Illinois Business License

Written by: Nik Ventouris

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Illinois Business License

Venturing into the world of business in Illinois will require a little pre-planning, starting with securing the appropriate Illinois Business License so that your business can operate legally.

Unfortunately, navigating this licensing process can be a bit nuanced since Illinois doesn’t offer an all-purpose license. To help with this, we’ve outlined the specific licenses your business might need in Illinois, guiding you through the acquisition process, and providing insights into potential costs.

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Do I Need a Business License in Illinois

In Illinois, businesses are required to obtain various licenses and permits at the local, state, and federal levels. Here’s a general breakdown:

Type of Business

Below, we’ve detailed common ways in which your business type can dictate the licenses you’ll be required to obtain, as well as specific examples of these:

  • Retailers’ Occupation Tax License: If your business sells tangible personal property, the Retailer’s Occupation Tax License is essential. This license, which is sometimes also referred to as a Sales Tax Permit is required, not only for legitimacy but also to allow the government to collect sales tax. The Illinois Department of Revenue oversees all applications and registrations for this license
  • Professional Licenses: In Illinois, certain professions like accounting, engineering, or cosmetology require specific professional licenses. The Illinois Department of Financial and Professional Regulation (IDFPR) manages the licensing for these professions and keeps a comprehensive list of regulated professions and the requirements for each on the IDFPR website
  • Environmental Permits: Businesses that might affect the environment, for instance by releasing pollutants into the air or water, need specific permits from the Illinois Environmental Protection Agency (IEPA). For example, if your business handles waste disposal or operates a large factory, you’ll likely need to engage with the IEPA to ensure you’re compliant

However, this is not the only factor influencing the exact combination of licenses you’ll need — the location of your business within Illinois plays an important role as well.


In this section, we’ve provided a succinct overview of the potential licenses and permits that your business may need due to local, state, and federal requirements:

  • Local: Local regulations vary widely across Illinois, so it’s pivotal to check with the municipal office of your business’s city or town. In Chicago, for instance, specific operations like food vending on public property, offering valet parking, or running large entertainment venues need a specialized city business license
  • State: The State of Illinois regulates numerous activities with a statewide business license, including real estate brokerage, security services, and operating medical facilities. If your enterprise plans on engaging in any state-regulated professions or activities, you’d need the corresponding license from the state agency responsible
  • Federal: If your business operates within certain industries or does specific types of work, you might need a license from the federal government. These include the alcohol, aviation, firearms and explosives, radio and television broadcasting, and transportation industries, among others

Since the exact permits and licenses your business will need are entirely unique to your situation, you’ll have to conduct thorough research into your own local, state, and federal regulations to smoothly launch your business.

Alternatively, many entrepreneurs opt to leverage the expertise of third-party services to handle this on their behalf.

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How to Get a Business License in Illinois

In order to get your business license(s) in Illinois, you will need to complete the following steps:

  • Form Your Business
  • Obtain an Employer Identification Number (EIN)
  • Apply for the Required Licenses and Permits

Let’s take a look at each step in more detail below.

Step 1: Form Your Business

Before setting out to obtain a business license in Illinois, it’s pivotal that you first choose an appropriate structure for your business. Sole proprietorships, general partnerships, and corporations are all common choices, however it’s often seen as the most advantageous for small businesses in Illinois to register as a Limited Liability Company (LLC). Here are a few reasons for why:

  • Limited Liability: Members are protected from personal liability for business debts, safeguarding personal assets
  • Tax Benefits: LLCs typically enjoy a pass-through tax treatment, avoiding the double taxation that corporations are subjected to
  • Management Flexibility: LLCs allow for flexibility in management structure, either being member-managed or manager-managed based on the preferences outlined in the certificate of formation
  • Ease of Formation: With the Illinois Secretary of State providing forms that meet the minimum state law requirements and the option to file online, setting up an LLC is relatively straightforward

Many small business owners opt to avoid the tricky process of forming an LLC by instead leveraging the help of third-party LLC formation services.

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Step 2: Obtain an EIN

The second step you’ll need to complete before applying for your business license is to obtain your EIN. This is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to businesses in the United States so that their financial transactions can be identified and tracked.

