As of 2016, there were over 22,000 non-profit organizations in Illinois. These organizations include everything from religious institutions to youth programs to academic offerings. The climate for expansion is only increasing and someone is looking for exactly what you have to offer. The question is, are you ready to begin? With this step-by-step guide, you can have your organization off the ground by this time next month.

How Do I Launch My Business Now? 

Step 1: Find out if Your Organization Already Exists 

 While 22,000 non-profit organizations might sound like a big number, that encompasses numerous different categories and types of businesses. There is a high likelihood that your idea hasn’t been used before. However, you must research to make sure that you are not entering an already saturated market. If there are businesses that exist like yours, are you able to successfully launch? Or is this something that you can partner with an existing organization on?

Step 2: Pick Out Your Organization’s Name 

 The name you choose will be how your organization is recognized. It will represent your brand and the identity that you are trying to convey. When you are choosing your name, it is important to note that there are legal requirements that must be met. The legal name may not conflict with any existing organization. To search all registered non-profits in Illinois, please click here. It is important to note that if your name might suggest that your organization is not organized for a non-profit purpose, then NFP must be at the end of our legal name.    

Step 3: Define Your employee roles 

 Certain roles need to be defined before you can launch your organization including:

  • Incorporator: This is who will sign the Articles of Incorporation. You need at least one designee, but you can have more than one.
  • Directors: These are the main decision-makers and stakeholders in your organization’s success. To meet the IRS requirements, you will need to designate at least three unrelated members. In Illinois, there are no residency or membership requirements. 
  • Officer: The officer will certify all corporate records as written in the company bylaws. If your bylaws allow, an officer may hold multiple offices. 
  • Registered Agent: This person is responsible for receiving all legal notices pertaining to the organization. This agent must be in Illinois and have a physical location that is open during normal business hours. 

Step 4: File the Articles of Incorporation 

 The “Articles of Incorporation” form can be found online by clicking here. When you are ready to file this, you should have already defined your organization’s name, registered agent, incorporator, officer(s), director(s). and physical location. In addition, you will be asked to provide the purpose for which your corporation is being established.

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Step 5: Apply for an Employer Identification Number (EIN)

 An EIN is a nine-digit number that the IRS will assign to identify your organization. The EIN will be used to open a company bank account, apply for non-profit status, and to submit 990 returns to the IRS. You can file the form by clicking here. If you fill out the form online or by phone, you should receive your EIN immediately. If you are faxing in your form, the turnaround is about four days and about a month if you mail in your form.

Step 6: Establish Your Bylaws 

The “bylaws” are the operating manual of your organization. This should outline the rules that your organization will follow, how the company will operate and how it will adhere to the law. From there on out, it should be used as a guiding principle for any employee or volunteer entering your organization. In addition, you should be setting up your “conflict of interest policy.” This policy protects your organization when someone that is in a position of power has a competing interest and could make choices that benefit themselves while harming the organization. Once you have put together both the Bylaws and the Conflict-of-Interest Policy, you will need approval from the Board of Directors. Your application to the IRS for a non-profit exemption will require both items to have been adopted and approved.  

Step 7: Apply for State Tax Identification Numbers 

In the state of Illinois, you are required to pay state tax and in turn, you will need to have a state tax identification number. This can be done by mail or online. If you choose to sign up for it online, you will visit the Illinois Department of Revenue, register for a login, and then follow the prompts notated by clicking here. 

Step 8: Applying for Exemptions  

501(c): The term 501(c) refers to the part of the IRS that regulates non-profit organizations. The 501(c) tax exemption can offer your organization numerous benefits. This will allow your organization to apply for grants, fundraise, and become exempt from IRS income tax. However, this will be the most time-consuming part of the registration process. If you expect your annual revenue to be less than $50,000, then you will want to fill out a 1023-EZ. If you expect to have higher yearly revenue, you will want to fill out Form 1023. The IRS may take up to six months to decide on your status. For information on Form 1023, you will want to click here. For more information on Form 1023-EZ, you will want to click here.

State- Tax Exemptions: To file for a Sales Tax Exemption, you will need to fill out another form on the IRS Website or you can click here.  

Step 9: File an Annual Report 

All non-profit corporations must file an annual report with the Secretary of State. This report is due each year on the first day of the month when the organization was formed. For example, if your organization was formed on August 17th, then the annual report would be due on August 1st of the following year. This form can be filed online by clicking here.

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How Much Does Starting A Non-Profit in Illinois Cost? 

 The cost of investing in your business is entirely up to you, but the fixed costs of getting your non-profit off the ground are non negotiable. Luckily, these costs won’t break your bank, but they should be accounted for when you are putting together your opening costs. 

  • Articles of Incorporation: $50 by mail or $77.50 online ($100 to have it expedited) 
  • Filing for a 501(c): $275 for the 1023-EZ or $600 if you are filling out the 1023 Form. 
  • Illinois Charitable Registration $15 
  • Filing your Annual Report: $10

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How Long Does It Take to Start a Non-Profit 

It can take as little as a month or it can take as long as six months. It all boils down to the 501(c) and whether you are filing your information online or mailing it in. Assuming that you are doing everything online, incorporating your business can take up to two- weeks. However, if you pay the expedited fee, you can have your incorporation back in as little as one to five business days. You will need to set up your EIN, but again, if you sign up online, that turnaround time is immediate. What will take the most time will be setting up the 501(c) status. On average, it takes about one to three months to receive your non-profit status but can take as long as six months. 

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Can One Person Start a Non-Profit? 

Illinois law requires that non-profits have at the very minimum three board members. There is no membership or residency when it comes to your board members, but they are instrumental in establishing your organization as they will help to determine the direction that your non-profit will take as the years go on. 

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FAQ 

Why do I Want to File for a 501(c)? 

The biggest benefit of applying for a 501(c) is that you are exempt from applying for federal/state income taxes.

Do Non-Profits Need to Register as a Charity? 

Yes. This allows all potential donors to research the organization before they donate.

Do Non-profits Need to File an Annual Report?

Yes, all Illinois non-profits are required to submit an annual report on the 1st of the month your organization was formed in. You will receive a reminder 60 days before the report is due. The state will only require basic information on your form. However, larger donors and corporations will need a detailed report when making larger funding decisions.

How Long Do the Board Members Stay in Office? 

Generally, elections are held each year, but if you choose to hold your elections differently, they should be notated in your company bylaws.

If One Person Can’t Start a Non-profit, then What is a Sole Member Non-profit? 

This is a public charity where there is just one permanent member, and this is usually the founder. Occasionally, you will see another person, perhaps a spouse. However, the member still has a requirement to set a board of directors, which will usually include themselves. In this case, though, the sole member will be responsible for finding the board of directors and the directors have no authority to remove the sole member.

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