State guide · Illinois
Starting a Medical Practice in Illinois
What physicians need to know about Illinois's regulatory environment, entity requirements, and practice-specific rules.
Entity required
Medical Corporation, Professional Service Corporation, or Professional LLC
LLC permitted
No
CPOM enforcement
Strict
Top income tax
4.95%
Min. franchise tax
Verify — IL franchise tax has been phased down; minimum filing fees apply
Med board registration
Required
The information on this page is provided for general reference only and may not reflect recent regulatory or legislative changes. Entity formation requirements, tax rates, and CPOM rules vary by state and change frequently. Always verify requirements with your state's official agencies, a qualified healthcare attorney, or a CPA with medical practice experience before making business formation decisions. Nothing on this page constitutes legal or financial advice.
Entity Requirements
Illinois physicians may organize under the Medical Corporation Act (805 ILCS 15) as a Medical Corporation, under the Professional Service Corporation Act, or as a Professional Limited Liability Company under the Limited Liability Company Act (with appropriate medical-practice provisions). Standard LLCs are not permitted for the practice of medicine.
Medical Corporations must be wholly owned by Illinois-licensed physicians (with limited exceptions). Filing is with the Illinois Secretary of State.
- •Form a Medical Corporation, Professional Service Corporation, or Professional LLC — standard LLCs cannot practice medicine
- •All shareholders/members must be licensed Illinois physicians
- •File Articles of Incorporation or Articles of Organization with the Illinois Secretary of State
- •Register with the Illinois Department of Financial and Professional Regulation (IDFPR) Medical Disciplinary Board
- •File annual report with the Secretary of State
Corporate Practice of Medicine
Illinois enforces a strict Corporate Practice of Medicine doctrine. The Illinois Medical Practice Act and case law (including Berlin v. Sarah Bush Lincoln Health Center) prohibit lay corporations from employing physicians for clinical practice, with limited statutory exceptions for hospitals, HMOs, and certain other licensed entities.
MSO structures are widely used to allow non-physician investment. The MSO must avoid fee-splitting and cannot direct clinical care.
Important
Illinois recognizes a hospital-employment exception under the Hospital Licensing Act, but not a general business-corporation exception. MSO arrangements should be reviewed by Illinois healthcare counsel.
Tax Considerations
Illinois imposes a flat 4.95% personal income tax. Pass-through entities also pay a 1.5% personal property replacement tax (PPRT). C-corporations pay a 7% corporate income tax plus 2.5% PPRT.
Illinois eliminated the franchise tax for most filings effective January 1, 2024, but minimum filing fees remain. An optional Pass-Through Entity Tax (PTE) election is available to mitigate the federal SALT cap.
- •Flat 4.95% Illinois personal income tax
- •1.5% personal property replacement tax (PPRT) on pass-throughs
- •7% corporate income tax + 2.5% PPRT for C-corps
- •Franchise tax phased out for most filings (Verify current status)
- •PTE election available — discuss with CPA
Illinois Department of Financial and Professional Regulation (IDFPR) — Medical Disciplinary Board
Medical Corporations and Professional Service Corporations practicing medicine in Illinois must register the entity with IDFPR, which issues a Certificate of Registration in addition to the individual physician licenses.
- •File a Medical Corporation Registration with IDFPR
- •Submit a list of all officers, directors, and shareholders with their IL medical license numbers
- •Renew registration as required by IDFPR (Verify current cycle)
- •Update IDFPR on any change in ownership or officers
Employment Law Considerations
Illinois has expanding employee protections. Mandatory paid leave (Paid Leave for All Workers Act, effective January 2024) requires employers to provide up to 40 hours of paid leave annually for any reason. The Illinois Human Rights Act covers smaller employers than federal Title VII.
Chicago and Cook County add their own paid sick leave, minimum wage, and Fair Workweek requirements.
- •Paid Leave for All Workers Act: 40 hours annually for any reason (effective 2024)
- •Chicago and Cook County have separate, more generous paid sick leave ordinances
- •Illinois minimum wage: $14/hour as of 2024, $15 by 2025 (Chicago higher)
- •Sexual harassment prevention training required annually
- •Non-compete restrictions: Illinois Freedom to Work Act limits non-competes for low-wage workers; physician non-competes still enforceable but tightly construed
Official resources
Bookmark these official agency portals for Illinois entity formation, tax registration, and medical board information.
Looking for Illinois licensing and credentialing information?
State medical license requirements, controlled-substance registration, and Medicaid enrollment specifics for Illinois.
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