Illinois prices the paperwork low. Articles of Organization cost $150 per LLC, so the two entities behind a typical fund cost $300 to form. The one state offering filing is a copy of Form D with a $100 fee, due no later than 15 days after the first sale to Illinois residents. Annual upkeep at the Secretary of State is a $75 report per LLC.
The adviser layer is where Illinois departs from most states. Illinois never adopted the NASAA model private fund adviser exemption. A manager who qualifies as a federal exempt reporting adviser under Advisers Act Section 203(m) gets no automatic relief from the Illinois Securities Law. Unless the manager fits one of the two narrow exemptions in 14 Ill. Adm. Code 130.805, investment adviser registration under 815 ILCS 5/8.A is the default.
This guide walks the full path: two LLCs at the Department of Business Services, the offering filings, the adviser analysis under the Illinois Securities Law of 1953, and one genuine tax break, because a fund that qualifies as an investment partnership owes no Illinois replacement tax. Every legal claim cites the statute or rule it comes from.
Five steps to launch in Illinois
Generate Documents
Free on HedgiaYour fund needs offering documents before it can take a dollar: an offering memorandum, operating agreements for both LLCs, and subscription documents. Hedgia generates all of them free, whether or not you launch on the platform.
Create the Two LLCs
File Articles of Organization with the Illinois Secretary of State's Department of Business Services for the management company and the fund. Each standard LLC costs $150 under 805 ILCS 180/50-10. Standard processing runs 10 business days; the Department offers 24 hour service at $250 total per LLC.
Create Accounts and File Form D
Obtain EINs for both LLCs, open the fund's bank account, and make the two securities filings an Illinois fund faces: Form D with the SEC, and the Illinois covered security notice. Hedgia obtains the EINs, prepares and submits Form D and the state notice at your direction, and sets up banking through Axos Bank.
Invite Investors
Under Rule 506(b) you can raise from an unlimited number of accredited investors without general solicitation. Illinois adds no investor composition condition of its own to the offering. The state pressure sits on the adviser side, so settle the registration question before the first subscription.
Start Your Fund
Run the fund on Hedgia's software: investor onboarding, NAV, fee calculations, K-1 preparation, and reporting. $0 upfront and no minimum fund size.
* $89/month includes 3 manager seats. Additional seats $30/month each. Plus 0.2% of AUM above $1 million, capped.
Illinois requirements at a glance
The law behind each requirement
Rule 506(b): the federal exemption your offering relies on
Rule 506(b) of Regulation D is an exemption from Securities Act registration. Securities sold under it are covered securities under Securities Act Section 18(b)(4)(F), which bars states from imposing registration or merit review on the offering. States may require at most a notice filing, a fee, and consent to service of process. Illinois uses that authority: it collects a $100 notice filing.
- •Unlimited accredited investors; up to 35 purchasers per offering who are not accredited, each of whom must meet the rule's sophistication standard
- •No general solicitation or advertising
- •Form D due at the SEC through EDGAR within 15 days of first sale, under SEC Rule 503
- •State authority over the offering is limited to notice filings, fees, and consent to service under Section 18(c)
The Illinois Form D notice: $100, 15 days after the first Illinois sale
Illinois requires a notice filing for a Rule 506 offering. The operative rule says issuers of securities offered under Regulation D, Section 506 shall file Form D together with a $100 fee no later than 15 days after the first sale of the federally covered securities to residents of Illinois. Note the trigger: the first sale to an Illinois resident, not the first sale anywhere.
- •A copy of the Form D filed with the SEC, plus the $100 fee; the Securities Department treats 506(b) and 506(c) identically for filing purposes
- •File through NASAA's EFD system with ACH payment, or on paper with a check to the Illinois Securities Department in Springfield
- •If a filing is deficient, the Secretary of State gives written notice and 10 business days to remedy (14 Ill. Adm. Code 130.293(c)); a missed notification is a statutory violation, though the statute excludes private rescission for it (815 ILCS 5/2a)
- •The rule's preamble also describes an annual notification, and the EFD schedule lists a $100 Illinois renewal fee; for an offering that continues past one year, budget $100 and confirm renewal treatment with the Securities Department
Adviser registration is the Illinois default
815 ILCS 5/8.A requires every investment adviser, and every investment adviser representative, doing business in Illinois to register with the Secretary of State. Registration runs through IARD on Form ADV and renews each calendar year. An SEC registered adviser is excluded from the state definition as a federal covered investment adviser and instead makes a notification filing.
