Illinois LLC Business Licenses — Step 7 of 8
Illinois has no general statewide business license — but Chicago and other municipalities have their own requirements, and most businesses selling goods or services need a state sales tax account.
Illinois does not require a general state business license. Whether you need one depends on your city/county and industry — Chicago requires most businesses to hold a local license (rates around $500–$1,000 per 2-year cycle for 2026). If you sell taxable goods or services, register for free on MyTax Illinois for a Retailer's Occupation Tax (sales tax) account. Remote sellers trigger economic nexus by exceeding $100,000 in Illinois sales (revenue-only — Illinois eliminated its 200-transaction threshold effective January 1, 2026).
- General state license
- None required
- Sales tax registration
- Free
- Base sales tax rate
- 6.25% state
- Chicago combined rate
- 10.25%
- Remote seller nexus
- $100k (revenue only)
- Chicago local license
- ~$500–$1,000/2yr
- Next step
- Step 8 →
Illinois's Licensing Landscape
Illinois leaves most day-to-day licensing decisions to cities and counties, with a few statewide requirements layered on top:
- No general statewide business license — Illinois doesn't require every LLC to hold a basic statewide operating license.
- Chicago requires a local business license for most businesses — 2026 rates run roughly $500 to $1,000 for a 2-year cycle, depending on business type and size.
- Free sales tax account for taxable sales — register on MyTax Illinois for a Retailer's Occupation Tax number if you sell goods or taxable services.
- Regulated professions need state-level licensing — cosmetology, real estate, and private investigation are notable examples requiring an IDFPR (Illinois Department of Financial and Professional Regulation) license.
- No statewide contractor license — HVAC, plumbing, and electrical contractors are licensed at the municipal level, so requirements vary by city or county.
License Finder Checklist
Select what applies to your business, and we'll flag what to look into:
Getting Your Sales Tax Account
- Register through MyTax Illinois — no fee to obtain a Retailer's Occupation Tax number, which functions as your sales tax account.
- Base rate of 6.25% statewide — plus local taxes that vary by jurisdiction; combined rates can reach 10.25% in Chicago.
- Illinois uses destination-based sourcing for remote sales — you charge tax based on where your customer receives the product, not where your business is located.
- Remote sellers trigger nexus at $100,000 — revenue-only, since Illinois eliminated the 200-transaction threshold effective January 1, 2026. Marketplace sales are generally excluded from your own threshold calculation when the marketplace collects and remits on your behalf.
- Groceries are now exempt from state sales tax — effective January 1, 2026, though individual municipalities may adopt their own local 1% grocery tax.
Illinois's PPRT catches out-of-state founders off guardMulti-member Illinois LLCs owe a 1.5% Personal Property Replacement Tax that most other states don't have — it's separate from sales tax and separate from individual income tax. We cover the full details, with a calculator, in Step 8.
- ✓Forms your Illinois LLC for $39 + the $150 state fee
- ✓Tracks your unusual Annual Report deadline for you
- ✓Free Illinois registered agent the first year
- ✓No upsells · No data selling · Privacy by Default
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Illinois Business Licenses — FAQ
Ahmad Adil is the founder and CEO of LLC School. The guidance here — the absence of a general state license, Chicago's local licensing costs, the free sales tax registration, and the revenue-only $100,000 nexus threshold — reflects current Illinois Department of Revenue and Secretary of State guidance. This is educational information, not legal or tax advice.
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