Forming a Non-Profit in Illinois entails that you create a name that adheres to the specifications set by the Secretary of State for Non-Profit organizations in Illinois.
Any of the words like ‘company’, ‘limited’, ‘incorporated’, or ‘corporation’ or even its corresponding abbreviation can be used, but it is not mandatory. However, your Illinois Non-Profit name should explicitly end with ‘NFP’. Further, the name of your Non-Profit should not contain any name of an established political party.
As a reminder, the name should be easily distinguishable as your organization’s own, so it should not closely resemble or be similar to any existing business entity legally registered at the Secretary of State. A business name search tool will help you determine whether the name you have selected is still available.
As a necessity when starting an Illinois Non-Profit, you are required to elect three or more directors. A single incorporator must also be chosen.
This incorporator can either be a person residing in Illinois of legal age or a domestic or foreign Corporation. These Illinois Non-Profit officers and directors will help you make the necessary decisions at the organizational meeting.
An Illinois Registered Agent is the next professional you need to hire for your Non-Profit. Observe these conditions when hiring for one:
(1) A Registered Agent in Illinois can be an individual who is a resident of the state or a foreign or domestic entity legally approved to transact business within the state. (2) The Registered Agent should also provide his Illinois physical address upon consenting to the position.
That said, you can hire a Registered Agent service and pay up to $160/year, or get a Colorado Registered Agent free of charge when you incorporate your Non-Profit with IncFile.
A Non-Profit Articles of Incorporation must be filed to the Secretary of State of Illinois. Aside from the information required of you pertaining to your Non-Profit, you are also obliged to include the following statements when you file your form:
The organizational meeting should commence as soon as you have elected the board of directors for your Non-Profit. The following agenda should be discussed and decided upon:
Minutes of the meeting should be created, to be signed by all the persons present during the meeting, and stored in the Corporate Records Binder.
All documentation that your Non-Profit has will need to be stored in a safe and organized at the start of your Illinois Non-Profit registration. To be able to do this, you need a Corporate Records Binder.
A simple folder where you can keep all your important documents, a Corporate Records Binder is also evidence of your legitimacy as a Non-Profit. To purchase a binder, you can go to an office supply chain in your area or order directly via Amazon.
An Illinois Non-Profit EIN is a mandatory requirement when forming your Non-Profit. This is because an EIN is required at almost every transaction of your organization, whether it’s filing for your tax exemptions or opening a bank account for your Non-Profit.
Free and fast processing of your Employer Identification Number can be easily done at the IRS website.
Keeping your Non-Profit’s finances and personal finances separate is very important. The best way to do this is to open a separate business checking account.
Although there are many options available, do the research to see which is right for you and your business. If you’re not sure where to get started, here is a great roundup of the best banking options.
A Non-Profit is not automatically entitled to several federal and tax exemptions, the owner of the Non-Profit has to go through Illinois Non-Profit tax registration to determine which taxes he is exempt from and which ones he still needs to comply with. When registering for Non-Profit taxes exemption, you can refer to these steps.
To qualify for federal tax exemptions, one has to file Form 1023, the Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. As this is a lengthy and detailed form that requires a lot of information about your Non-Profit, read the instructions on the form before you fill it out. In addition, double check every entry once you have filled it out.
An alternative to the form above is Form 1023-EZ, the Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. As compared to the former form, Form 1023-EZ is shorter and much less detailed. For you to be able to use this though, you must have total assets of not more than $250,000 and an annual forecasted gross receipts of not more than $50,000.
As soon as you have the official confirmation from the IRS that you are exempt from federal tax, you will also be automatically exempt from the Illinois income tax. As well, an exemption from sales tax imposed by the state of Illinois may also be imposed depending on the nature of your Non-Profit. Verify with Illinois’ Department of Revenue for more details on state tax exemptions for Non-Profits.
The reports and documentation you need to file during outreach programs and fundraising activities vary depending on the size of your Non-Profit, so make sure to check the state’s website or the Attorney General for more information regarding this matter.
The next thing that you need to handle before you can start conducting business in Illinois is to comply with business licenses and permits. These will mainly depend on the nature of your startup as well as your location so be sure to do the research.
When obtaining your business licenses and permits, make sure that you’re doing it in compliance with federal, state and local government specifications. For more information visit SBA.gov or have professionals handle the research on your behalf through this reliable service.
Now that you have followed the steps above, you are an official Non-Profit organization in the state of Illinois. Other than those 10 steps that are based on state guidelines, here are 2 additional steps based on best practices for starting a successful organization. Not required, but highly recommended.
When you’re looking to start a Non-Profit, there is nothing more you want than to see it flourish and become a success.
With the help of a business plan, you can do this. Write a solid business plan now, and implement it. Begin the process of your Non-Profit’s success using the links below.
In the past decade, technology has become more and more important to business owners. That is why the next step to starting a business in Illinois is to build a professional website.
Rather than spending thousands on a custom design, I recommend you do it yourself through WordPress. WordPress is easy to use, customize, and present your business in a professional manner.
Be reminded that this article is just a guide on how to form a Non-Profit in Illinois; in essence, it is written to provide information only. For specifics on the legalities of starting a Non-Profit organization in Illinois or Illinois Non-Profit organizations in general, the best source of professional help is still your lawyer. Always make it a point to consult his expertise.