days for processing newly filed business documents. The domestication becomes effective upon the date and time the Statement of Domestication is filed with the Illinois Secretary of State.

The total timeline also depends on: the members’ or managers’ time to communicate the necessary information to the service provider; the service provider’s time to review information and prepare the domestication documents; the members’ or managers’ time to review and sign the domestication documents; the provider’s time to file the final documents with state agencies; and state agencies’ time to receive and process the documents.

For a detailed breakdown of each phase in the domestication timeline, understanding the full domestication process, including document preparation and coordination between both states, is covered in detail in our guide to LLC domestication.

Moving an LLC Out of Illinois

Illinois permits outbound LLC domestication under the Illinois Limited Liability Company Act. A domesticated Illinois LLC can domesticate to another state’s jurisdiction, provided that the destination state also authorizes the procedure.

Illinois Outbound Domestication Requirements

An Illinois LLC that domesticates to another state must file a Statement of Domestication with the Illinois Secretary of State. The outbound filing must include a plan of domestication approved by the LLC’s members or managers.

The plan of domestication must contain the name and type of the Illinois LLC; the name and jurisdiction of organization of the LLC after domestication; the manner of converting the interests in the Illinois LLC into interests, securities, obligations, rights to acquire interests or securities, cash, or other property, or any combination thereof;

The proposed articles of organization (or equivalent document) of the LLC after domestication; the full text of the LLC’s operating agreement after domestication that is proposed to be in a record; the other terms and conditions of the domestication; and any other provision required by Illinois law or the LLC’s governing documents.

Illinois does not require a separate certificate of surrender. The Statement of Domestication completes the Illinois side of the transaction. The destination state will require its own formation and domestication (or conversion) documents.

Filing Fees for Moving an LLC from Illinois

The Illinois Secretary of State charges a filing fee of $100.00 for an outbound Statement of Domestication. The destination state will charge separate filing fees for its formation and domestication documents.

Illinois LLC Laws That Apply After the Move

The Illinois Limited Liability Company Act imposes ongoing requirements on all domestic LLCs, including those formed through domestication from another state. An LLC that domesticates to Illinois becomes subject to these obligations immediately upon effectiveness of the domestication.

Illinois Annual Report and Compliance Requirements

Illinois requires domestic LLCs to file an Annual Report with the Illinois Secretary of State every year. The filing fee is $75.00 per year. This annual reporting requirement applies to all Illinois LLCs, including those that have domesticated from another state.

Illinois Operating Agreement Requirements

An LLC’s internal governance document is called an Operating Agreement under Illinois law. The Operating Agreement governs the LLC’s internal affairs, including the rights and obligations of members and managers, profit distributions, and management structure. The Operating Agreement is not filed with the state; it is maintained by the LLC as a private document.

Illinois Registered Agent Requirements

Illinois law requires LLCs that do business in Illinois to appoint a registered agent with authority to accept service of process for the company. The Articles of Organization list the registered agent’s name and address. Businesses sometimes hire a commercial registered agent to avoid listing an owner or employee’s personal information. Commercial registered agents also help keep service consistent and organized.

Alternatives to Illinois LLC Domestication

When domestication is not available because the other state’s law does not authorize it, a merger-based reorganization achieves the same result. The reorganization involves forming a new Illinois LLC and merging the out-of-state LLC into it, with the Illinois LLC as the surviving entity.

The surviving LLC succeeds to all property, contracts, and obligations of the original LLC by operation of law. Illinois law supports this merger structure as an alternative path for moving an LLC to Illinois. For a detailed explanation of how the reorganization process works, see our guide to LLC reorganization.

For a state-by-state comparison of LLC domestication and conversion laws across all states, see our guide to LLC domestication and conversion by state.