To start a therapy practice in Illinois, follow these seven steps:
- Check local zoning regulations
- Register a business name
- Choose a business structure
- Register your business
- Obtain relevant licenses
- Get insurance
- Start paying taxes
If you’re moving your practice from a different state, there’s an eighth step you’ll need to follow: Figuring out how to pay taxes in multiple states.
This article covers the bare essentials needed to get your therapy practice up and running in the Prairie State. For advice on budgeting, marketing your practice, and billing your clients, check out our general guide, How to Start a Therapy Practice.
{{consult}}
Check local zoning regulations in Illinois
Illinois boasts 102 counties and 1,300 municipalities. Before you settle on a location for your therapy practice—even if that location is your own home—you must make sure the local zoning allows you to operate there.
In cases where you aren’t typically allowed to operate a business in a certain area—for instance, a home business in a residential area—you can apply for a zoning variance. A variance is more or less an exception to zoning laws.
For information on whether you need to apply for a variance, what types of zoning your town or city recognizes, and what kind of business you can perform there, contact your local municipality.
Register a business name in Illinois
If your therapy practice is a sole proprietorship or general partnership, and you intend to operate under a name different from your own or your partners’ (respectively), you’ll need to register an assumed name.
Assumed names for sole props and partnerships are registered at the county level. Contact your county clerk’s office for details.
Before registering, you’re required to run an announcement of your new name in a newspaper published in your county. The county clerk’s office will provide you with a list of eligible papers.
The newspaper will provide you with an affidavit confirming your announcement ran, which you will provide when you register your name with the county clerk’s office.
Choose a business structure recognized by the State of Illinois
Each state recognizes—and registers—different business structures (aka “entity types”). Your practice’s business structure affects how its income is taxed and who may own shares of the practice.
In Illinois, the business structures you can choose from are:
- Sole proprietorship
- General partnership
- Business corporation
- Professional corporation*
- Professional limited liability company (PLLC)**
- Limited partnership (LP)
- Limited liability partnership (LLP)
- Limited liability limited partnership (LLLP)
*Licensed professionals in the State of Illinois—including most therapists—who wish to incorporate may choose to form professional corporations.
**Licensed professionals in the State of Illinois—including most therapists—who wish to form limited liability companies (LLCs) must now form PLLCs. Learn more about this recent change.
This list is just an introduction. Before settling on a business structure, talk to your accountant—and, if necessary, a lawyer—for help choosing the right one.
For more information, check out our article How to Choose a Business Entity for Your Therapy Practice.
Sole Proprietorship
When you go into business for yourself, you’re considered a sole proprietor by default. As a sole proprietorship, your business is identical with your person: All revenue is your revenue, all losses are your losses.
Sole proprietorships are the simplest form of business structure, but offer nothing in the way of legal or financial protection.
General Partnership (GP)
In a general partnership, all members are general partners—meaning, they all share legal and financial liability equally.
Profit Corporation
A profit corporation is a typical corporation as we know it: It exists separately from its owners, who own shares in it. There are two types: C corporations and S corporations. C corporations may elect S corporation status by filing IRS Form 2553.
C corporations have their income taxed separately from the income of the shareholders. S corporations pass on the tax liability to each shareholder. (For a variety of reasons, Heard recommends its clients form S corporations at the federal level.)
Professional Corporation
Those practicing professions in the state of Illinois may choose to form professional service corporations. A professional service corporation functions like a business corporation, with added protections in case a shareholder is sued for malpractice. All shareholders in a professional service corporation must be licensed and practicing the same professions.
Limited Liability Company (LLC)
The LLC business structure offers liability protection similar to a corporation, but with the option to be taxed in different ways. Your accountant may recommend you elect to be taxed as either an S corporation or a partnership.
Professional Limited Liability Company (PLLC)
The PLLC business structure is identical to the LLC, except for the fact that every member must be a professional licensed by the State, and provide proof of certification when the PLLC files its articles of formation with the Secretary of State. Therapists qualify as professionals licensed by the state.
The PLLC business structure provides extra liability protection for all members in case of legal proceedings brought against the organization (eg. a patient suing for malpractice.)
Limited Partnership (LP)
A limited partnership offers some liability protection for some of its members. To operate as a limited partnership, at least one individual acts as a general partner, who heads the company and makes major decisions, while at least one other individual acts as a limited partner, who does not.
General partners have unlimited liability—they are personally liable for the partnership’s debts, legal proceedings, and so on. Limited partners are only liable for their controlling share of the partnership.
Limited Liability Partnership (LLP)
An LLP is similar to a general partnership, but with extra protections; it’s typically favored by professionals like lawyers and accountants, but any professional licensed with the state (including therapists) may form an LLP. You can think of an LLP as the “professional version” of a general partnership.
The LLP structure protects each partner against outcomes of the other partners’ professional negligence. For instance, if one partner in an LLP is sued by a client, the other partners are not liable.
Limited Liability Limited Partnership (LLLP)
The LLLP business structure is very similar to an LLP business structure. The main difference is that existing general partnerships may choose to register as LLPs, while existing limited partnerships may choose to register as LLLPs.
