Getting Started on 501 c 3 in Chicago: Understanding Local Regulation
When establishing a 501 c 3 in Chicago, it is important to understand the local regulations that apply to the nonprofit3 min read
When establishing a 501 c 3 in Chicago, it is important to understand the local regulations that apply to the nonprofit. The First Step in getting started is filing the necessary paperwork with the applicable government agency. To do this, organizations will need to undergo a process of establishing themselves as an official nonprofit and fulfilling all the requirements set by the state of Illinois. In order to help with this, we have put together a comprehensive guide to getting started on 501 c 3 and understanding Chicago's local regulations.
The first step in getting started on 501 c 3 is to establish the nonprofit as a legal entity in Chicago. The legal procedures required for this will vary depending on the type of organization you intend to establish. For instance, a religious organization must file a Declaration of Trust with the state, while a public charity needs to file Articles of Incorporation. Forms can be obtained from the Illinois Secretary of State's website or from a qualified attorney. Once the legal procedures are completed, the organization's name must be officially registered with the Secretary of State.
Once your nonprofit organization is legally established, the next step is to obtain tax-exempt status from the IRS. The 501(c)3 exemption is available for organizations that are organized and operated exclusively for exempt purposes, such as religious, charitable, scientific, educational, and literary purposes. To apply for the exemption, the organization must file Form 1023, Application for Recognition of Exemption. The form must be accompanied by supporting documents, such as a business plan, purpose statement, financial statement, and organization chart.
In addition to registering with the IRS, organizations must also be registered with the state of Illinois. Organizations wishing to have an exemption from Illinois sales tax must register with the Illinois Department of Revenue by filing Form CRT-61, Application for Sales Tax Exemption. Organizations must also register for charitable trust status with the state to receive exemption from state income tax. This is done by filing Form CD-11, Application for Charitable Trust Exemption.
Organizations must also be aware of the changes to the tax code. Since 2019, a new form has been introduced for filing for charitable trust status with the state. Organizations must now file Form CD-11EZ, Easy Re-registration Application for Charitable Trust Exemption. The form must include information about the organization’s compliance with the Illinois Charitable Trust Act, as well as certain other state requirements.
Once the organization is established and registered with the state and the IRS, it can begin fundraising activities. It is important for organizations to understand the state’s regulations on fundraising activities, including the Illinois Charitable Organization Registration Law, which requires all fundraising activities to be conducted in compliance with the law. Organizations must also be aware of the rules for charitable solicitations, which are subject to federal and state regulations.
Finally, organizations should consider the long-term implications of establishing a 501 c 3. Organizations must understand the financial and legal requirements of maintaining a nonprofit status. This includes proper financial planning and record keeping, filing annual reports, and a host of other requirements. Organizations should also register for a charitable registration number, which is required when engaging in certain forms of fundraising activities.
Getting started on 501 c 3 can be a complex process, especially in the city of Chicago. It’s important to work with a qualified legal professional to ensure that all the necessary procedures are followed and the requirements are met. UpCounsel can help connect small businesses and entrepreneurs with experienced attorneys who can provide competent legal counsel and support. Whether your organization needs a one-time consultation or a full-time, freelance legal department, UpCounsel can help you get started on 501 c 3 in Chicago.
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