The short answer
It depends. Illinois has trade-offs: 1.5% personal property replacement tax on LLCs, High corporate tax. For most founders, alternatives like Wyoming or your home state are simpler.
Three deciding questions
1. Do you live or operate in Illinois?
If yes, form here. Out-of-state formation while operating in Illinois costs double, not half.
2. What is the 5-year all-in cost?
$775 (filing + 5 × annual report + $50 registered agent + franchise minimums). This is the actual number to compare across states.
3. What are your three real requirements?
- Privacy: 4/10 (weak — members appear on public filings).
- Banking: 8/10 (workable but not premium).
- Cost: low 5-year total.
Illinois pros
- Major market
Illinois cons
- 1.5% personal property replacement tax on LLCs
- High corporate tax
Most common alternative
Wyoming for cost + privacy. Delaware for VC-backed startups. Your home state if you operate there. Run the 5-question quiz for a personalized shortlist.