The Full Picture
Your Illinois Home Food Business Checklist
Eight steps from idea to first legal sale. Items marked Required must be completed before you sell. Recommended items should follow within your first month.
Illinois Home Food Business — Launch Checklist
Complete in order. Steps 1–4 are required before your first sale.
1
Earn Your CFPM Certificate
ANSI-ANAB accredited exam, ~8 hours training, $100–$300
Required First
2
Create Compliant Labels
All 7 required elements; disclaimer text pre-filled
Required
3
Register with Your County LHD
Up to $50/year; receive your registration number
Required
4
Register for Sales Tax with IDOR
Free via MyTax Illinois; required before retail sales
Required
5
Choose a Business Structure
Sole prop (county DBA, $50) or LLC ($150 + $75/yr)
Recommended
6
Open a Dedicated Business Bank Account
Keeps personal and business finances separate
Recommended
7
Get an EIN from the IRS
Free, instant, protects your SSN; required for LLCs
Recommended
8
List Products & Choose Sales Channels
Farmers markets, online (SellFood.com), events, delivery
Launch
Business Structure
Sole Proprietor vs. LLC — Which Is Right for You?
Most cottage food sellers start as sole proprietors and upgrade to an LLC when they hit meaningful revenue. Here's an honest comparison of both options under Illinois law.
Option 1
Sole Proprietorship
The fastest, cheapest way to start selling
DBA Filing
~$50
County clerk fee; varies by county
Annual Cost
~$0
No annual state report; renew DBA as needed
Setup Time
Days
File DBA at county clerk; start selling quickly
Tax Filing
Schedule C
File with your personal federal & IL state return
Pros & Cons
- ✓ Simplest structure — no paperwork beyond DBA
- ✓ Zero ongoing state fees (no annual report)
- ✓ Income taxed once on your personal return
- ✓ Easy to switch to LLC later if you grow
- ✗ No personal liability protection — business debts are your personal debts
- ✗ Less credible for wholesale buyers or larger accounts
- ✗ DBA filed at county level only (not SOS)
Option 2
Limited Liability Company (LLC)
Personal liability protection for serious sellers
Formation Fee
$150
Articles of Organization, IL SOS; one-time
Annual Report
$75/yr
Due 1st of anniversary month; $100 late penalty
LLC DBA
~$120
Assumed name filed with SOS; 5-year cycle, fee varies by year filed
Registered Agent
$0–$100/yr
You can serve as your own at no cost, or hire a service
Pros & Cons
- ✓ Personal assets protected from business liabilities
- ✓ More credible for wholesale, partnerships, and markets
- ✓ Single-member LLC taxed same as sole prop (Schedule C) by default
- ✓ No Illinois franchise tax on LLCs (only corporations)
- ✗ $150 formation fee + $75/year ongoing
- ✗ Annual report required or risk administrative dissolution
- ✗ Slightly more paperwork at formation
Our take: If you're just starting out and testing the market, a sole proprietorship with a county DBA is the right move — fast, cheap, and easy to upgrade later. Once you're generating consistent revenue (say, $500+ per month), or if you're selling at multiple markets and events, the liability protection and credibility of an LLC are worth the $225 in combined first-year costs. Illinois does not tax LLCs separately — so the tax treatment is the same either way for most small sellers.
Business Name Registration
DBA (Doing Business As) in Illinois
In Illinois, any business operating under a name other than the owner's legal name must register a DBA — also called an "assumed name." The process and costs differ based on your business structure.
Sole Proprietor / Partnership — County DBA
Where to File
County Clerk
In the county where you operate
In the county where you operate
Filing Fee
~$50
Varies by county; non-refundable
Varies by county; non-refundable
Publication
Often Required
Most counties require local newspaper notice — verify with your county clerk
Most counties require local newspaper notice — verify with your county clerk
Name Check
County-LevelSearch county records; your DBA doesn't appear in SOS search
Term
VariesMost counties: 5-year terms or indefinite until changed
LLC / Corporation — Secretary of State DBA
Where to File
IL Secretary of State
Form LLC-1.20, Application to Adopt Assumed Name
Form LLC-1.20, Application to Adopt Assumed Name
Filing Fee
~$120 (2026)
Fixed 5-year cycles; ~$30/yr remaining in cycle. Expires 2030.
