Nowadays, there are at least 1.5 million nonprofit organizations in the United States. Every year, more than 50 thousand new not-for-profit organizations are created. With over 104,185 created nonprofits, Illinois is not the exception to the general American rules of creating numerous social corporations.
Any nonprofit has the mission to address the most pressing issues and difficult situations that can take place in any given community. In other words, nonprofits work for their community without seeking for a profit in return. Yosef Meystel knows that as an incentive to the creation of nonprofits, the U.S government gives these organizations a tax-exempt status once they meet certain criteria. This means nonprofits don’t need to pay taxes on any money they raise to support a social cause.
In Illinois, the vast majority of nonprofits are 501(c)(3) corporations. This category includes any scientific, educational, charitable or religious corporation. Tax exemptions in Illinois only apply after you have formed an Illinois not-for-profit corporation. Once you create your corporation, you can contact the IRS and apply for a tax-exempt status.
Steps to Create a Nonprofit in Illinois
There are some steps every individual needs to follow when creating a nonprofit in Illinois:
1 . Choosing a board of directors
In Illinois, every nonprofit must have a board of directors composed of at least three members. Besides, at least one of those members needs to be an incorporator, which can be an individual or a corporation.
2 . Naming the Corporation
According to law, in the state of Illinois nonprofits must have recognizable names, they must be easy to distinguish from any other business on file with the Secretary of State. For those who are not sure if they name the chose is valid, they can search on a database dedicated to keeping track of corporate names in Illinois. This database is available on the Secretary of State’s website. Another useful tool may be writing or calling the Secretary of State’s office directly and check if the name you picked is available.
Though it is not mandatory, it is recommended to use words such as “company” or “corporation”. Abbreviations of these words may be used as well. In Illinois, not-for-profit names must contain the letters NFP at the end if they are not clear enough about their purpose. Also, names cannot use words taken from any political party unless they have the required permit to do so.
3. Preparing your articles of incorporation
not-for-profit articles to incorporate your organizations will be needed to be filed with the Illinois Secretary of State. Every article of incorporation includes your organization’s purpose, address, the name of the initial registered agent at that office, name and address of each incorporator, and basic information required and authorized by the Illinois Not For Profit Act.
If you have any doubt about the filling process, you can use the Illinois Secretary of State website. There you will learn how to fill your articles thanks to the useful instructions offered by the site. Keep in mind that some of the articles provided online do not include information required by the IRS to obtain the tax-exempt status give to all the 501(c)(3) corporations. In order to obtain this tax-exempt status, you will need to include a statement of purpose, another statement declaring that your nonprofit won’t be involved in any political activity and a dissolution of assets. Nevertheless, if you want to get more information on the IRS requirements, you should visit their website.
4 . Define your bylaws
Every nonprofit corporation in Illinois must need to set a group of bylaws according to Illinois law. Rules and procedures will need to be contained and every member of the organization will have the obligation of following this bylaw. The Illinois Secretary of State won’t need you to file your organization’s bylaws, however, this set of rules will regulate your corporation and will need to be followed for meetings and the election of officers and directors.
Bylaws of any organization in Illinois must take care of any corporate formality and work as your nonprofit internal organization manual.
5 . Hold your first meeting
Your first organizational meeting of the board should define the organization’s bylaws, appoint the chosen officers, set an accounting period and tax year and approve the initial banking transactions, such as opening an account. Every meeting a minute should be created.
The right place for organizations to hold their important documents is a corporate record binder. Documents such as bylaws, minutes, forms, resolutions, records and reports should be kept together and accessible to authorized members of the organizations who need to check this information.
Getting your Illinois state tax exemption
Nonprofits that are tax-exempt from the IRS do not need to pay Illinois income tax. Filing documents is not required to obtain this exemption. To find out more about this matter, you can check the Illinois Department of Revenue website and download the forms and documents needed for you to apply to any other tax exemption in Illinois.