- •The Securities Department's published fees: $400 firm registration and annual renewal, $150 per investment adviser representative, $20 per branch office
- •The codified fee rule, 14 Ill. Adm. Code 130.110, still reads $200 for the firm and $75 per representative from a 1997 amendment; confirm the current amounts on the Department's fee schedule before filing
- •Federal covered investment advisers are excluded under 815 ILCS 5/2.11 and make a notification filing through IARD under 14 Ill. Adm. Code 130.838
Illinois has no private fund adviser exemption
Most states adopted a version of the NASAA model private fund adviser exemption. Illinois did not. Part 130 of the Illinois administrative code contains no private fund or exempt reporting adviser provision, so federal exempt reporting adviser status under Advisers Act Section 203(m) brings no Illinois relief on its own. The only exits from registration are the two in 14 Ill. Adm. Code 130.805.
- •130.805(a) exempts advisers whose only Illinois clients are institutional: investment companies under the federal 1940 Act, pension or profit sharing plans with at least $5,000,000 in assets, government agencies, and financial institutions with at least $1,000,000 net worth
- •130.805(b) exempts an adviser with no more than 5 Illinois clients during the preceding 12 months, counted in addition to the subsection (a) institutional clients
- •The rule does not say whether a private fund counts as one client, or how a fund advised from an Illinois office is counted; do not rely on 130.805(b) for a fund without counsel
- •A manager who fits neither exemption registers as an Illinois investment adviser under 815 ILCS 5/8.A
Section 3(c)(1): staying outside the Investment Company Act
Section 3(c)(1) of the Investment Company Act is an exclusion from the definition of investment company, not an exemption. A fund whose outstanding securities are beneficially owned by no more than 100 persons, and which makes no public offering, never becomes an investment company at all, so the Act's registration regime never reaches it.
- •No more than 100 beneficial owners of the fund's outstanding securities
- •No public offering, which a Rule 506(b) offering with no general solicitation respects by design
- •Illinois adds no investor composition overlay; the 100 owner cap and the Rule 506(b) limits are the constraints
Illinois tax and fee quirks
The fund skips the replacement tax; the management company pays it
Illinois imposes a Personal Property Tax Replacement Income Tax of 1.5% of net income on partnerships and trusts, and 2.5% on corporations (35 ILCS 5/201(c), (d)). An investment partnership is exempt (35 ILCS 5/205(b)). The definition in 35 ILCS 5/1501(a)(11.5), expanded by P.A. 103-9 for tax years ending on or after December 31, 2023, requires at least 90% of the partnership's assets to be qualifying investment securities, deposits, and office space, and at least 90% of gross income to be interest, dividends, and gains from those securities. A fund LLC taxed as a partnership will typically qualify. The management company earns fee income, does not qualify, and pays 1.5% on its net income.
The adviser fee rule and the Department's fee page disagree
The codified fee rule, 14 Ill. Adm. Code 130.110, carries a source note effective December 1, 1997 and lists a $200 firm fee and $75 per representative. The Securities Department's own website lists $400 for the firm and $150 per representative. Budget the Department's published figures, and confirm the current amounts on its fee schedule before filing.
The Illinois question is the adviser, not the offering
Add it up. Two LLCs cost $300 in state fees and process in 10 business days, or faster at $250 total each for 24 hour service. The Rule 506 offering costs Illinois exactly $100: a copy of Form D filed no later than 15 days after the first sale to an Illinois resident. Each LLC then owes a $75 annual report. And the fund itself, as an investment partnership under 35 ILCS 5/1501(a)(11.5), typically owes no replacement tax, while the management company pays 1.5% on its net fee income.
The open question is the adviser. Illinois never adopted the NASAA model private fund adviser exemption, so federal exempt reporting adviser status carries no weight at the state line. A manager either fits 14 Ill. Adm. Code 130.805, whose institutional and 5 client exemptions were not written with private funds in mind and do not define how a fund is counted, or registers under 815 ILCS 5/8.A at $400 for the firm and $150 per representative on the Department's published schedule. That analysis belongs to you and your counsel, and it should be settled before the first subscription.
Hedgia handles the mechanics: both LLC formations, EINs, fund document generation, Form D preparation and submission with the Illinois notice at your direction, banking through Axos Bank, and investor onboarding through NAV, fees, and K-1s. Registration and exemption decisions stay with you and your counsel. Fees and processing times change; confirm current figures with the Securities Department and the Department of Business Services before you file.
Illinois Securities Department, Office of the Illinois Secretary of State