Fixed 5-year cycles; ~$30/yr remaining in cycle. Expires 2030.
Publication
Also Required
Same newspaper publication requirement as sole props
Same newspaper publication requirement as sole props
Name Search
SOS DatabaseSearch at ilsos.gov/corporatellc before filing to confirm availability
Term
5-Year CyclesAll Illinois DBA cycles end in years divisible by 5 (2025, 2030, 2035)
Taxes & Finances
Tax Obligations for Illinois Home Food Sellers
Running a cottage food business means managing several tax streams. Here's a clear breakdown of what applies to you.
4.95%
Illinois State Income Tax
Illinois has a flat 4.95% income tax rate on all individual income, including self-employment profits from your cottage food business. No tiered brackets — the rate is the same regardless of how much you earn.
15.3%
Federal Self-Employment Tax
As a self-employed person, you pay both the employer and employee portions of Social Security and Medicare. This is 15.3% on net self-employment income up to the Social Security wage base (~$168,600 in 2024), then 2.9% above that. You can deduct half on your federal return.
0%
State Sales Tax on Most Food
As of January 1, 2026, Illinois eliminated the 1% state grocery tax (Public Act 103-0781). Most packaged cottage food products now carry 0% state sales tax. Candy and prepared-for-immediate-consumption food are still taxed at 6.25%.
6.25%
Sales Tax on Candy & Prepared Food
Candy (including most chocolate confections) and food prepared for immediate consumption are taxed at the full 6.25% Illinois rate. Know which of your products fall into this category and charge accordingly.
Up to 1%
Local Grocery Tax
When Illinois eliminated the state grocery tax in 2026, it allowed local governments to impose up to 1% local grocery tax by ordinance. Check whether your city or county has enacted this. Especially relevant in Chicago and Cook County areas.
Quarterly
Estimated Tax Payments
If you expect to owe more than $1,000 in federal taxes for the year, you must make quarterly estimated payments (April, June, September, January). Illinois has a similar requirement. Set aside approximately 25–30% of net profit to cover both state and federal taxes.
Practical Guidance
Setting Your Prices
Underpricing is the most common mistake home food sellers make. Your prices must cover ingredients, supplies, your time, overhead, and a fair profit margin — not just ingredients alone.
Cost of Goods Sold (COGS)
Add up the cost of every ingredient and supply that goes into one unit: flour, butter, sugar, packaging, labels, parchment paper, twist ties. Divide bulk purchases by how much goes into one batch, then by units per batch. Don't guess — measure and track.
Your Time Has Real Value
Decide your hourly rate — at minimum, Illinois minimum wage ($15/hr as of 2024), ideally $20–$40/hr for skilled food artisans. Track how long each batch takes (prep, baking, cooling, packaging, cleanup). Many sellers forget cleanup time.
Overhead Costs
Include your share of utilities (gas/electric for baking), CFPM renewal, LHD registration ($50/yr), packaging costs, market booth fees, and any liability insurance. Spread annual costs across your projected annual units.
Market Positioning
Research what comparable products sell for at Illinois farmers markets. Premium, artisan, or locally-sourced products command higher prices. If you're using Illinois Grown ingredients, say so on your label — it justifies a premium. Price to the market, but floor at your break-even.
A Simple Pricing Formula for Home Food Sellers
Ingredient Cost
+
Your Time
+
Overhead Share
×
2.0 – 3.0×
=
Retail Price
The 2–3× multiplier is your profit margin. At 2×, you're covering costs and taking home a modest profit. At 3×, you have room for market fees, discounts, and growth investment. Most farmers market staples (jams, baked goods) price at 2.5–3× cost. Premium confections, custom cakes, and specialty items can support 3–4×.
Sales Channels
Where to Sell in Illinois
Illinois gives home food sellers more sales channel options than almost any other state. Here's what's available and the key things to know about each channel.
Allowed
Farmers Markets
Traditional and mobile farmers markets statewide. Illinois has hundreds — from the Green City Market in Chicago to small-town community markets across the state.
→ Check if the market requires its own vendor application and fee in addition to your LHD registration
Allowed
Online Sales
Sell through your own website, SellFood.com, social media, or third-party platforms. Illinois allows online sales statewide. Non-perishables may also be shipped within Illinois.
