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Illinois vs Massachusetts LLC: fees, taxes, and which to pick

Data last updated: Apr 21, 2026

Illinois charges $150 to form an LLC; Massachusetts charges $500. Day-one sticker price is only part of the story, since most of the real cost comes from the annual obligations that stack up each year you keep the LLC open.

Over a rolling three-year window, Illinois runs about $1,625 less in total state fees than Massachusetts. Whether that gap matters depends on whether you actually operate in one of these states or are weighing a non-resident filing.

On speed, Massachusetts typically clears standard online filings faster than Illinois. Both states offer expedited tiers at an additional cost for filers on tight timelines.

For most small operators the choice is not really between these two states at all. It is between forming where the business actually operates and trying to route through a non-resident filing. The data below shows what each option actually costs.

Formation filing fee
Illinois $150
Massachusetts $500
Illinois saves $350
Year 1 total estimate
Illinois $325
Massachusetts $1,100
Illinois saves $775
Ongoing per year
Illinois $175
Massachusetts $600
Illinois saves $425
3-year total
Illinois $675
Massachusetts $2,300
Illinois saves $1,625

Key differences at a glance

  • Illinois costs $350 less to form ($150 vs $500).
  • Illinois is $425 per year cheaper to maintain ($175 vs $600).

Where each state fits

For most filers, forming in the state you actually operate from is the right call. The side-by-side below shows where the two states meaningfully diverge.

Three-year cost, side by side

Rough estimate of the state-facing cost to form and keep an LLC through three years. Both totals include a $100 per year registered-agent estimate.

Illinois Massachusetts
Year 1
$325
$1,100
Year 2
$500
$1,700
Year 3
$675
$2,300

Running total includes the one-time filing fee and annual ongoing costs (report fee or franchise tax plus a $100/year registered agent estimate).

What it costs under your specific situation

The table below runs the same LLC through four common scenarios. "Non-resident" rows assume a typical home-state foreign LLC registration adds about $200 per year of stacked cost; the real number depends on which state you live in and ranges from $50 to over $800 depending on jurisdiction.

Scenario Year 1 Each year after 3-year total
You live in Illinois, business operates there
No foreign LLC registration needed. You pay Illinois fees only.
 $325 $175 $675
You live in Massachusetts, business operates there
No foreign LLC registration needed. You pay Massachusetts fees only.
 $1,100 $600 $2,300
Non-resident forming in Illinois with operations elsewhere
You pay Illinois's fees plus a typical home-state foreign LLC registration of about $200 per year.
 $525 $375 $1,275
Non-resident forming in Massachusetts with operations elsewhere
You pay Massachusetts's fees plus a typical home-state foreign LLC registration of about $200 per year.
 $1,300 $800 $2,900

Illinois vs Massachusetts: full comparison

Dimension Illinois Massachusetts
Online filing
Can you file the formation document online?
 Yes Yes
Online approval time
Standard, non-expedited
 10 business days 2 business days
Expedited option
Paid fast-track filing
 $100 $20
Annual report
Required in addition to tax
 Required, $75 Required, $500
State-imposed annual tax
Franchise, privilege, or LLC tax minimum
 None None
State income tax
On pass-through LLC income at member level
 Yes Yes
Publication requirement
Newspaper publication after formation
 No No
Operating agreement
Required by state statute
 Recommended, not required Recommended, not required
Foreign LLC fee
Cost to register as a foreign LLC in this state
 $150 $500
State sales tax
General statewide rate
 6.3% 6.3%

Taxes in Illinois and Massachusetts

How each state handles entity-level tax on LLCs. Pass-through classification means member-level income tax also applies at each member's residence state.

Illinois tax

No entity-level franchise tax on LLCs. State income tax applies to member-level pass-through income. Corporate rate 7.0%.

Massachusetts tax

No entity-level franchise tax on LLCs. State income tax applies to member-level pass-through income. Corporate rate 8.0%.

Ongoing compliance

The recurring filings each state requires after formation.

Illinois

Annual report $75, due on your anniversary month. Registered agent required in Illinois.

Massachusetts

Annual report $500, due on your anniversary month. Registered agent required in Massachusetts.

Formation process, side by side

What actually happens from the moment you start filing to the moment you're in good standing. Use this as a checklist.

Illinois

  1. Check business-name availability on the Illinois entity search.
  2. Appoint a registered agent with a physical Illinois street address.
  3. File Form LLC-5.5 - Articles of Organization for $150.
  4. Wait for approval. Online typically 10 business days. Paid expedite from $100.
  5. Adopt an operating agreement (recommended, not required by Illinois statute).
  6. Apply for a federal EIN (free from the IRS).
  7. Open a business bank account to separate personal and business finances.
  8. File your first annual report and pay $75 when it comes due.

Massachusetts

  1. Check business-name availability on the Massachusetts entity search.
  2. Appoint a registered agent with a physical Massachusetts street address.
  3. File Certificate of Organization (Form 156C §12) for $500.
  4. Wait for approval. Online typically 2 business days. Paid expedite from $20.
  5. Adopt an operating agreement (recommended, not required by Massachusetts statute).
  6. Apply for a federal EIN (free from the IRS).
  7. Open a business bank account to separate personal and business finances.
  8. File your first annual report and pay $500 when it comes due.