An EIN is often necessitated when applying for various permits and licenses as it allows local and state governments to ensure your business is operating within the confines of the law. You can obtain it in a number of ways:

  • Online: You can apply for your EIN on the IRS’s official website by using the EIN Assistant. You should be granted your EIN shortly after completing this application
  • By Fax/Mail: After completing Form SS-4, you can apply for an EIN by submitting it to the IRS via mail or fax
  • By Phone: International applicants and businesses located outside US Territories are required to call the IRS at (267) 941-1099 to obtain their EIN — which they should receive during this call

Note: If you are a sole proprietor, you will be able to use your Social Security Number (SSN) instead (as long as you do not have employees).

Step 3: Apply for Licenses and Permits

After settling on the appropriate structure for your business and initiating the application for your EIN, the next step is to focus on securing the necessary licenses and permits to operate legally within your locale and industry.

  • Local Licenses: The licenses are also dictated by the local government agencies of the city or county your business is based in. For example, Chicago restaurants wishing to provide outdoor seating must apply for a Public Place of Amusement (PPA) license from the Business Affairs and Consumer Protection (BACP) online portal
  • Statewide Licenses: To apply for professional licenses in fields such as health, architecture, or engineering, businesses should submit their applications to the IDFPR using the online portal. Similarly, for permits related to environmental concerns, applications need to be directed to the IEPA’s online system
  • Federal Licenses: While the federal government doesn’t mandate licenses for general business operations, if your business falls under any government-regulated category, such as agriculture, fishing, firearms, and alcohol sales, it may be required to obtain additional federal license or permit

Note: For specific licenses and registration details, use MyTax Illinois. For further inquiries, contact the Illinois Department of Revenue or local authorities like Chicago’s BACP.

Step 4: Renewal of Licenses and Permits

In Illinois, you will need to renew your business licenses and permits in order to maintain their status. While some licenses might have extended periods before renewal is due, many, particularly those issued by the City of Chicago, require renewal every one or two years.

Any significant changes to your business operations or structure, such as a change in the “Doing Business As” name or a relocation, will require attention and potential adjustments before renewing your licenses. Failing to renew or update details in a timely manner can result in penalties, ranging from late fees to more severe legal repercussions.

If you’re uncertain whether you need to renew any of your business’s licenses, make sure to reach out to the agency that issued your business license for clarification.

Alternatively, you can use a third-party service or a professional attorney for this process. This can be a good choice if you want to ensure that you avoid potential fines, as well as if you want to be as time-efficient as possible.

If you’re interested in finding out more about this process, see our article on How to Get a Business License.

How Much is a Business License in Illinois

In Illinois, the fee structure for business licenses can vary based on the type of license and its specific location. Due to this lack of standardization, calculating an exact cost can be a challenge.

The Retailer’s Occupation Tax License, which is necessary for businesses selling tangible goods, comes with a fee that varies depending on several factors, such as the type of goods being sold and the business’s size.

Contrastingly, businesses looking to operate as a hotel in Chicago would incur a two-year license application fee of $250, with an added charge of $2.20 per room. Meanwhile, restaurants with a space ranging from zero to 1,000 square feet are required to pay a two-year Retail Food license fee of $660.

Given the wide range of fees across different licenses and permits, it’s often advisable for businesses to seek guidance from a licensing specialist. This is to ensure they receive a detailed breakdown of potential expenses and can budget accordingly.

Illinois Business License FAQ

Does Illinois require a business license?

Yes, if you’re looking to operate your business in Illinois, you’ll typically need to obtain specific licenses and permits at the local, state, and federal levels. These requirements vary based on the nature and location of your business, ensuring you operate within legal confines. Interested in finding out more? Take a look at our How to Get a Business License article.

How much is a business license in Illinois?

The cost of an Illinois Business License varies depending on factors such as location, type of business, and sector. For instance, the Retailer’s Occupation Tax License cost will vary according to your business type and size. Similarly, local licenses in Chicago, like those for pop-up retail spots, will have vastly different fees.

How do I open a business license in Illinois?

To get Illinois business authorization, start by selecting your business structure, obtain an EIN, and then apply for the necessary licenses and permits from the relevant local, state, or federal agencies. In cities like Chicago, you might need specific licenses available through portals like BACP.

Do I need a business license as a sole proprietor in Illinois?

Yes, even as a sole proprietor, you’ll still require certain Illinois business licenses before you can get started. However, if you operate without employees, you can use your SSN in place of an EIN for some applications.

For all related articles, have a look at our How to Get a Business License page.