→ Your point-of-sale disclaimer must be prominently displayed online too
Shelf-Stable Only
In-State Shipping
Non-perishable, shelf-stable products may be shipped to Illinois customers. Must use tamper-evident packaging. No interstate shipping — Illinois only.
→ Great for scaling beyond local markets without more LHD registrations
Allowed
Direct Delivery
Deliver directly to customers' doors across Illinois. No geographic restriction for delivery within state lines. Great for building a local subscription or repeat customer base.
→ For perishables, maintain cold chain (≤41°F) through delivery
Check Local Rules
Home Pickup / Farm Stand
Customers can pick up orders at your home or farm. Check local zoning first — some municipalities restrict commercial activity at residential addresses or have signage rules.
→ Farm kitchens are specifically permitted under IL cottage food law
Allowed
Third-Party Pickup
Customers can pick up orders at a third-party location (e.g., a local business) with that property owner's written consent. Added by the 2024 amendment (PA 103-0903).
→ Excellent for partnering with coffee shops, boutiques, or local businesses
Allowed
Fairs, Festivals & Events
County fairs, food festivals, pop-ups, community events, and public gatherings statewide. The Illinois State Fair is one of the largest in the country — a major opportunity.
→ Some events require vendor insurance — check requirements before applying
Not Allowed
Retail / Wholesale
You cannot sell cottage food products to grocery stores, restaurants, or retailers under cottage food rules. A wholesale food processor license from IDPH is required to enter retail channels.
→ See Special Categories for the commercial kitchen upgrade path
Illinois allows same-day adjacent-county registration — added by Public Act 103-0903 in August 2024. If you want to sell at markets in a neighboring county, you may register with that adjacent county's local health department using your existing certificate of registration. This makes it significantly easier to expand your farmers market reach beyond your home county without duplicating the full registration process.
Federal Setup
Getting Your EIN (Employer Identification Number)
An EIN is a free federal tax ID number issued by the IRS. You may need one sooner than you think — and it protects your Social Security number from being shared with vendors and platforms.
Who Needs an EIN
Required: Multi-member LLCs, any business with employees, single-member LLCs taxed as a corporation.
Strongly recommended: Sole proprietors and single-member LLCs — using an EIN instead of your SSN protects your personal Social Security number when opening bank accounts, applying for vendor accounts, or working with payment processors.
Practical: Most business bank accounts require either an EIN or SSN. Using an EIN keeps those two numbers separate and reduces identity theft risk.
How to Get One
Apply directly on the IRS website — the application is completely free, and your EIN is issued immediately upon completing the online form. There is no processing time.
You will need your personal SSN or ITIN, your business name and address, and your entity type (sole proprietor, LLC, etc.) to complete the application.
The IRS will ask about the "responsible party" — for a sole prop, that's you personally. For an LLC, that's the member(s).
Financial Foundations
Bank Accounts & Record Keeping
Separating your business finances from your personal finances is one of the most important steps you can take — for tax purposes, for liability protection, and for understanding how your business is actually performing.
Open a Separate Business Checking Account
All business income goes in, all business expenses come out. Bring your EIN (or SSN for sole props), your business name, and your DBA or LLC paperwork. Many banks offer free business checking for small businesses — compare options before opening.
Track Every Income and Expense
Use a simple spreadsheet or accounting software from your first sale. Track: ingredient costs, packaging, LHD and CFPM fees, market booth fees, mileage to markets, and every dollar of income. This data is essential for tax filing and for understanding your margins.
Save Every Receipt
Photograph receipts with a free app (many accounting tools have this built in) or keep physical copies. The IRS generally requires records for 3 years. For Illinois purposes, the same 3-year rule applies. Deductible expenses include: ingredients, packaging, LHD registration, CFPM certification, market fees, mileage, and a portion of home utilities used for food production.
Set Aside Tax Reserves
Transfer 25–30% of every payment you receive into a dedicated tax savings account. This covers federal self-employment tax (15.3%), federal income tax, and Illinois state income tax (4.95%). If you owe less than expected, that's a bonus — if you owe more, you're covered.
Business Setup Checklist
Track every step of your Illinois cottage food business launch — from CFPM certification to first sale — with an interactive checklist that saves your progress.
Create Free Account to Use This Tool →Explore Related Pages