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New Illinois Limited Liability Act makes Limited Liability Corporations an easy choice over S Corporations

NAPERVILLE, BOLINGBROOK, WHEATON, AND AURORA BUSINESS PLANNING AND LIMITED LIABILITY CORPORATION ATTORNEYS

Sean Robertson and Gateville Law Firm are business planning and asset protection attorneys in the Naperville, Oswego, Aurora, Wheaton, Bolingbrook, Romeoville, and Joliet areas.  Sean Robertson and Robertson Legal Group, LLC service the Western Suburbs, Fox Valley, and the Southwestern Suburbs of Chicago with their Limited Liability Corporations and Business Planning legal expertise.

KENDALL COUNTY AND FOX VALLEY LIMITED LIABILITY CORPORATION ATTORNEYS

Sean Robertson and Gateville Law Firm provide Oswego, Yorkville, Plano, Aurora, Sugar Grove, and other areas in Kendall County and Fox Valley with reliable and experienced legal counsel related to estate planning, business planning and succession planning, real estate law, and asset protection planning.  The New Illinois Limited Liability Company Act took effect on July 1, 2017 created opportunities for entrepreneurs, families, and business owners.

  1. New Lower Cost for Limited Liability Cost

The new Illinois Limited Liability Company Act, 805 ILCS 180/Limited Liability Company Act changed in several ways.  The first way is the cost of Illinois Limited Liability Corporations in the State of Illinois were reduced to $150 versus $500 per Limited Liability Corporation.

Form LLC-5.5 applies to Illinois Limited Liability Company Act and Articles of Organization effective on July 1, 2017, the filing fee to create an Articles of Organization (or formation of an LLC) is $150.  The previous LLC fee was $500, and the State of Illinois was losing a substantial amount of business to Delaware and Nevada because their cost to create a Limited Liability Corporation were substantially less.  For example, I drafted seller’s documents for a real estate closing in LaSalle County this past week and the series LLC was a Delaware Series Limited Liability Corporation.  Certain industries had to be Illinois LLCs, but the real estate industry was foreign shopping to find the lowest cost for a Limited Liability Corporation.

The substantial reduction in Illinois Limited Liability Corporations’ cost will have a substantial impact of attracting and retaining Illinois residents in creating their LLCs in the State of Illinois.  Now, an Illinois LLC is a smart choice especially considering the cost to acquire a Delaware LLC and Delaware registered agent is higher than an Illinois LLC.

Here in Illinois, one can be their own registered agent because they are Illinois residents.  Often, business owners and real estate owners have their CPA or business attorney as their registered agent.  Unlike those people, I believe that it makes more sense for a businessperson to be their own registered agent.  Filing an annual report is easy and if a person or entity needs assistance, a business attorney such as Sean Robertson is available to assist them.  Paying for registered agent service is a waste of money in my opinion.

Second, Illinois LLCs likely will make S corporations obsolete in Illinois.  Generally, the major reason to pick an S corporation in Illinois was due to the price difference between an S corporation and Limited Liability Corporation.  Now, an Illinois Limited Liability Corporation is $150 versus $175 for an S corporation in the State of Illinois.  An S corporation is similar to a landline compared to a Limited Liability Corporation (being a cell phone).  There are substantial limitations with an S corporation versus a Limited Liability Corporation.

Unfortunately, most businesspeople do not take advantage of the substantial benefits of a Limited Liability Corporation.  Furthermore, most business attorneys do not understand the benefits of an LLC versus an S corporation.  One key benefit is flexibility of a Limited Liability Corporation.  An LLC is similar to a partnership because it is flexible.  An LLC is limited by their owner’s imagination versus an S corporation is limited under Illinois law to one type of share of stock.

In English, this means that an S corporation is rigid because every owner must have the same identical interests.  For example, an investor must have the same rights as a business owner unlike a Limited Liability Corporation.  With a Limited Liability Corporation, an investor can have non-voting interest in the LLC versus an S corporation.

Business owners often want to control their companies and make strategic business decisions.  An investor is a financial contributor to the company, which wants a preference prior to the business owner in recouping their financial investment in the company.  Furthermore, an investor wants limited liability protection because they are simply an investor (in some cases) in a financial, business and/or real estate venture.

Sean Robertson and Gateville Law Firm understand LLCs and Corporations including S corporations thoroughly and understand how they relate to business, financial protection, and asset protection goals.  Whether you are a real estate investor or owner and want asset protection or you are a startup company and want legal advice, Sean Robertson and Gateville Law Firm can assist you.

  1. Oral and Implied Agreements are recognized by the State of Illinois

YORKVILLE, OSWEGO, AND KENDALL COUNTY LLC AND CORPORATE ATTORNEYS

As of July 2017, oral operating agreements are recognized for Illinois Limited Liability Corporations.  An oral operating agreement is essentially an oral contractual agreement between business partners, members, and/or managers on how to operate the Illinois business.  An oral operating agreement differs from an Illinois written operating agreement because a written operating agreement is in writing and signed by the members and applicable managers.

For example, an oral operating agreement may be a written operating agreement, which failed to be signed by the members and/or managers.  Simply put, an operating agreement is a written contract between the owners of an LLC on how to conduct the business affairs of the Illinois business.

  1. LLC are assumed to be member-managed LLCs unless otherwise explicitly stated.

There are two (2) types of Illinois LLCs.  The first type is a member-manager LLC, which is managed by the members of the LLC.  A member is an owner of the LLC.  In contrast, the owner of a Corporation is considered a shareholder.  Unlike a manager-managed LLC, the business is managed by the members of the LLC.  The second type of LLC is a manager-managed LLC.

A manager-managed LLC is similar to a corporation because the members (or owners) elect managers to operate the day to day affairs of an LLC.  Personally, I prefer manager-managed LLCs because I often see husbands and wives own LLC together jointly, which I believe is a huge mistake.  A husband and wife should not jointly own the business because their creditors have two (2) targets versus one target (one spouse).

Pursuant to Illinois law, a husband and wife are both implied members and owners of an LLC in case of a divorce.  Thus, husband and wife are protected under Illinois law, but a manager-managed LLC enables a husband and wife to participate in the management and affairs of the LLC without the liability risks and concerns.

  1. Members are no longer assumed to be agents of the LLC having the ability to bind an LLC

This procedure is vital because many business owners when they conflict with one another are concerned about one member -binding the LLC and placing their interests at risk of creditor and liability concerns.  Typically, this incident would occur when two (2) or more members are conflicting, and one member wants to unwind the LLC.  Under the old LLC law, both members still could be liable for business debts of the LLC because a member was considered an agent of the LLC that had the ability to sign contracts and bind the LLC to agreements.

EXPERIENCED ESTATE PLANNING, LLC, AND BUSINESS PLANNING ATTORNEYS IN NAPERVILLE, YORKVILLE, AND KENDALL COUNTY

Robertson and Gateville Law Firm concentrate in business planning, estate planning, and asset protection for LLCs and business owners in the Yorkville, Oswego, Plano, Sugar Grove, and Sandwich areas including Kendall County.  Sean Robertson is a graduate of DePaul University College of Law and concentrates his practice in the areas of business planning, estate planning, real estate law and asset protection, and asset protection law.  Sean Robertson may be reached online through the contact forms.  We provide home, business, and office appointments for business owners and entrepreneurs in the Kendall County area.  Sean Robertson may be reached at 630-780-1034.  Our website is www.GatevilleLawFirm.com.

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Yorkville, Illinois 60560