{{consult}}
Register your therapy practice in Illinois
To register your business in Illinois, you need to do two things:
- File the business registration with the State
- Pay the filing fee
The fastest and easiest way to register your business in Illinois and pay associated fees is to do so online. However, some business structures—including partnerships—must register by mail or in person.
Here’s a breakdown for each of the business structures covered in section 3 above.
Form a sole proprietorship in Illinois
Filing fees: No cost to form, fees apply to register an assumed name
Unlike in many states, in Illinois, you are required to register your sole proprietorship in order to do business. To register your sole prop, follow the onscreen instructions to file REG-1 on MyTax Illinois.
Form a general partnership in Illinois
Filing fees: No cost to form, fees apply to register an assumed name
Unlike in many states, in Illinois, you are required to register your general partnership in order to do business. To register your general partnership, follow the onscreen instructions to file REG-1 on MyTax Illinois.
Incorporate in Illinois (business and professional corporations)
Filing fees: $150 to file Articles of Incorporation
- Choose a business name
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- File your Articles of Incorporation and pay the fee using the Illinois Secretary of State online incorporation service
Once you’ve incorporated in Illinois, you can elect S corporation status by filing IRS Form 2553.
Register a Professional Limited Liability Company (PLLC) in Illinois
Filing fees: $150 to file Articles of Organization
- Choose a business name
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- File your Articles of Organization and pay the fee using the Illinois Secretary of State online incorporation service
- Register your PLLC with the Illinois Department of Financial & Professional Regulation (G&G Law offers a step-by-step guide)
Register a Limited Partnership (LP) in Illinois
Filing fees: $150 to file a Certificate of Limited Partnership
- Choose a business name.
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- Download, fill out, and file a Certificate of Limited Partnership with the Secretary of State.
- Pay the filing fee.
- Draft a partnership agreement. It will help you stay organized and settle any disputes between partners.
Register a Limited Liability Partnership (LLP) in Illinois
Filing fees: $150 to file a Statement of Qualification
- Choose a business name.
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- Download, fill out, and file a Statement of Qualification with the Secretary of State.
- Pay the filing fee.
- Draft a partnership agreement. It will help you stay organized and settle any disputes between partners.
Register a Limited Liability Limited Partnership (LLLP) in Illinois
Filing fees: $150 to file a Certificate of Limited Partnership
- Choose a business name
- Appoint a registered agent. This person must be over 18 and have an address within the state. They’re responsible for receiving all official communications from the State.
- Download, fill out, and file a Certificate of Limited Partnership with the Secretary of State. On Line 5, select the option to designate the business an LLLP.
- Pay the filing fee
- Draft a partnership agreement. It will help you stay organized and settle any disputes between partners.
{{consult}}
Get business licenses and permits for your therapy practice in Illinois
To operate in Illinois, your therapy practice may require licenses or permits. These are handled at the federal, state, and local levels.
Luckily, therapy practices do not need any special federal permits or licenses to operate in Illinois. And, outside of standard licensure for mental health practitioners, they also do not require permitting or licensing at the state level.
At the local level—meaning your municipality (town, city, etc.), you may be required to purchase a business license to operate. Contact your local permitting office for details.
Get business insurance for your therapy practice in Illinois
The following types of business insurance are highly recommended for therapy practices operating in Illinois:
- General liability insurance
- Commercial property insurance
- Business income insurance
- Professional liability insurance
- Illinois worker’s compensation insurance
While shopping for insurance, look for a business owner’s policy (BOP). A BOP typically includes the three core types of insurance coverage: general liability, commercial property, and business income.
General liability insurance protects you in case of any damages you cause to someone else’s property or person. Since the State of Illinois puts no cap on liability lawsuit rewards, it’s important to make sure you’re well-covered. Aim for at least $1 million coverage.
Commercial property insurance protects property your therapy practice owns, like computers, business phones, or office furniture. It also protects the building where you operate, whether owned or rented.
Business income insurance covers you for loss of income due to specific circumstances. These include natural disasters, such as fire or storm damage; and man-made disasters, like theft.
Professional liability insurance covers you in case you are sued for libel or slander, for mishandling patient records, for providing inaccurate advice, or for otherwise causing harm in the process of practicing your profession.
If you have employees, you’re legally required to cover them with Illinois worker’s compensation insurance. This pays for medical expenses, lost wages, and ongoing care in the event one of your employees is injured on the job.
Prepare to pay taxes in Illinois
Every business earning income in Illinois is required to pay state taxes. If you owe over $1,000 in state taxes, you’re required to pay that amount in quarterly installments.
Wondering how to get started? Check out How to Pay Income Tax in Every State as a Therapist.
Learn how to pay taxes in multiple states
If you started your therapy practice in a different state, and you’re moving to Illinois—or if you operate in Illinois, and you’re planning to move to a different state—you’ll need to figure out how to pay taxes in multiple states.
The rules vary depending on which states you operate in over the course of the year, and how long you spend in each. Check out how moving to a different state impacts your taxes as a therapist.
—
Want to learn more? Check out our guide on how to start a therapy practice.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.
Bryce Warnes is a West Coast writer specializing in small business finances.
{{resource}}
Maximize your tax season savings with limited-time pricing
You don't have to do it alone. Every therapist who joins Heard is supported by a team of accounting and tax pros who specialize in therapy practices. Book a free consult to learn more.
Schedule a free consult
