How to Start a Nonprofit in Illinois


Steve Goldstein
Steve Goldstein
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Start a Nonprofit in Illinois

Are you looking to start a nonprofit in Illinois? You’ve come to the right place. Known for its vibrant community and rich culture, Illinois (often referred to as The Prairie State) is an ideal location for establishing a nonprofit organization. Unlike for-profit businesses, nonprofits focus on addressing pressing social issues and require a strong foundation, thorough research, and a clear mission targeting a specific community problem.

Embarking on the journey of creating a nonprofit entails various crucial steps, such as obtaining 501(c)(3) status. A 501(c)(3) organization is designed for charitable, religious, educational purposes, and more, qualifying it for federal and state tax exemptions.

In the spirit of Illinois’s motto, “State sovereignty, national union,” thousands of nonprofits are founded within the state each year. This article will provide a comprehensive guide to starting your own nonprofit corporation in Illinois. Keep in mind that the steps discussed here are general guidelines, and modifications may be necessary depending on your specific circumstances. To gain a deep understanding of how to start a nonprofit in Illinois, we encourage you to read this article in its entirety.

What is a Nonprofit in Illinois?

Nonprofit organizations are legal entities that operate to serve public benefits and address community issues. Unlike for-profit organizations, nonprofits do not aim to generate any profit. The Internal Revenue Service (IRS) generally exempts nonprofit organizations from tax. However, based on the business entity structure, you will receive tax exemptions as a nonprofit.

In Illinois, ensure you have a community issue to address before you start forming your nonprofit. It can generally be education, religion, charity, social service, or other social issues. Nonprofits do not pay taxes on the money they receive through fundraising programs, donations, or any charitable funding.

Types of Nonprofits in Illinois

The first thing one has to decide is what type of nonprofit structure one wants. There are several types of nonprofits one can start. Here is a list of nonprofit types one can choose from-

  1. Nonprofit LLC
  2. Nonprofit Corporation
  3. Unincorporated Nonprofit

Forming an LLC in Illinois for your nonprofit can be a smooth option. However, having a corporation is less complex than having a nonprofit LLC. Hence, it is wise to start a nonprofit corporation instead of an unincorporated nonprofit or nonprofit LLC.

LLCBuddy Editorial Team.

Technically, starting a corporation for your nonprofit protects your personal assets but also is eligible for Federal and State tax exemptions. When you form an LLC for your nonprofit, it only protects your personal assets but does not give you any tax exemptions. On the other hand, a nonprofit Corporation has both corporation and limited liability company benefits. You can also have an unincorporated structure where you don’t have to register it. Unincorporated nonprofits in Illinois might be eligible for tax exemptions (check with Illinois Department of Revenue), but this type of organization does not get to enjoy limited liability and personal asset protection.

How to Start a Nonprofit Corporation in Illinois

Setting up a nonprofit corporation requires a few things to consider. Name of the nonprofit, initial directors, drafting bylaws, get a Registered Agent, obtain tax IDs, insurance, and a bank account – these are important steps you must follow. The steps mentioned here are general business formation steps. State-wise, some steps can be different. Getting an expert consultation before you start your nonprofit corporation formation is recommended. Here are the steps explained below-

Step 1: Get a Suitable Name for Your Illinois Nonprofit Corp

The first step is to name your nonprofit corporation. You must be sure that the name is available and that no other organization is using this name. You can check the Illinois LLC name search to find the best suitable name for your organization. You must follow those rules to avoid any legal issues later. You can reserve the name for 90 days for any domestic entity (such as a nonprofit LLC) if you’re not forming the nonprofit immediately.

Step 2: Appoint the Initial Board of Directors

The next step is to get your nonprofit’s initial board of directors. It is very important when you are setting up a nonprofit corporation. You need at least Three unrelated directors to start the organization. If you don’t choose a minimum of Three directors, it will automatically become a member-managed corporation.

Step 3: Appoint Your Illinois Registered Agent

The third step is to get a Illinois Registered Agent for your nonprofit corporation. The Registered Agent is a person who receives all the legal documents on your behalf. It is necessary to get a registered agent. He/she must be above 18 years old and have a physical address in Illinois.

Step 4: Write Illinois Nonprofit Bylaws

The next important step is to write the company bylaws. The directors and board members must decide how the meetings, elections, voting, and other corporate activities will be held. These bylaws must comply with the Illinois state law. It is similar to an LLC operating agreement in Illinois for the LLC owners.