Before you pick either state

A few things that apply no matter which state you choose. These trip up enough first-time filers that they're worth stating explicitly.

Registered agent is non-negotiable. Both Illinois and Massachusetts (and every other US state) require every LLC to designate a registered agent with a physical street address in the state of formation. You can serve as your own agent if you live in the state; otherwise a commercial agent runs $50 to $125 per year. Using your own home address makes it part of the public record.

Forming elsewhere does not escape your home state's tax. If you live and operate a business from your home state, forming the LLC in Illinois or Massachusetts does not avoid your home state's income tax. The moment you transact business at home, your home state requires a foreign LLC registration, and state tax liability follows your residence regardless of where the entity sits on paper.

EIN applications are free. The IRS issues Employer Identification Numbers directly at no cost. Any service charging you to "get your EIN" is reselling a free form submission. Single-member LLCs with no employees technically don't need one for federal tax, but nearly every bank requires an EIN to open a business account.

Operating agreement matters more than the state you pick. A well-drafted operating agreement governs member ownership, management, profit splits, buy-sell terms, and dissolution. Without one, your LLC runs on the state's default rules, which are rarely what you want. California, Maine, Missouri, and New York require a written one by statute; every other state treats it as strongly recommended.

Agency contacts

Illinois Secretary of State, Department of Business Services

Website
www.ilsos.gov/departments/business_services/home.html
Phone
(217) 524-8008
Mail
Limited Liability Division, 501 S. Second St., Room 351, Springfield, IL 62756
Office
501 S. Second St., Room 351, Springfield, IL 62756
Hours
8:00 AM to 4:30 PM Central, Monday to Friday

Secretary of the Commonwealth of Massachusetts, Corporations Division

Website
www.sec.state.ma.us/divisions/corporations/corporations.htm
Phone
(617) 727-9640
Email
corpinfo@sec.state.ma.us
Mail
Secretary of the Commonwealth, Corporations Division, One Ashburton Place, Room 1717, Boston, MA 02108
Office
McCormack Building, One Ashburton Place, 17th Floor, Boston, MA 02108
Hours
8:45 AM to 5:00 PM Eastern, Monday to Friday

Illinois Department of Revenue

Website
tax.illinois.gov
Phone
(800) 732-8866
Mail
101 West Jefferson Street, Springfield, IL 62702
Office
555 West Monroe, Suite 1100, Chicago, IL 60661
Hours
8:30 AM to 5:00 PM Central, Monday to Friday

Massachusetts Department of Revenue

Website
www.mass.gov/orgs/massachusetts-department-of-revenue
Phone
(617) 887-6367
Mail
Massachusetts Department of Revenue, P.O. Box 7010, Boston, MA 02204
Office
100 Cambridge Street, Boston, MA 02114
Hours
9:00 AM to 4:00 PM Eastern, Monday to Friday

Frequently Asked Questions

  • Is it cheaper to form an LLC in Illinois or Massachusetts?

    Illinois is cheaper at formation ($150) than Massachusetts ($500). Ongoing costs are also different: $175 vs $600 per year. Total over three years: $675 vs $2,300.

  • Can I form an LLC in Illinois if I live in Massachusetts?

    Yes, but your Massachusetts business will almost certainly need to register as a foreign LLC in Massachusetts too, which means paying Massachusetts's foreign registration fee and any ongoing Massachusetts obligations on top of the Illinois ones. The "form elsewhere to save" math usually doesn't work for operating businesses; it only works when you have no physical operations tied to any specific state.

  • How long does it take to form an LLC in Illinois vs Massachusetts?

    Illinois online: 10 business days; Massachusetts online: 2 business days. Illinois offers paid expedite from $100. Massachusetts offers paid expedite from $20.

  • Which state has lower taxes for an LLC, Illinois or Massachusetts?

    Illinois: state income tax applies to member-level pass-through income, no entity-level franchise or LLC tax. Massachusetts: state income tax applies to member-level pass-through income, no entity-level franchise or LLC tax.

  • Do both states require a registered agent?

    Yes. Every US state (and DC) requires every LLC to maintain a registered agent with a physical street address in the state. Illinois and Massachusetts both have this requirement. You can serve as your own agent if you live in the state; most out-of-state filers use a commercial agent for $50 to $125 per year.

  • Which state should I pick if I run an online business from home?

    Form in the state you actually live in. Your home state's Department of Revenue treats your residence as nexus regardless of where the LLC is filed, which means you owe state income tax there anyway. Forming in Illinois or Massachusetts to escape your home state's tax doesn't work; it adds paperwork. The non-resident filings make sense when you genuinely operate nowhere in particular: international founders, purely passive holding entities, or real-estate LLCs owning property in other states.

Full state guides

More Illinois and Massachusetts comparisons

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Sources

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