The following information is not intended to be legal advice and should not be used as a substitute for obtaining legal advice.
The process of starting a nonprofit organization in Kansas involves three phases of work: research and planning for your nonprofit, legally establishing the organization with the State of Kansas and the Internal Revenue Service (IRS), and maintaining your nonprofit status.
Plan for the first two phases to take anywhere from 9 months to two years or more, depending on your circumstances and the time it takes for the IRS to make its determination about your status as a nonprofit organization.
Here is a checklist and links for documents to organize your work. Keep copies of all documents completed and/or received during this process as part of the organization’s corporate records.
|Create a vision and mission statement for the organization.|
|Select a name for the organization (with ‘Inc.’ or ‘Association’, etc.) that is legally available in your state. Go to the Kansas Business Center to see if your name is available. This website gives you the opportunity to reserve your name if you want. It is an option if you expect to have a delay between choosing your name and incorporating.|
|Clarify your primary activities and programs to carry out a tax-exempt purpose. Determine that these activities should/can occur in the context of a nonprofit organization versus suitability for a different form of business.|
|Research similar providers in your area and in the state of Kansas to determine the uniqueness of your mission/vision. Determine your catchment area for services.|
|Collect data that justifies the creation of a new nonprofit organization to support the unique need for your purpose and activities with your target population (how will this be defined?) and how you will know that target population(s) will be helped by the organization. What staffing/volunteers will be required to carry out these proposed activities/programs?|
Recruit initial members of the organization’s governing board. These people will: serve as your Board’s governing officers, help write and be identified in the Articles of Incorporation (See Phase 2 instructions), help write the bylaws and the IRS application.
You, as well as members of the board, need to envision the role they hope to play for the organization, their commitment level to the board’s service, and their willingness to serve as a volunteer for the organization or expectations for compensation. The State of Kansas requires that you have at least three non-related board members
Determine an initial plan for financial start-up (including a projected budget of income and expenditures for 3 years) and options for long-term sustainability.
In considering how the organization will be funded, determine how much it will cost to operate for the first 3 years. Conduct some funding/market research to determine feasibility and possibilities for promotion. Then consider your projected percent of reliance on each of the following possible sources of funding: individual donors, grants from foundations/corporations, government contracts, fees for service, product sales, etc. Who will pay for the start-up costs?
Identify and describe resources available to you and the organization in the following areas: financial, professional, government, experience/background, education, management, community support, role models/mentors, network connections, and other resources.
|Read IRS publication 557|
|Consult with an attorney. Consultation with an attorney is recommended prior to establishing a nonprofit organization. An attorney can advise about the organization’s eligibility for nonprofit status based on its purpose and activities and can assist with the process of incorporation.|
|Choose an office address for the corporation. It must be a physical location although a post office box number may be used for mailing purposes.|
Write the Articles of Incorporation. Write and submit the Articles of Incorporation. Link for sample articles from IRS. Submit one original signed by the incorporator(s), witnessed by a notary public, with a $20 check made out to the Secretary of State. If you are submitting articles of incorporation drafted according to statute by mail, which is recommended, you do not need to file your articles online nor submit any other form with the drafted articles. You should receive a certified copy of your articles within 10 days. The certified copy will specify a Kansas Corporate ID number and the date the Articles of Incorporation were filed and the corporation came into existence.
Kansas Secretary of State
Obtain Federal Employer Identification Number (EIN) from the IRS. You can apply online, by mail, by telephone, or by fax. Applying online or by telephone tend to be the fastest methods. You will need an EIN number on other IRS forms you will be submitting and to open a bank account.
To apply, regardless of method, it is helpful to download the instructions to form SS-4 and form SS-4 at www.irs.gov. Fill out form SS-4 before calling or applying online. If applying by phone, call 1-800-829-4933 (toll-free). If applying online, go to www.irs.gov/businesses and click on Employer ID numbers.
|Write and adopt the organization’s bylaws. For more information about writing your bylaws, we recommend this information from GrantSpace, a service of the Foundation Center. All board members should become familiar with the bylaws because they specify the governing procedures and rules. Keep a copy of the bylaws with the corporate records. The state does not require a copy of an organization’s bylaws, but they must be attached to the federal tax exemption application.|
Obtain federal tax-exemption determination. It is best to complete this step within 27 months of incorporating with the state as a not-for-profit corporation.
From www.irs.gov, download form 1023 and instructions for form 1023, if seeking 501(c)(3) status. If you are working with an attorney, also download form 2848.Fill out form 1023, referring to the instructions and IRS publication 557.
Some organizations may be eligible to complete IRS form 1023-EZ online. Refer to the instructions for form 1023-EZ to determine your eligibility.It is important to have an attorney (experienced with nonprofits) review your bylaws and IRS application in advance of submittal to IRS. It is recommended that this attorney be given power of attorney status using the IRS 2848 form. This will allow him or her to check on the status of the application and answer any questions IRS representatives may have.
Send ALL the IRS forms with signatures, signed bylaws, and a copy of the filed, stamped articles of incorporation along with a copy of the initial articles, with a check ($850 if income will be greater than $10,000 or $400 if income will be less than $10,000) made out to the United States Treasury to:Internal Revenue Service
P.O. Box 12192
Covington, KY 41012-0192
|If your nonprofit is planning to influence legislation, we recommend you talk to a lawyer about whether you need to complete IRS form 5768.|
|Conduct an annual meeting and elect board members, according to the process outlined in your bylaws.|
|File annual report to the Kansas Secretary of State Office.|
|File annual report of income to the IRS (form 990-N, form 990-EZ, or form 990, based on annual gross receipts)|
|Determine if you are sales tax exempt or apply for sales tax exemption.|
|Apply for property tax exemption|
If you have employees or independent contractors, in consultation with your lawyer, accountant, or human resources provider:
o Pay state employment taxes
o Pay state unemployment taxes
o Pay federal employment taxes
o Pay workers’ compensation insurance
o Display required posters
Obtain proper insurance for organization and board members and officers. For more information, we recommend this resource on insurance.
o General liability insurance
o Directors and officers insurance
How to Form a Nonprofit Organization by Anthony Mancuso (2013)
Starting and Managing a Nonprofit Organization: A Legal Guide (5th Edition) by Bruce Hopkins
FOR MORE INFORMATION, contact:
Amy Delamaide, MPA