New Nonprofits in Kansas and Missouri
Before embarking on the endeavor of starting a nonprofit, you should ask yourself a very important question: Should I start a nonprofit? This “pre-step” if you will, could save you a lot of time and money. There are a wide variety of factors to consider. Researching online and getting legal counsel is a great way to get started in determining if you should or should not start a nonprofit. The following steps are the essential elements in forming a 501(c)(3) organization in Kansas or Missouri.
1. Initial Details
First, when launching a new nonprofit, it is essential to decide on the framework for your organization.
- Name- In selecting a name, you must check to see if the desired name is available online at the Secretary of State's website. The business center of both Kansas and Missouri's Secretary of State's website can help with this.
- Board members- In Missouri, three board members are required. In Kansas, only one board member is required.
- Location- Choose what state your nonprofit will operate in. This is often the state in which the organization primarily conducts its activities.
2. Articles of Incorporation
Second, a document called Articles of Incorporation must be drafted and submitted to the Secretary of State's Office. The key contents of this document include the name of the organization, registered address, custom corporate purpose statement, and specific language required by the IRS in order to qualify for 501(c)(3) status. There is a filing fee of $20 in Kansas and $25 in Missouri.
3. Employer Identification Number
Next, an Employer Identification Number (EIN) needs to be obtained by the nonprofit. The application for an EIN is submitted to the IRS via a Form called SS-4. There is no fee required to obtain an EIN. You must have an EIN in order to open a bank account for your nonprofit.
4. Bylaws and Conflict of Interest Policy
Then, Bylaws will need to be drafted for your organization. Bylaws traditionally have information on rules and regulations for the organization, methods of operation, and description of board members' roles. Additionally, a Conflict of Interest Policy will need to be made and provided to the IRS when applying for tax-exempt status.
5. Form 1023
Finally, the last major step in forming a nonprofit is applying for tax-exempt status with the IRS. This is done through the submission of a form called Form 1023. This stage of the process is the most tedious part and will likely require the most time.
To apply for tax-exempt status, also known as 501(c)(3) status, a lengthy application (about 40 pages before supplemental materials are added) needs to be submitted to the IRS. The application contains a variety of organizational, financial, ethical, and legal questions. While you can fill out this application on your own, you may require professional counsel to accurately answer some of the questions. Legal questions often arise from the IRS and you may be sent a letter of inquiry. These inquiries can be about a variety of issues including board governance, intellectual property, real estate, liability concerns, fundraising and charitable contributions, employee relations, and contractual obligations.
Once the IRS has determined your organization meets the criteria for a tax-exempt organization, you will receive a document in the mail called a “determination letter” that confirms your 501(c)(3) status, among other things. Once you receive this document you can confirm to donors the tax-deductible nature of their contributions to your organization and you can start the good work you set out to do. As your organization grows, additional legal matters tend to arise. It may be beneficial to have an attorney familiar with your organization on retainer. For a more detailed outline of how to start a nonprofit, feel free to contact us.