Illinois construction companies must address varied concerns prior to their launch. Some steps are common to starting any type of business in the United States. In Illinois, however, the licenses and bonds needed for construction work depend on both the region your company is contracted to work in and the type of work being done. Your Illinois construction business is better positioned for success when you understand the inherent risks and responsibilities associated with starting this type of company.
Items you will need
- Feasibility checklist
- Business plan
- Unique company name registered with your Illinois County Clerk’s Office
- Certificate or Articles for your type of business structure
- Illinois Business Tax number
- Illinois Department of Professional Recognition license (required for some professions)
- General Contractor License (Chicago only)
- Worker’s Compensation Insurance (if your company hires any employees)
Write a feasibility checklist and a business plan. Determine your business’s potential for success with the feasibility checklist. Use the business plan to both guide your company’s direction and fulfill a requirement to obtain additional finances.
Define your construction company as a sole proprietorship, general or limited partnership, limited liability partnership, limited liability company or partnership, “S” corporation or a “C” corporation. Sole proprietorships are the easiest businesses to form but also leave you open to the greatest amount of liability for your company, according to the “State of Illinois Business Portal.” Corporate structures require more work to establish but offer more protection for your personal involvement in company disputes.
Find an available construction company name and register it with your Illinois county clerk’s office if it differs from your personal name and you are forming a sole proprietorship. This is required by the Illinois Assumed Name Act.
Prepare and file the required paperwork for your business structure with the Illinois Secretary of State Department of Business Services. Limited partnerships must complete a Certificate of Limited Partnership. Limited liability partnerships are required to submit several statements and affidavits. Limited liability companies or LLCs must prepare and file Articles of Organization. Both “C” and “S” corporations must complete and file Articles of Incorporation.
Illinois construction companies forming as corporations must record both their Certificate of Incorporation and the original Articles of Incorporation with the Office of the Recorder of Deeds in the county where the business is located. This must be done within 15 days of the certificate’s receipt.
Register your business with IDOR, The Illinois Department of Revenue, before you make any sales or hire any employees. This enables your company to pay taxes. You will receive a Certificate of Registration and an Illinois Business Tax Number or IBT number.
Obtain a license from the Illinois Department of Professional Recognition if your construction company engages in any of the following professions: structural engineering, home inspections, interior design, land surveying or roofing.
Apply for a license to do business with the City of Chicago as a general contractor if your company will be working in Chicago city limits. Certain trades (crane operators, mason contractors, plumbers, supervising elevator mechanics and stationary engineers) must pass a written exam to get certification by the city.
Acquaint yourself and all relevant company personnel on the Equal Employment Opportunity Commission’s anti-discrimination laws. This legislation has an impact on your company’s hiring practices. (see References 1)
Obtain Worker’s Compensation Insurance if your company will be hiring employees. The State of Illinois requires employers to provide worker’s compensation insurance even if they only have one employee.
Insure your company adequately with policies relevant to the work you will be performing and the losses you may incur. Construction companies commonly hold the following policies: General Liability, Professional Liability, Umbrella Liability, Property and Builder’s Risk Insurance.
Create a company name unique to the Illinois Secretary of State which contains either the word or abbreviation for "corporation", "company", "incorporated", or "limited” if your construction company is a corporation.
Retain enough funds to provide a bond to either the State of Illinois or the relevant political body awarding the contract if you plan to perform work for the state valued at over $50,000 or complete work for a political subdivision valued at over $5,000. This is specified in Illinois’ Construction Bond Act (FINANCE 30 ILCS 550/).
Appoint at least one director for your Illinois corporation.
Certify your qualifying company online for the City of Chicago’s Supplier Diversity program, formerly the Minority and Women-Owned Business Enterprise program.
Check with the EPA to see if your construction company will be required to obtain a pollution certificate for air, land or water.
Contact your local Illinois revenue agency to determine if your construction company is liable for any additional local taxes.
Get coverage against claims of bodily injury or property damage with a General Liability insurance policy.
Protect yourself against responsibility for any claims in excess of your General Liability insurance’s maximum amount with an Umbrella Liability Insurance policy. Insure yourself with Professional Liability insurance if you will be providing any design services and want to protect yourself against losses related to the project or claims to third parties.
Consider getting Builder’s Risk insurance to protect against loss caused by theft, vandalism, fire, wind storms and hail.
- State of Illinois Business Portal: Frequently Asked Questions
- Illinois Secretary of State: Corp/LLC Certificate of Good Standing
- Illinois Department of Public Health: County Vital Records Web Sites or County Clerk Addresses
- IRS.gov: - Small Business and Self-Employed Tax Center
- Small Business Administration
- state seal of Illinois image by Jan Ebling from Fotolia.com