Step 5: File the Illinois Articles of Incorporation

This is the most important step. File your Articles of Incorporation with the Illinois Secretary of State. You can do it through two ways, online and by mail. All the formation forms, such as the Illinois LLC Articles of Organization form, the Illinois Articles of Incorporation form for corporations, forms for LLPs, and all others can be found on the Illinois SOS official website. Submit the details of your nonprofit corporation, like the name of the nonprofit, address, name and address of the registered agent, operation dates, directors’ details, and more information related to your company. You can send the form (for offline filing) and the filing fee of $150 for filing in-person and by mail to the Department of Business Services, Limited Liability Division, 501 S. Second St., Rm. 351, Springfield, IL 62746 or upload it online (if available).

Step 6: Obtain Tax ID for Your Illinois Nonprofit Corporation

The subsequent step involves obtaining a Tax ID for your nonprofit corporation. You will need to acquire an Employer Identification Number (EIN) from the official IRS website. To obtain the EIN, submit your application to the IRS office either by mail or through their online platform. There is no associated cost for this process.

Step 7: Get Business Licenses in Illinois

The next step is to get the business licenses you need to run your nonprofit organization in Illinois. Check with the local government office if any special licenses you need to run your nonprofit. You can file your nonprofit as a charity if you want.

Step 8: Federal Tax Exemption

You must submit Form 1023 to the IRS to file for federal tax exemption. This form, titled “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” is required for all nonprofit corporations. Smaller nonprofits have the option to file Form 1023-EZ instead. You will be prompted to provide details about your organization upon obtaining the relevant form. Complete the form with the necessary information and submit it. The filing fees are $600 for Form 1023 and $275 for Form 1023-EZ.

Step 9: State Tax Exemption

Once you get the Federal Tax Exempt, it is time for State Tax Exempt. In Illinois, you must apply for the tax exemption to Illinois Department of Revenue. Get the form, fill it up with the correct details, and send it to the office. You may need to pay a fee along with the form and supportive documents to apply for the State Tax Exemption. You need STAX-1 – Certificate of Exemption to apply for the state tax exemption. Read Illinois classification of taxes to learn more about the Illinois tax structure.

Step 10: Get Insurance for Your Illinois Nonprofit

Once you start your nonprofit, you must get insurance to protect your organization. You must get workers’ compensation and unemployment insurance if you have employees. Based on your nonprofit structure, you might need general liability insurance, property, vehicle, auto insurance, etc. You can contact the insurance providers to learn more about which are required for your organization. Also, you can contact Illinois Department of Insurance for more information.

After Forming Your Illinois Nonprofit Corporation

Once your nonprofit is formed, there are additional steps to complete:

  • Get a Business Bank Account: You must get a business account for all types of business-related transactions in Illinois. You may need different documents based on the bank and place of business. Check with the bank for it.
  • File Nonprofit as Charity: This is optional. Your nonprofit is either for charity purposes or any purpose that meets your community’s needs. If your organization is for charity purposes, then you can file your nonprofit as a charity to enjoy tax exemptions.
  • Other Business Compliances: You may need additional compliances based on your nonprofit type. Check with your attorney or local authority for more information.

Names of Nonprofit Corporations in Illinois

Following are some of the Nonprofit Organizations in Illinois. The contact information of these organizations can be found on Illinois SOS official websites.

  • Gift of Adoption Fund Inc
  • Alliance of Hope for Suicide Loss Survivors
  • Operation Asha
  • D & R Rescue Inc
  • Zakat Foundaton of America
  • Diveheart Foundation
  • Heartland Institute
  • Woman Made

