Get your tax IDs in Illinois

An EIN, if you need one, takes minutes online. Illinois adds a business registration with the Department of Revenue, income tax with a replacement tax on top, and employer accounts once you hire. Registration with the Illinois Department of Revenue (IDOR) covers sales tax; unemployment insurance is a separate registration with the Illinois Department of Employment Security (IDES).

What’s different in Illinois

• Sales tax starts with business registration. Illinois asks you to register with the Illinois Department of Revenue (IDOR) on Form REG-1, Illinois Business Registration Application, or online in MyTax Illinois. You may see it called a sales tax permit elsewhere. Here, if one applies, you are issued a Certificate of Registration or License.
• The state rate is 6.25%, and local taxes stack on top. They vary by address and change January 1 and July 1.
• Income tax comes with a replacement tax. Illinois adds a personal property replacement tax to its income tax, and a partnership or S corporation owes it even though income passes through to the owners.
• Workers’ compensation has no employee minimum. And the Paid Leave for All Workers Act reaches most employers; an employer already covered by a local paid leave ordinance follows that instead.

Do this

1. Get an EIN from the IRS if you need one. The IRS requires one if you have employees and for partnerships, corporations, nonprofits and most LLCs. It is free and, if approved, issued immediately online. Form your LLC or corporation first. Don’t pay a website to apply for you.
2. Register with the Department of Revenue. The rule covers any business conducting business in Illinois or with Illinois customers, including sole proprietors. Register before you make any purchases, sales, or hire an employee. Use MyTax Illinois, or mail Form REG-1, Illinois Business Registration Application (the registration page has both). Online processing is about 1 to 2 business days. Paper takes 4 to 6 weeks or longer. The page we read does not say whether registration costs anything.* Check the official source before you pay anyone to file it for you.
3. Look up your sales tax rate. The state rate is 6.25% for general merchandise and 1% for qualifying drugs and medical appliances, per the Department’s rate guide. On top are local retailers' and service occupation taxes, which vary by address. Check the combined rate for your address before your first sale.
4. File sales tax returns on the schedule you’re given. The return is Form ST-1, Sales and Use Tax Return, due the 20th day of the month following the end of the reporting period. The Department may move you to monthly filing when your average monthly liability is over $200, to quarterly between $50 and $200, and to annual under $50. The ST-1 instructions explain it. The level at which you must file electronically wasn’t in our sources.* Check the official source.
5. Plan for income tax. A sole proprietor, partner or LLC member reports business income on their own return at 4.95%. A C corporation pays 7% income tax plus 2.5% replacement tax. An S corporation or partnership owes 1.5% replacement tax on its net income, and may elect an entity-level tax at 4.95%. The rates are in the Income Tax Act. Whether an election makes sense is a question for a CPA. Entity vs. tax election explains the federal side.
6. Register as an employer when you hire. Do the Department of Revenue registration first, since it comes before you hire anyone. Have each employee complete Form IL-W-4. Withholding is paid with Form IL-501, Withholding Payment Coupon, and reported on Form IL-941, Illinois Withholding Income Tax Return. The quarterly return is due the last day of the month that follows the end of the quarter. Monthly payments are due the 15th day of the month following the month in which the tax was withheld. If you withheld more than $12,000 in the look-back period (the one-year period ending on June 30 of the immediately preceding calendar year), you pay semi-weekly. The payment and filing rules explain each schedule.
7. Register with the Illinois Department of Employment Security (IDES). You owe unemployment tax once you have paid $1,500 in wages in a calendar quarter, or employed one or more people in 20 weeks of a calendar year. Each quarter you file Form UI-3/40, Employer's Contribution and Wage Report, due April 30, July 31, October 31, and January 31. Most new employers pay 3.35% on the first $14,250 of each worker’s wages in 2026 (a few industries pay a different entry rate, listed in the rate notice), and the 2026 range is 0.75% to 7.05%. The 2027 figures weren’t posted when we checked.* Report each new hire to the Illinois New Hire Directory within 20 days of the first day on the payroll. Illinois’s own E-Verify section was repealed effective December 12, 2025. The hiring your first employee guide covers the federal side, including federal work authorization rules.
8. Buy workers’ compensation insurance. The Illinois Workers' Compensation Commission runs the program. Covered employers must buy workers' compensation insurance or get the Commission's permission to self-insure. There is no minimum number of employees. See below.
9. Know your two Illinois employer rules. Paid leave: up to 40 hours a year unless a local ordinance covers you instead, with the notice from the Department of Labor. Retirement: My Illinois Savings applies to some employers. Stay compliant has both.

Workers’ compensation

Illinois sets no minimum number of employees. The Act covers listed hazardous trades outright, and any business that sells goods or services to the public once its annual payroll passes $1,000. Note that corporate officers may opt out of coverage by written notice to the insurance carrier. Knowingly going without coverage is a Class 4 felony, and the Commission can stop the work with a work-stop order. The Act also provides for citations of at least $500.

What you get back

• EIN: a nine-digit federal tax ID, shown on screen when approved. Print the confirmation letter.
• Business registration: your tax number and, if one applies, a Certificate of Registration or License. You can look yours up with the state’s Verify an Illinois Business Registration tool.
• Withholding and unemployment accounts: set up when you hire, each with its own filing schedule.

Not selling anything taxable or hiring yet? The EIN may be all you need for now.