Specialized tax planning, R&D credits, and CFO services for venture-backed startups in Chicago. Navigate Illinois's 9.5% combined tax rate while maximizing federal and state R&D credits. Serving River North, Fulton Market, West Loop, and the broader Chicago tech ecosystem.
Illinois has a 9.5% corporate income tax rate (7.0% state + 2.5% personal property replacement tax), one of the highest in the nation. This makes tax planning and credits crucial for Chicago startups.
Chicago requires a business license for most operations, with annual renewal fees. Businesses must register within 15 days of starting operations in the city.
Many Chicago startups have remote employees in neighboring states (Wisconsin, Indiana, Michigan), creating complex multi-state compliance requirements.
Illinois treats SaaS as a taxable service, requiring careful sales tax compliance for software companies. The combined state and Chicago rate can exceed 10%.
Illinois offers a generous R&D tax credit that equals 6.5% of qualifying expenses above a base amount. This credit can be carried forward for 5 years and stacks with the federal R&D credit, potentially saving Chicago tech companies $50K-$200K+ annually.
The Economic Development for a Growing Economy (EDGE) tax credit is available for companies creating or retaining jobs in Illinois. Tech startups expanding rapidly may qualify for significant state income tax credits.
Illinois provides a 25% tax credit to angel investors who invest in qualified Illinois companies. This makes fundraising more attractive for Chicago startups.
A Chicago-based fintech startup with 15 employees was paying full Illinois taxes without claiming available R&D credits. They had complex multi-state sales tax obligations due to nationwide customers but no compliance system in place.
We documented their software development activities for R&D credits, implemented automated sales tax compliance, and restructured their Illinois tax planning to maximize state credits while managing their multi-state footprint.
$180K in federal and state R&D credits claimed in year one, reduced effective Illinois tax rate from 9.5% to 6.2%, and achieved full multi-state sales tax compliance across 8 states. Total first-year savings: $215K.
Yes. If you're conducting business in Illinois (have an office, employees, or significant operations), you must register as a foreign corporation with the Illinois Secretary of State. This requires filing a Foreign Corporation Application and paying a $150 filing fee, plus annual report fees.
Illinois has one of the highest state corporate tax rates among major tech hubs. California is 8.84%, New York is 6.5% (plus NYC's 8.85%), Texas has no income tax (but 0.75% franchise tax), and Washington has no income tax. However, Illinois's R&D credit can significantly reduce the effective rate.
Yes! Illinois R&D credits stack with federal credits. If you claim $100K in federal R&D credits, you can also claim Illinois credits on the same qualifying expenses. This double benefit makes Chicago very attractive for tech development companies despite the high base rate.
Illinois treats SaaS as a taxable service with a state rate of 6.25%, plus Chicago's local rate of 1.25%, for a combined 7.5%. However, the Amusement Tax and other local taxes may apply depending on the service type, potentially reaching 9-10%.
Generally yes. Having employees in Wisconsin creates physical nexus, requiring you to register for Wisconsin income tax withholding, unemployment insurance, and potentially corporate income tax depending on their activities. We help Chicago startups manage multi-state compliance efficiently.
Schedule a free consultation with our Chicago-based startup tax experts. We'll analyze your situation and show you how to maximize Illinois and federal tax credits.