FAQs

What is a nonprofit organization?
A nonprofit organization is a type of organization that is exempt from federal income taxes and operated exclusively for charitable, educational, religious, or other specific purposes that benefit the public interest.
How do I start a nonprofit organization in Illinois?
To start a nonprofit organization in Illinois, you must first register with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office. You must also file Articles of Incorporation with the Illinois Secretary of State, obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), and obtain any necessary state and local licenses and permits.
Do I need to register my nonprofit with the state of Illinois?
Yes, you must register your nonprofit with the state of Illinois in order to be able to accept donations, apply for grants, and solicit funding from the public.
What are the steps to register a nonprofit organization in Illinois?
The steps to register a nonprofit organization in Illinois include filing Articles of Incorporation with the Illinois Secretary of State, registering with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office, obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), and obtaining any necessary state and local licenses and permits.
What documents are required to register a nonprofit organization in Illinois?
To register a nonprofit organization in Illinois, you must file Articles of Incorporation with the Illinois Secretary of State, obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), and obtain any necessary state and local licenses and permits.
What is the cost of registering a nonprofit in Illinois?
The cost of registering a nonprofit in Illinois varies depending on the type of organization and the services required. Generally, the cost of registering with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office is $25, and the cost of obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) is $30.
What is the process for applying for nonprofit status in Illinois?
The process for applying for nonprofit status in Illinois begins with filing Articles of Incorporation with the Illinois Secretary of State, registering with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office, obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), and obtaining any necessary state and local licenses and permits.
Is it necessary to have a board of directors for a nonprofit organization registered in Illinois?
Yes, it is necessary to have a board of directors for a nonprofit organization registered in Illinois. The board of directors is responsible for the overall governance of the organization and the oversight of its activities.
Is there a fee to register with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office?
Yes, there is a fee of $25 to register with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office.
Is a tax-exempt status required to operate a nonprofit in Illinois?
Yes, a tax-exempt status is required to operate a nonprofit in Illinois. To obtain tax-exempt status, you must register with the Internal Revenue Service (IRS).
What type of licenses and permits are required to operate a nonprofit in Illinois?
Depending on the type of activities conducted by the nonprofit, it may be necessary to obtain licenses and permits from the state and local governments in Illinois. Examples of licenses and permits include a liquor license, food service license, and business license.
Does a nonprofit organization in Illinois need to have liability insurance?
Yes, it is recommended that a nonprofit organization in Illinois have liability insurance to protect against potential lawsuits or other legal issues.
How can a nonprofit organization in Illinois raise funds?
A nonprofit organization in Illinois can raise funds by soliciting donations, hosting fundraising events, and applying for grants.
Does a nonprofit organization in Illinois need to file an annual report?
Yes, a nonprofit organization in Illinois must file an annual report with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office.
What is the deadline for filing an annual report for a nonprofit organization in Illinois?
The deadline for filing an annual report for a nonprofit organization in Illinois is June 30 of each year.
Is there a minimum amount of money that a nonprofit organization in Illinois must raise each year?
No, there is no minimum amount of money that a nonprofit organization in Illinois must raise each year.
What is the process for obtaining tax-exempt status in Illinois?
The process for obtaining tax-exempt status in Illinois begins with registering with the Internal Revenue Service (IRS) and obtaining an Employer Identification Number (EIN).
Is there a fee to obtain tax-exempt status in Illinois?
Yes, there is a fee of $30 to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
Are there any special requirements for a charitable organization to be exempt from Illinois state income taxes?
Yes, in order to be eligible for exemption from Illinois state income taxes, a charitable organization must meet certain requirements such as registering with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office and obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
Are there any special requirements for a religious organization to be exempt from Illinois state income taxes?
Yes, in order to be eligible for exemption from Illinois state income taxes, a religious organization must meet certain requirements such as registering with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office and obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
Are there any special requirements for an educational organization to be exempt from Illinois state income taxes?
Yes, in order to be eligible for exemption from Illinois state income taxes, an educational organization must meet certain requirements such as registering with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office and obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
Are there any special requirements for a scientific organization to be exempt from Illinois state income taxes?
Yes, in order to be eligible for exemption from Illinois state income taxes, a scientific organization must meet certain requirements such as registering with the Illinois Attorney General’s Charitable Trust and Solicitations Registration Office and obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
What is the process for obtaining a liquor license in Illinois?
The process for obtaining a liquor license in Illinois varies depending on the type of organization and the jurisdiction in which it is located. Generally, the process includes submitting an application to the local government, paying the required fees, and passing a background check.
What is the process for obtaining a food service license in Illinois?
The process for obtaining a food service license in Illinois varies depending on the type of organization and the jurisdiction in which it is located. Generally, the process includes submitting an application to the local government, paying the required fees, and passing a health inspection.
What is the process for obtaining a business license in Illinois?
The process for obtaining a business license in Illinois varies depending on the type of organization and the jurisdiction in which it is located. Generally, the process includes submitting an application to the local government, paying the required fees, and submitting a business plan.
Are there any special requirements for a nonprofit organization in Illinois to receive tax-deductible donations?
Yes, in order to receive tax-deductible donations, a nonprofit organization in Illinois must be registered with the Internal Revenue Service (IRS) and must be in compliance with all applicable state and local laws.
Are there any special requirements for a nonprofit organization in Illinois to receive grant funding?
Yes, in order to receive grant funding, a nonprofit organization in Illinois must be registered with the Internal Revenue Service (IRS) and must be in compliance with all applicable state and local laws.
What is the process for filing taxes for a nonprofit organization in Illinois?
The process for filing taxes for a nonprofit organization in Illinois depends on the type of organization and whether it is registered as a 501(c)(3) with the Internal Revenue Service (IRS). Generally, nonprofit organizations must file Form 990 or Form 990-EZ with the IRS.
What are the penalties for failing to file taxes for a nonprofit organization in Illinois?
The penalties for failing to file taxes for a nonprofit organization in Illinois depend on the type of organization and whether it is registered as a 501(c)(3) with the Internal Revenue Service (IRS). Generally, penalties may include fines, revocation of nonprofit status, and/or criminal prosecution.
What are the requirements to start a nonprofit in Illinois?
Starting a nonprofit in Illinois requires filing Articles of Incorporation with the Illinois Secretary of State, including a name, registered agent, purpose, directors, and other information. You must also register with the Internal Revenue Service to obtain 501(c)(3) status.
What are the steps involved in registering a nonprofit in Illinois?
The steps to register a nonprofit in Illinois include filing Articles of Incorporation with the Illinois Secretary of State, obtaining an Employer Identification Number from the Internal Revenue Service, and applying for tax-exempt status from the IRS.
Are there any fees involved in registering a nonprofit in Illinois?
Yes, there are fees involved in registering a nonprofit in Illinois. These include the filing fee for Articles of Incorporation with the Illinois Secretary of State and the application fee for tax-exempt status from the Internal Revenue Service.
Are there any resources available to help with starting a nonprofit in Illinois?
Yes, there are a number of resources available to help with starting a nonprofit in Illinois. These include the Guide to Starting a Nonprofit in Illinois from the Illinois Attorney General, the Illinois Nonprofit Resource Center, and the IRS Tax Exempt and Government Entities Division.
What types of organizations qualify as a nonprofit in Illinois?
In Illinois, nonprofit organizations can be organized for any lawful purpose, and may be organized as a corporation, trust, unincorporated association, or other legal entity. Examples of qualifying organizations include educational, scientific, literary, and charitable organizations, as well as religious, fraternal, and veteran organizations.
Are there any reporting requirements for nonprofits in Illinois?
Yes, nonprofits in Illinois are required to file annual reports with the Illinois Secretary of State, as well as to file Form 990 with the Internal Revenue Service.

