How to Start a Nonprofit Organization in Illinois
If you want to learn how to start a nonprofit organization in Illinois, you've come to the right place.4 min read
If you want to learn how to start a nonprofit organization in Illinois, you've come to the right place. Starting a nonprofit in Illinois involves booking a name, appointing a board of directors and registered agent for service process, filing the Articles of Incorporation. 501(c) tax-exemption from the IRS is obtained by filing Form 1023 or 1023-EZ. Other filings the nonprofit may be required to do with the state of Illinois include registering for fundraising and registering with the Illinois office of Bingo and Charitable games.
Naming Your Nonprofit
Finding a name for your nonprofit is one of the most important aspects of forming a nonprofit in Illinois. Your organization's name must meet these requirements:
- The name of your nonprofit may not be the same or very similar to the name of another registered organization in the state.
- The name must have a suffix that contains the word or abbreviation of the word “corporation”, “company”, “incorporated”, or “limited."
You can find out if a name is available by doing a name search.
Appointing a Board of Directors and Officers
The names of at least three non-related people who will serve as the board of directors are needed to form the nonprofit.
After incorporation, the board of directors must appoint officers to manage the day-to-day activities of the nonprofit. The roles of the officers must be defined in the Articles of Incorporation or the nonprofit's bylaws. One of the officers, the secretary is responsible for certifying corporate records and It is ok for two or more responsibilities to be held by the same person if the bylaws provide for it.
Your nonprofit will need bylaws to run smoothly. These can be adopted during the first meeting of the Board of Directors. You can also create a conflict of interest policy to prevent board members and officers from personally benefiting at the organization's expense.
Appoint a Registered Agent for Service Process
Every nonprofit in Illinois must have a registered agent for service process. The registered agent is responsible for receiving legal papers on behalf of the nonprofit. A business lawyer can act as your registered agent. You will also need a person called an Incorporator to sign on the Articles of Incorporation of the nonprofit.
Filing the Articles of Incorporation
Filing a document called the Articles of Incorporation marks the official opening of the nonprofit. The document must meet state and IRS requirements for the organization to be classed as a 501(c)(3) nonprofit. You will need to pay $50 to file this document is you file by mail or $77.75 if you do so online. Be sure to select the purpose of the organization from the 33 possible purposes in Section 103.05(a) of the General Not-For-Profit Corporation Act.
Getting an Employer Identification Number (EIN)
All types of nonprofits should get an EIN regardless of whether they intend to hire employees or not. The EIN will also come in handy when you want to open an organizational bank account and when submitting 990 returns to the IRS. Obtaining an EIN is free if it is done on the website of the IRS. You may also be required to obtain an Illinois State Tax Identification Number.
Attaining Tax-Exempt Status
This is a very important step in making the nonprofit functional. Tax exemption enables your organization to apply for grants and organize fundraising drives. Your organization will also be exempted from certain IRS and state taxes. To apply for 501(c)(3) exemption, you need to complete Form 1023 or 1023-EZ and submit it to the IRS. The IRS will send a reply letting you know if the 501(c) exemption has been granted. IRS fees for filing are:
- $275 if you file using Form 1023-EZ
- $600 if you file with Form 1023
According to the IRS, preparing a good application could take more than 100 hours. A nonprofit lawyer in Illinois can help you to save time during the filing.
If your organization qualifies, you may also apply for Illinois sales tax exemption. You also need to register for charitable solicitation if your nonprofit will be involved in fundraising. This is done by:
- Filing Form C0-1 with the Illinois Attorney General - Charitable Trust Bureau
- Attaching Form 1023 or 1024
- Submitting a list of the organization's directors and officers
- Paying the $15 filing fee
Obtain Business Licenses and Permits
Depending on the activities that the nonprofit will be involved in, you need to obtain the requisite permits and business licenses. Organizations that will conduct bingos, raffles, and other charitable games must register with the Illinois Department of Revenue - Office of Bingo and Charitable Games. This is done by submitting the following:
- Form RCG-1
- Form RCG-2
- Form RCG-10.
- A filing fee of $200
If you need legal help understanding how to start a nonprofit organization in Illinois, post your legal need at Upcounsel's marketplace. Upcounsel helps you to compare top nonprofit lawyers in Illinois.