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The Illinois LLC operating agreement is a legal document that is recommended for limited liability companies of all sizes, including single-member LLCs. This document allows the member(s) to create policies, outline responsibilities, identify voting rights, and more while also providing legal liability protection for members.

From (805 ILCS 180/1-5):

“Operating agreement” means the agreement under Section 15-5, whether or not referred to as an operating agreement and whether oral, in a record, implied, or in any combination thereof, of all of the members of a limited liability company, including a sole member, concerning the relations among the members, managers, and limited liability company. The term “operating agreement” includes amendments to the agreement.

Illinois Operating Agreement Law

Per 805 ILCS 180/15-5:

(a) All members of a limited liability company may enter into an operating agreement to regulate the affairs of the company and the conduct of its business and to govern relations among the members, managers, and company. The operating agreement may establish that a limited liability company is a manager-managed limited liability company and the rights and duties under this Act of a person in the capacity of a manager. To the extent the operating agreement does not otherwise provide, this Act governs relations among the members, managers, and company. Except as provided in subsections (b), (c), (d), and (e) of this Section, an operating agreement may modify any provision or provisions of this Act governing relations among the members, managers, and company.
(b) The operating agreement may not:
(1) unreasonably restrict a right to information or access to records under Section 1-40 or Section 10-15;
(2) vary the right to expel a member in an event specified in subdivision (6) of Section 35-45;
(3) vary the requirement to wind up the limited liability company’s business in a case specified in subdivision (4), (5), or (6) of subsection (a) of Section 35-1;
(4) restrict rights of a person, other than a manager, member, and transferee of a member’s distributional interest, under this Act;
(5) restrict the power of a member to dissociate under Section 35-50, although an operating agreement may determine whether a dissociation is wrongful under Section 35-50;
(6) (blank);
(6.5) eliminate or reduce the obligations or purposes a low-profit limited liability company undertakes when organized under Section 1-26;
(7) eliminate or reduce the obligation of good faith and fair dealing under subsection (d) of Section 15-3, but the operating agreement may determine the standards by which the performance of the member’s duties or the exercise of the member’s rights is to be measured;
(8) eliminate, vary, or restrict the priority of a statement of authority over provisions in the articles of organization as provided in subsection (h) of Section 13-15;
(9) vary the law applicable under Section 1-65;
(10) vary the power of the court under Section 5-50;
or
(11) restrict the right to approve a merger, conversion, or domestication under Article 37 or the Entity Omnibus Act of a member that will have personal liability with respect to a surviving, converted, or domesticated organization.
(c) The operating agreement may:
(1) restrict or eliminate a fiduciary duty, other than the duty of care described in subsection (c) of Section 15-3, but only to the extent the restriction or elimination in the operating agreement is clear and unambiguous;
(2) identify specific types or categories of activities that do not violate any fiduciary duty; and
(3) alter the duty of care, except to authorize intentional misconduct or knowing violation of law.
(d) The operating agreement may specify the method by which a specific act or transaction that would otherwise violate the duty of loyalty may be authorized or ratified by one or more disinterested and independent persons after full disclosure of all material facts.
(e) The operating agreement may alter or eliminate the right to payment or reimbursement for a member or manager provided by Section 15-7 and may eliminate or limit a member or manager’s liability to the limited liability company and members for money damages, except for:
(1) subject to subsections (c) and (d) of this
Section, breach of the duties as required in subdivisions (1), (2), and (3) of subsection (b) of Section 15-3 and subsection (g) of Section 15-3;
(2) a financial benefit received by the member or manager to which the member or manager is not entitled;
(3) a breach of a duty under Section 25-35;
(4) intentional infliction of harm on the company or a member; or
(5) an intentional violation of criminal law.
(f) A limited liability company is bound by and may enforce the operating agreement, whether or not the company has itself manifested assent to the operating agreement.
(g) A person that becomes a member of a limited liability company is deemed to assent to the operating agreement.
(h) An operating agreement may be entered into before, after, or at the time of filing of articles of organization and, whether entered into before, after, or at the time of the filing, may be made effective as of the time of formation of the limited liability company or as of the time or date provided in the operating agreement.

