 A bill that recently passed the Illinois Senate would lessen startup costs for
entrepreneurs. Lawmakers from both sides of the aisle voted unanimously May 3 to
pass Senate Bill 867, which will reduce the cost of starting a Limited Liability
Company in Illinois from $500 to $39. State Sen. Tom Cullerton, D-Villa Park,
was the bill’s chief sponsor.
Illinois currently has the highest start-up fee in the country for LLCs, tied
with Massachusetts. Illinois entrepreneurs pay this $500 fee simply to file
paperwork to organize a new business. Not only is the fee unnecessarily painful,
it signals to entrepreneurs that Illinois sees businesses as entities to nickel
and dime rather than as partners in producing economic growth.
Cutting the LLC start-up fee from $500 to $39 is a symbolic first step toward
getting Illinois back on the right footing. SB 867 would give Illinois the
lowest start-up fee in the region.
illinois LLC fees
A lower start-up fee is a good way to begin signaling to businesses that
Illinois wants to attract investment and economic growth. Everybody wins when
the economy grows faster, and more rapid economic growth is necessary for
Illinois to produce higher wages and a better standard of living.
State Rep. David McSweeney, R-Barrington Hills, is the chief sponsor of the bill
in the House. If it sails through the House as easily as it went through the
Senate, Illinois will have a better incentive structure to attract new business
formation.
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The state legislature can follow up on this cost-cutting measure
by also reducing the LLC annual filing fee. Illinois’ $500 LLC
start-up fee is punishing, and is backed up by an annual fee of $250
per year. SB 867 does not change the annual fee.
The annual fee is also far out of line with surrounding states,
and hits every LLC in Illinois every year. Cutting the annual fee
would keep a little more money in the pockets of small businesses.
Taxes, fees and regulations in Illinois create incentives for
businesses to avoid the Land of Lincoln. Meanwhile, neighboring
states have been rolling out the welcome mat for new business
investments. For example, Kentucky has announced nearly $3 billion
in new business investments since enacting Right-to-Work in early
2017.
These types of job-creating investments don’t come to Illinois.
Instead, workers in neighboring states benefit from new capital and
machinery, higher productivity and increasing wages. Workers in
Illinois are too often stuck envying the job opportunities across
the border.
SB 867 is a start to build upon. Lawmakers should pass SB 867 and
string together a series of business reforms to make Illinois an
attractive place to invest.
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