Also Read

Why Illinois Nonprofit Corporation is So Important

One of the key reasons why Illinois Nonprofit Corporations are so important is their ability to address critical needs that might otherwise go unmet. Whether it’s providing food and shelter to the homeless, offering educational programs to underserved populations, or advocating for social justice, these organizations fill the gaps where government and for-profit businesses fall short. They play a crucial role in enhancing the quality of life for individuals and communities across the state.

Furthermore, Illinois Nonprofit Corporations are often at the forefront of innovation and social change. They have the flexibility to test new ideas, pilot programs, and adapt quickly to address emerging challenges. These organizations are driven by a passion for creating positive change and are willing to take risks to achieve their goals. As a result, they often serve as catalysts for larger societal shifts and inspire others to get involved in making a difference.

Additionally, Illinois Nonprofit Corporations play a significant role in fostering a sense of community and belonging. They bring people together around shared values and goals, creating a sense of camaraderie and connection among individuals who might not otherwise cross paths. These organizations provide opportunities for people to engage with issues they care about, volunteer their time and talents, and build relationships with like-minded individuals. In doing so, they help build stronger, more resilient communities where everyone has the opportunity to thrive.

Another reason why Illinois Nonprofit Corporations are so important is their ability to amplify the voices of marginalized and underrepresented groups. These organizations often work directly with communities facing systemic barriers and help elevate their perspectives and experiences. By amplifying these voices, nonprofits help to create a more inclusive society where everyone’s needs and concerns are taken into account. They advocate for policies and practices that promote equity and justice, ensuring that all individuals have the opportunity to reach their full potential.

In conclusion, Illinois Nonprofit Corporations are a critical component of our society, providing essential services, fostering innovation, building community, and advocating for social change. These organizations rely on the support of donors, volunteers, and community members to continue their vital work. By recognizing the importance of nonprofit organizations and getting involved in their efforts, we can all play a role in creating a more just, equitable, and thriving society for everyone.

Conclusion

Starting a nonprofit corporation in Illinois is an incredible way to give back to your community and positively impact the causes that matter most to you. By forming a nonprofit, you can provide essential services, promote awareness, and make a lasting difference in the lives of those who need it most. In Illinois, a lot of nonprofit organizations are there to cater to people in need. Starting a nonprofit corporation is better than an LLC, as it provides limited liability and tax benefits. It helps you save taxes. If you want to start a nonprofit in Illinois, you must follow the steps mentioned above in the article.

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