How to Get a Business License in Illinois

Starting a business in Illinois involves naming and forming your business, registering with the state, and obtaining any necessary licenses and permits. You may or may not need a business license in Illinois, depending on your business.

Here’s what to know about getting a business license in Illinois. 

What is a business license in Illinois?

Businesses operating in Illinois may need to register to pay the Illinois sales tax and obtain state business licenses and permits or other local licenses in order to comply with local, state, and federal rules. 

It’s important that businesses secure Illinois business authorization from relevant agencies before they start advertising or making sales. 

While Illinois doesn’t have a blanket business license requirement, most businesses (including sole proprietors, exempt organizations, and government agencies that withhold Illinois income tax for Illinois employees) that conduct business in the state or with Illinois customers must register with the Illinois Department of Revenue (IDOR). 

Certain categories of businesses may need to contact state agencies to get a business license. Illinois cities and counties may also require businesses to obtain a local license in order to operate in those locations. 

Types of business licenses 

There are several types of business licenses that you may need if you do business in Illinois, including local, state, and federal-level licenses and permits. 

Certificate of Registration or License

Most businesses in Illinois are required to register with IDOR before they can do business. Applicable businesses that register with IDOR will be issued a Certificate of Registration or License and a tax identification number. 

A Certificate of Registration is similar to what is called a seller’s or sales tax permit in other states, which is a license that businesses must get before selling taxable goods. 

Local licenses and permits

Individual cities and counties in Illinois may require certain businesses to get a local license or permit in order to do business. 

For example, Chicago requires all businesses in the city that aren’t licensed by the Illinois Department of Financial and Professional Regulation (IDFPR) to have a business license. 

State licenses and permits

Businesses in particular industries—such as liquor distributors, pet shop operators, and plumbers—may be required to get a license or permit through a state agency. 

Federal licenses and permits

You may need to apply for a federal license or permit if your business is engaged in certain activities regulated by the federal government, such as selling alcohol or firearms.

How to apply for a business license in Illinois

The steps for applying for a business license in Illinois depend on your business type and location. 

Here’s how to register for taxes to get a Certificate of Registration and apply for local, state, and federal licenses in Illinois. 

Step 1. Register for taxes

Illinois requires businesses to register for applicable taxes with IDOR before they can make tax-exempt purchases or sales or hire employees. 

Before registering with IDOR, make sure you have your federal employer identification number (FEIN). Corporations, S corporations, and LLCs must also register with the Illinois Secretary of State before applying for a Certificate of Registration. 

Tax types that businesses may need to register for include the following:

• Withholding income tax. Withholding taxes and unemployment insurance come out of your employees’ paychecks.
• Sales and use taxes. Any business that sells tangible products to the general public is required to register for sales and use taxes. Once you register, you will receive a Certification of Registration along with your Illinois Account ID. You must prominently display the Certificate of Registration at your place of business. 
• Business income tax. Corporations, S corporations, partnerships, and limited liability companies (LLCs) are required to register for business income tax. 

You can register with IDOR using one of the following methods.

• Apply online via the MyTax Illinois website. From the homepage, click “Register a New Business (Form REG-1)” and submit your business information. 
• Submit your application by mail by completing and mailing a paper Form REG-1, Illinois Business Registration Application (available as a PDF on the IDOR website) to the address on the form. You can also request a paper form by calling 1-800-356-6302.
• Apply in person (and get on-site support) at one of the IDOR offices. 

You may also need to submit corresponding business registration forms, if applicable.

Common corresponding schedules include the following:

• Schedule REG-1-A, Liquor Information
• Schedule REG-1-C, Cigarette and Tobacco Products Information
• Schedule REG-1-D, Electricity Tax Self-Assessing Purchaser
• Schedule REG-1-G, Gas Use Tax Self-Assessing Purchaser
• Schedule REG-1-L, Illinois Business Site Location Information
• Schedule REG-1-MR, Illinois Cigarette Manufacturer's Representative
• Schedule REG-1-O, Owner and Officer Information
• Schedule REG-1-R, Responsible Party Information
• Schedule REG-1-T, Telecommunications Tax Location Information

Step 2. Search for local licensing requirements

The city or county your business is located in may require you to have specific licenses or permits, depending on your business activities. 

For instance, businesses in Chicago must register for a business license through Chicago’s Department of Business Affairs and Consumer Protection (BACP). Chicago business owners can apply for most types of business licenses either online or in person. 

Check your city or county website to find out what local licensing requirements may apply to your business. 

Step 3. Identify state-level licensing requirements

You can find information about how to register for specific licenses or permits with the state of Illinois via Illinois’ Registrations, Licenses, and Permits page. 

The page includes licensing and permitting information for a diverse range of business categories, including pilots, liquor manufacturers, aquatic life dealers, fur buyers, wild game breeders, pyrotechnics distributors, and more.

Click on the business type to find the name, website, and contact information of the regulating agency.

Step 4. Apply for applicable federal licenses and permits

Federal agencies require businesses to apply for a permit when engaging in federally regulated activities. 

Here are some common types of business activities that are subject to federal regulation and their corresponding agencies.

