I would like to start an online cupcake business in illinois. I am wondering what kind of business and food sanitation license I need to be legal.

There are too many different variables to answer the question of what which legal entity to choose.  It depends on numerous factual issues.   You should consult a local business/corporate attorney because each state has unique laws and a local attorney can determine what laws apply to your situation - especially considering your use of the mail and interstate transit.  Many attorneys offer a free initial consultations to determine how best to proceed. This is not intended to be legal advice, and is general in its nature. No attorney-client relationship exists or is formed by this information. Furthermore, this does not represent the views or opinions of LexisNexis or its affiliated companies.