Forming an LLC in Illinois

  1. Conduct a name search
  2. Choose a registered agent
  3. File formation articles
  4. Draft an operating agreement

Each LLC formation in Illinois is required to choose a unique business name for their business. The name must not only be unique from other LLCs, but also from other business types and government agencies.

The name used for an LLC must include one of:

  • LLC
  • L.L.C.
  • Limited Liability Company

These designators are used to identify the business structure of the company, so “corp” and other designations cannot be used.

Professionals such as doctors, lawyers, or CPAs may be required to complete additional verification to use their title in the name of the business.

To conduct the name search, use the Illinois Secretary of State Business Entity Search website.

Step 2: Choose Your Registered Agent

All Illinois LLCs must appoint a registered agent that will accept legal documentation on behalf of the company. The appointed agent may be an individual that is part of the LLC, a family member of an LLC member, or even an unaffiliated individual. However, they are expected to accept legal responsibility for handling documentation, so a trusted registered agent is essential.

An individual agent must:

  • Be 18 years or older
  • Be available during business hours (9am – 5pm local time)
  • Be a resident of the state
  • Have a physical (not a P.O. Box) address in Illinois, as well as a mailing address within the state

A registered agent service must be authorized to do business in Illinois.

Step 3: File Your Formation Articles

An Illinois Domestic LLC (in-state) must complete Articles of Organization to be recognized as an LLC.

Online Filing (Domestic):

  • $150 filing fee, plus optional $100 for 24-hour expedited processing
  • Turnaround time: 7-10 business days, unless expedited
  • Submit Online

Mailed Filing (Domestic):

  • $150 filing fee
  • Turnaround time: 7-10 business days upon receipt
  • Fill out the form online or after printing, create an additional copy, and mail both to:

Secretary of State
Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62756

In-Person Filing (Domestic):

  • $150 filing fee, plus optional $100 for 24-hour expedited processing
  • Turnaround time: 7-10 business days
  • Fill out the form online or after printing, create an additional copy, and deliver to:

Springfield Office (for non-Chicago residents):
501 S. Second St., Rm. 350
Springfield, IL 62756

Chicago Office (for Chicago residents only):
69 W. Washington St., Ste. 1240
Chicago, IL 60602

Foreign LLCs looking to do business in Illinois must complete a Certificate of Authority, and file a Certificate of Existence (dated within 60 days of the filing date) from the original formation of the business.

Online filing is unavailable for Foreign LLCs.

Mailed Filing (Foreign):

  • $150 filing fee
  • Turnaround time: 7-10 business days upon receipt
  • Fill out the form and mail to:online or after printing, create an additional copy, and mail to:

Secretary of State
Department of Business Services
Limited Liability Division
501 S. Second St., Rm. 351
Springfield, IL 62756

In-Person Filing (Foreign):

  • $150 filing fee, plus optional $100 for 24-hour expedited processing
  • Turnaround time: 7-10 business days, unless expedited
  • Fill out the form online or after printing, create an additional copy and deliver to:

Springfield Office (for non-Chicago residents):
501 S. Second St., Rm. 350
Springfield, IL 62756

Chicago Office (for Chicago residents only):
69 W. Washington St., Ste. 1240
Chicago, IL 60602

Step 4: Draft an Illinois Operating Agreement

While not required, it is highly recommended LLCs with a single or multiple directors draft and implement an operating agreement. This legal document is recommended to set proper expectations, guidelines, and structure to the business and its members.

When signed and agreed to, the agreement can be used to settle disputes between members. The terms in the document also protect individual finances of the members, separating the individual and business funds and liability.

An Illinois operating agreement does not need to be filed with the state to be enforced.