• Agriculture: U.S. Department of Agriculture
• Alcoholic beverages: Alcohol and Tobacco Tax and Trade Bureau
• Aviation: Federal Aviation Administration (FAA)
• Firearms, ammunition, and explosives: Bureau of Alcohol, Tobacco, Firearms and Explosives
• Fish and wildlife: U.S. Fish and Wildlife Service
• Commercial fisheries: National Oceanic and Atmospheric Administration Fisheries Service
• Maritime transportation: Federal Maritime Commission
• Mining and drilling: Bureau of Safety and Environmental Enforcement
• Nuclear energy: U.S. Nuclear Regulatory Commission
• Radio and television broadcasting: Federal Communications Commission (FCC)

How much does a business license cost in Illinois?

The cost of a business license in Illinois depends on your license type and location and can range from under a hundred dollars to thousands of dollars. 

For example, childcare providers in Chicago must apply for a Children’s Services Facility License (MCC 4-75) and pay a two-year licensing fee of $165 in order to operate a daycare or children’s play center, while the fee for obtaining a state brew pub license through the Illinois Liquor Control Commission (ILCC) is $1,500. 

Illinois business license search and lookup

You can use the following techniques to search for an Illinois business license:

Search the state licensing agency’s website. Many licensing authorities maintain a license search tool that can be used to find out whether a business’s license is active or expired. For instance, the ILCC provides a license lookup tool. Users can click on the business name in the search results to find out more information about the liquor license and the business, including license number and status.

• Use the IDFPR license search tool. The IDFPR regulates and licenses several Illinois business types, including banks, credit unions, healthcare and occupational professions, and real estate professionals. You can use its license search tool to look up business licenses by license type, number, and status. The IDFPR also publishes monthly consolidated reports listing any licensees it has taken disciplinary action against. 
• Check your local city or county website. Some Illinois cities and counties provide business license search tools. For example, Chicago’s business license lookup tool enables users to search for business licenses by address, business name, ward, or precinct.

Do I need a business license in Illinois?

Whether you need a business license in Illinois depends on the nature of your business and your business entity. 

Common types of business entities include the following:

• Sole proprietorship. A sole proprietorship’s business assets and liabilities are not separate from the owner’s personal assets and liabilities. Anyone who does business and isn’t registered as another business entity is automatically considered to be a sole proprietorship.
• LLC. An LLC is a popular business structure for small business owners as it can help shield owners’ personal assets and provide tax advantages. 
• Partnership. Partnerships are when two or more individuals own a business together. A partnership can be a limited partnership (LP) or a limited liability partnership (LLP). 
• Corporation. A corporation provides the best liability protection but must pay income tax on its profits (and can face double taxation). 
• S corporation. An S corporation can help business owners enjoy the benefits of a corporation while avoiding double taxation. It enables profits (and some losses) to pass through to the owners’ personal income without being taxed at corporate rates. 

Sole proprietors with no employees may not need to register with IDOR, but they might still need to obtain local, state, or federal business licenses, depending on their business activities. 

Corporations, S corporations, partnerships, and LLCs must register for business income tax in Illinois and may need additional business licenses or permits based on their business operations.

Renewing your business license in Illinois

The renewal process for a business license in Illinois depends on your license type and the individual licensing agency’s requirements. It’s important to check with the licensing authority to find out renewal dates and requirements to ensure that your business license remains valid. 

FAQs

How long does it take to get a business license in Illinois?

How long it takes to get a business license in Illinois depends on whether you submit a paper application or apply online and the license type and agency. 

For instance, the processing time for an electronic business registration application through IDOR is generally one to two business days, compared to four to six weeks for a paper application. 

Do I need a business license if I’m a sole proprietor in Illinois?

Some sole proprietors may need to get a business license in order to do business in Illinois. 

For example, sole proprietors that withhold Illinois Income Tax for Illinois employees are required to register their business with IDOR.

However, unlike corporations, S corporations, and LLCs, sole proprietors do not need to register with the Illinois Secretary of State. Sole proprietorships are registered at the county level. 

How do I look up a business license in Illinois?

You can look up a business license in Illinois by using the state licensing agency’s search tool or the IDFPR’s license lookup tool or searching your local city or county website (if applicable).

Can I apply for a business license online in Illinois?

You can register your business online through the IDOR website. Many local, state, and federal agencies allow businesses to apply for licenses or permits online, with some offering the option to submit a paper application or apply for a business license in person. 

What happens if I don’t get a business license in Illinois?

If your business needs a business license and you don’t get one, or if you fail to renew your business license on time, you may be subject to penalties and sanctions. 

For example, Cook County, Illinois, requires all businesses in the unincorporated area of the county to obtain a local general business license. Businesses that violate this requirement can be denied contracts with the county, be subject to suspension or revocation, and face a fine of up to $1,000 for the first offense and $2,000 for subsequent offenses.

Are there different business licenses for different Illinois cities?

Illinois cities may require businesses to obtain local business licenses and permits. Check with your local government to find out about your city’s business license requirements. 

What is the difference between a state and local business license in Illinois?

A state business license is issued by a state authority. Local business licenses are required and issued by individual cities and counties.