Experienced Representation In Business Law, Estate Planning And Tax Law

Establishing A Nonprofit Corporation Or Charitable Organization

Business clients in the Godfrey area looking to establish an Illinois 501(c)(3) corporation or charitable organization have come to Farrell, Hamilton & Julian, P.C., for help with nonprofit corporation formation since 1965. We handle all aspects of this type of business formation to ensure that everything is done in accordance with both state and federal tax laws.

Complexities Of Nonprofit Corporate Formation

Nonprofit formation takes more than just filing a form for tax-exempt status, as various complex steps must be undertaken to complete your application. At Farrell, Hamilton & Julian, P.C., we carefully and skillfully oversee the entire process to help get your organization registered as a nonprofit company with the attorney general’s office.

Our experience goes beyond the standard 501(c)(3) filings for churches and charitable organizations. We also assist lobbying and political organizations with filing for nonprofit status under 501(c)(4), as well as labor unions with filing under 501(c)(5), and business leagues/chambers of commerce with filing under 501(c)(6), among others.

Steps In Forming An Illinois Tax-Exempt Organization/Nonprofit Formation

Creating an Illinois nonprofit requires both state-level formation and, when applicable, a separate application for federal tax-exempt status. Common steps in the nonprofit formation process include:

Choose the organization’s structure and purpose. Clearly define the nonprofit’s mission and determine which tax-exempt classification fits its activities.
Form the Illinois nonprofit corporation. Prepare and file articles of incorporation with the Illinois Secretary of State using provisions appropriate for the organization.
Establish organizational governance. Select directors, prepare bylaws and document the board’s initial organizational actions.
Obtain an EIN. Apply to the IRS for an Employer Identification Number for tax and administrative purposes.
Prepare financial information. Develop budgets showing anticipated revenue, expenses and funding sources.
Apply for federal tax-exempt status. Eligible organizations generally seek recognition from the IRS under the appropriate section of Internal Revenue Code Section 501(c).
Address Illinois registration requirements. Charitable organizations may also need to register with the Illinois Attorney General and satisfy applicable state tax requirements.

Careful preparation at each stage can help establish a sound legal, financial and governance foundation for the organization.

Types Of Nonprofit Corporate Formation

Not every nonprofit serves the same purpose or receives the same federal tax treatment. Farrell, Hamilton & Julian, P.C., helps organizations evaluate the classification appropriate for their activities.

501(c)(3) organizations generally include charitable, religious and educational organizations. Contributions may be tax deductible when federal requirements are met.
501(c)(4) organizations generally include social welfare organizations and may conduct more lobbying than 501(c)(3) organizations, subject to restrictions.
501(c)(5) organizations include qualifying labor, agricultural and horticultural organizations formed to advance members’ interests.
501(c)(6) organizations generally include business leagues and chambers of commerce formed to advance shared business interests.

Selecting the correct classification matters because each category carries different rules concerning permissible activities, taxation and reporting.

Preparing A Budget And Other Documents For Nonprofit Formation

The process of nonprofit formation is complex and requires an attorney who is experienced not only with tax law, but also financial matters. For example, to apply for tax-exempt status, you must present a detailed budget documenting your costs and expenses as well as your projected sources of income.

Many of the business law attorneys at our firm have accounting degrees or are certified public accountants (CPA). We believe this extensive education makes them some of the most effective taxation counsel in the area. They can assist you with the creation of a budget for your nonprofit organization and most other financial matters related to nonprofit formation.

Get Started Today

Nonprofit formation requires careful coordination of organizational, tax and financial requirements. Farrell, Hamilton & Julian, P.C., has assisted Godfrey-area business clients since 1965. The firm also offers valuable attorney-CPA financial knowledge, with a lawyer who is also a certified public accountant.

To obtain more information or to schedule an appointment with an experienced lawyer, please contact us online or by calling 618-208-0263.