How to Start a Sole Proprietorship in Illinois
DBA Registration Requirements and Filing Process
You must file a DBA (doing business as) with your county clerk or recorder if you operate under any name other than your legal name. This filing is mandatory in Illinois and must occur before you begin business operations under your chosen name.
Do You Need to File a DBA in Illinois?
Yes. Illinois requires sole proprietors to file a DBA (doing business as) if you operate under any name other than your legal name. This filing is mandatory regardless of whether you use your personal name as your business name—you still need to register it with your county clerk or recorder to operate legally in Illinois.
Where to File Your DBA
You file your sole proprietorship DBA with the county clerk or recorder in the county where your business operates. This is different from LLCs, which file assumed names with the Illinois Secretary of State. If you operate in multiple counties, you may need to file in each county where you conduct business.
Contact your county clerk's office directly for the specific filing process, required forms, and local fees, as these vary by county.
Filing Requirements and Documentation
Your county clerk will require you to provide your legal name, the DBA name you want to use, and the address where you'll operate the business. Some counties may require additional information such as your Social Security number or federal Employer Identification Number (EIN) if you plan to hire employees.
Verify the exact documentation requirements with your county clerk before submitting your application, as local requirements differ.
DBA Name Restrictions
Your DBA name must be distinguishable from other business names already registered in your county. You cannot use restricted words like "Corporation," "Corp.," "Incorporated," "Inc.," "Ltd.," "Co.," "Limited Partnership," or "LP" in your sole proprietorship DBA, as these designators are reserved for other business entity types.
Words indicating banking, insurance, trust, or fiduciary services may also be restricted and require separate approval.
Filing Fees and Timeline
County DBA filing fees vary by location. Illinois does not set a statewide fee for sole proprietorship DBAs, so contact your county clerk for the exact cost. Processing times also differ by county—some process applications within days, while others may take longer.
Request an estimated timeline when you submit your application.
Business License Requirements
In addition to your DBA filing, Illinois requires sole proprietors to obtain a business license. You must register with the Illinois Department of Revenue through MyTax Illinois or Form REG-1 if you will make taxable sales or hire employees. This registration is free and should be completed before you start business operations.
You may also need local business licenses or zoning approvals from your city or county. Check the Illinois registrations, licenses, and permits portal for agency-specific requirements.
Sales Tax Registration
If your sole proprietorship will generate taxable sales, you must register for an Illinois sales tax certificate of registration. Register through MyTax Illinois or submit Form REG-1 to the Illinois Department of Revenue.
Illinois imposes a 6.25% state sales tax rate before local taxes and special district add-ons. Registration is free and must occur before you make your first taxable sale.
Tax Obligations for Sole Proprietors
As a sole proprietor, you pay Illinois individual income tax at 4.95% on your business net income. You are also subject to federal self-employment tax. Illinois does not have a separate franchise tax or gross receipts tax.
If you hire employees, you must withhold and remit Illinois income tax. File estimated tax payments with the Illinois Department of Revenue on April 15, June 15, September 15, and January 15.
Renewal and Ongoing Compliance
Your DBA registration remains valid according to your county's renewal schedule. Contact your county clerk to confirm renewal deadlines and procedures—some counties require renewal every one to five years.
You must also file an annual business tax return with the Illinois Department of Revenue and maintain current local business licenses and permits.
Resources and Contact Information
For DBA filing questions, contact your county clerk or recorder. For state tax registration and compliance, visit the Illinois Department of Revenue or call (217) 782-3336.
For professional licenses or regulated business activities, check the Illinois Department of Financial and Professional Regulation and the Illinois registrations, licenses, and permits portal.
Business Licenses You Must Obtain
Illinois does not require a general statewide business license for sole proprietorships. Instead, you must obtain specific licenses and registrations based on your business type and location. Your licensing obligations depend on your industry, whether you hire employees, and local requirements in your county or city.
Business Tax Registration
You must register with the Illinois Department of Revenue if you will make taxable sales or hire employees. Registration is free and completed through MyTax Illinois or Form REG-1. This registration is separate from any local business license and is required before you begin operations.
The Illinois Department of Revenue processes registrations with no filing fee. You can complete registration online at MyTax Illinois or submit Form REG-1 by mail. Registration allows you to collect sales tax and comply with state employment tax obligations.
Sales Tax Certificate of Registration
If you sell taxable goods or services, you must obtain a sales tax certificate of registration from the Illinois Department of Revenue. Illinois imposes a 6.25% state sales tax rate before local taxes and special district add-ons. You cannot legally make taxable sales without this certificate.
