Starting an Illinois nonprofit corporation is an ideal way to help others in your community. Follow these steps on how to form a nonprofit corporation in Illinois.
Forming an Illinois nonprofit corporation involves quite a few steps. This step-by-step guide will guide you through the process.
Illinois nonprofit corporations are required to have at least three directors. Your directors don’t have to live in Illinois or be members of your nonprofit, but they must be 18 or older. The IRS requires directors to be unrelated to each other.
You also need one incorporator, which can be either a person or a corporation. The incorporator signs your Illinois nonprofit corporation’s Articles of Incorporation.
Choosing the right name for your Illinois nonprofit corporation is vital. Make sure your nonprofit’s name meets the following requirements:
To make sure the name of your Illinois nonprofit corporation is unique, search the state database of existing corporations. If your name’s available you can reserve on the state site for 90 days for a fee of $25.
In addition, if you plan to establish an online presence, you need a domain name. ZenBusiness offers a domain registration service to secure a domain name for you.
Your registered agent is a person or business authorized to receive important legal notices on your Illinois nonprofit corporation’s behalf.
Your nonprofit’s registered agent must have a physical street address in Illinois (not a P.O. box). They must also be available during standard business hours.
Many small businesses choose an officer or director to serve as their registered agent. However, in many cases, you’re better off using a registered agent service for the following reasons:
At ZenBusiness, we offer a registered agent service. This takes the burden of handling state-required paperwork off your plate, so you can focus on growing your business.
Filing your Articles of Incorporation with the Secretary of State’s website allows Illinois to recognize your nonprofit as a legitimate corporation. Your submission requires the following:
In addition, your Articles of Incorporation should include language that the IRS requires of 501(c)(3) nonprofit corporations. This includes a statement of purpose, a statement that your nonprofit will not be used for other purposes, and a dissolution clause.
Articles of Incorporation can be filed online on the state site for a fee of $50. Payment methods are Mastercard, Visa, Discover, or American Express.
Illinois requires your nonprofit to establish corporate bylaws in writing at your first organizational meeting. However, you don’t have to file the bylaws with the state.
Your bylaws establish how you plan to manage the corporation’s finances. Your bylaws should also include statements about:
The first meeting of your Illinois nonprofit corporation’s board of directors is known as the organizational meeting. At this meeting, your board should do the following:
You need to set up a binder to hold all the corporate records for your Illinois nonprofit corporation. These include your Articles of Incorporation, bylaws, and minutes. Often, this is done at the board of directors’ initial organizational meeting. You can also use a digital service, such as the cloud, to store these documents.
The IRS requires your Illinois nonprofit corporation to have an employer identification number, or EIN. You need this nine-digit number even if you don’t plan to hire employees. You’ll use it to open your bank account and apply for your official 501(c)(3) status. You also need it to apply for your state tax ID number.
You can get your EIN yourself through the IRS website, but if you’d rather not deal with that and/or you want the peace of mind from knowing it’s being handled correctly, you can use ZenBusinees’s EIN service.
The state of Illinois doesn’t require a general business license for your nonprofit, but your city or county may. In addition, you may need federal or statewide permits or licenses, depending on the type of activities you intend to pursue. If you plan to conduct charitable games of chance, for instance, you may have to apply with the state.
ZenBusiness can handle the lengthy process of assessing which licenses and permits you may need on the federal, state, county, and municipal level. Check out our business license report service for more details.
Filing for 501(c)(3) tax-exempt status is complicated. You need to fill out either the 1023 or 1023_EZ form to apply for recognition of exemption If you meet the IRS requirements for the 1023-EZ, read the instructions carefully, then file the form. The IRS will look over your application to see if you qualify as a tax-exempt organization, which can take up to six months.
Once you’re recognized by the IRS, your nonprofit receives automatic exemption from Illinois state income tax. However, you still need to file the application for state tax exemption (Form STAX-1).
If you plan to do any fundraising or accept donations, your Illinois nonprofit corporation must register as a charitable organization.
The insurance needs of your Illinois nonprofit corporation vary significantly depending on the type of business you’re conducting. If your company has employees, you certainly need unemployment insurance as well as workers’ compensation. Contact a qualified insurance agent to determine what other insurance your nonprofit requires.
Your bank will require a copy of your bylaws and Articles of Incorporation, as well as your EIN number. Some banks ask for other documents, as well.
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service or are looking to register a domain, our goal is to help you stay on the road to success. Check out our services, and contact us today to see how we can help you grow your company.
If the founder is an employee of the Illinois nonprofit corporation, they can take a salary. However, board members should not profit from their service to a nonprofit, though their expenses may be reimbursed.
You’ll also pay a $50 fee to file your Articles of Incorporation. Registering as an Illinois charity costs an additional $15.
A nonprofit corporation is not allowed to make a profit, but it is allowed to make money. The money should be used to pay the nonprofit’s expenses.
Illinois allows the organization of 35 different types of nonprofits: Charitable, Benevolent, Eleemosynary, Educational, Civic, Patriotic, Political, Religious, Social, Literary, Athletic, Scientific Research, Agricultural, Horticultural, Soil improvement, Crop improvement, Livestock/poultry improvement, Professional and trade associations, Promotion of industry development, Cooperative electrification, Cooperative telephone service, Cooperative water supply facilities, Cooperative ownership of residential property, Homeowner associations, Cooperative membership consumer organizations, Community mental health centers, Debt management services, Ridesharing arrangements, Low-income utility/phone service organizations Any 501(c) or 501(d) tax-exempt organization Any tax-deductible purpose under Internal Revenue Code Cooperative natural gas organization Cooperative agriculture bio-gas organizations Hemophilia programs.
An Illinois nonprofit corporation may sell products to members of the organization, and it may hold fundraising events up to twice a year. Any nonprofit that sells products on an ongoing basis must register with the Illinois Department of Revenue as a retailer. It must also pay Retailers’ Occupation Tax on any profits.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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