Register for your sales tax certificate through the same MyTax Illinois portal or Form REG-1 used for business tax registration. The certificate is issued at no cost and is effective immediately upon approval.
Local Business License or Zoning Approval
You must obtain a local business license or zoning approval from your county clerk or city licensing office. Illinois does not operate a single statewide general business license, so local requirements vary by jurisdiction. Contact your city or county clerk to determine what licenses, permits, or zoning approvals apply to your specific business location and type.
Local licenses may include general business operation permits, home occupation permits, signage permits, or zoning compliance certificates. Fees and application procedures differ by municipality.
Professional or Occupational Licenses
If your sole proprietorship requires a professional license—such as for accounting, law, real estate, contracting, or healthcare—you must obtain that license from the Illinois Department of Financial and Professional Regulation (IDFPR). IDFPR maintains separate licensing requirements for each profession.
Check the IDFPR website at https://idfpr.illinois.gov or contact the department directly to confirm licensing requirements for your specific profession before you begin operations.
Health Permits
If your business involves food service, childcare, cosmetology, or other health-regulated activities, you must obtain a health permit from your local health department or the Illinois Department of Public Health. Health permits are separate from business licenses and have their own application and inspection requirements.
Contact your county health department or local public health agency to determine which health permits apply to your business.
Liquor Licenses
If you sell alcohol—whether beer, wine, or spirits—you must obtain a liquor license from your local municipality. Illinois liquor licensing is handled at the city or county level, not the state level. Liquor licenses are among the most heavily regulated business permits in Illinois and require separate applications, background checks, and local approval.
Contact your city or county clerk's office for liquor license application procedures and fees.
DBA (Assumed Name) Filing
If you operate your sole proprietorship under a name other than your legal name, you must file a DBA (assumed name) with the county clerk or recorder in the county where your business operates. This filing is required by Illinois law and must be completed before you use the assumed name in business.
File your DBA at the county level only—sole proprietor assumed names are not filed with the Illinois Secretary of State. Check with your county clerk for current filing fees and renewal requirements.
Where to Find Additional Licensing Information
The Illinois Department of Revenue, Illinois Department of Financial and Professional Regulation, and the state's registrations, licenses, and permits portal at https://www.illinois.gov/business/registration-licenses-permits.html provide comprehensive guidance on industry-specific licenses and permits. You can also contact your local city or county licensing office for jurisdiction-specific requirements.
Tax Obligations for Illinois Sole Proprietors
Illinois sole proprietors owe federal self-employment tax, Illinois state income tax at 4.95%, and sales tax on taxable sales. You must register for Illinois business tax and sales tax before making sales or hiring employees. Illinois imposes no franchise tax or gross receipts tax on sole proprietorships.
Illinois Income Tax
You pay Illinois individual income tax at 4.95% on your business net income under 35 ILCS 5/. This tax applies to all sole proprietorship earnings, whether you withdraw them or reinvest them in the business.
Illinois does not allow sole proprietors to elect pass-through entity (PTE) tax treatment. Your business income flows directly to your personal tax return and is taxed at the individual rate.
Self-Employment Tax
You owe federal self-employment tax on your sole proprietorship net earnings. Self-employment tax funds Social Security and Medicare and is calculated on Schedule SE (Form 1040). Illinois does not impose a separate state self-employment tax, but your federal obligation applies.
For 2026, you pay 15.3% on 92.35% of your net self-employment income (up to the annual wage base for Social Security). You may deduct half of your self-employment tax when calculating your adjusted gross income.
Sales Tax Registration and Collection
If you make taxable sales, you must register with the Illinois Department of Revenue before making your first sale. Registration is free and completed through MyTax Illinois or Form REG-1 at https://tax.illinois.gov/questionsandanswers/286.
Illinois imposes a 6.25% state general merchandise sales tax before any local or special district add-ons. You collect this tax from customers and remit it to the Department of Revenue on the schedule assigned to your account. Local jurisdictions may add additional sales tax on top of the state rate.
Business Tax Registration
You must register for Illinois business tax if you will make taxable sales or hire employees. This registration is separate from sales tax registration, though both are completed through the same MyTax Illinois portal.
There is no registration fee for standard Illinois business tax registration. Registration must occur before you hire your first employee or make your first taxable sale.
Estimated Tax Payments
You must make quarterly estimated tax payments to Illinois if you expect to owe $500 or more in state income tax for the year. Estimated tax deadlines are **April