Use the guide below to form a 501(c)(3) nonprofit in Kentucky. Keep in mind that the process requires forming a nonprofit corporation and getting tax-exempt status with the IRS.
Since the overall process is extremely complex, we highly recommend consulting with an attorney or using a service like Harbor Compliance for personalized top-to-bottom nonprofit formation and obtaining IRS 501(c)(3) status.
The most time-sensitive matter at hand is locking down a name for your nonprofit corporation. Choosing a unique, catchy name is super important for branding your organization, while choosing an appropriate and available name is necessary for staying out of legal trouble.
When selecting a name for your 501(C)(3), make sure it:
Conduct a name search through the KY Secretary of State website to find out if your ideal name is available. Business names are first come first serve, so if yours is up for grabs we advise you to start hustling to get your organization formed. Alternatively, if you’re going to have to wait a while to file your Articles of Incorporation, you can also reserve your name for up to 120 days.
You should also use GoDaddy to find out if a decent URL is available for your organization. Even if you don’t plan on launching a website right away, it’s a good idea to lock down a quality domain name to make it easier for folks to find you!
Quick Note: Before you commit 100% to a name, you may also want to check that there’s a decent URL available for your business. Use GoDaddy to search your options. If there’s a quality domain name for purchase, we advise buying it right away. Even if launching a business website isn’t on your radar right now, it’s going to be soon, and you might as well nail down a domain name that’ll make it easy for customers to find you!
Now it’s time to appoint a Kentucky registered agent and initial board of directors, as you’ll need to include their information on your Articles of Incorporation.
Kentucky business law requires you to appoint a registered agent to receive tax forms, service of process notices, and other important documents on behalf of your nonprofit. Your registered agent in Kentucky needs to be a legal resident of the state, or a company legally allowed to do business in the state.
They also need to maintain normal business hours at a local address. Some folks choose to act as their own registered agent, but there are a few reasons you may not want to — for instance, if you don’t keep normal business hours, or if you operate out of your home and don’t want to make your personal address public.
Around the same time, you’ll want to decide on your initial board of directors. Kentucky requires you to list 3 board members on your Articles of Incorporation, so you’ll need to choose at least 3 to start out. When selecting your directors, make sure to choose people who:
Unfortunately, simply having a passion for the cause is not enough. Don’t just assume folks have all the necessary qualities to drive your organization in the right direction — make sure to sit down and properly interview your prospective board members.
If you’re considering acting as your own registered agent, take a look at our guide to get a better idea of the responsibilities involved. If you decide you’re up for the task, great! Otherwise, to enlist the help of a professional, consider getting registered agent services through an online filing provider. Some companies, like Harbor Compliance, offer a year free (see details) when you form your organization with them.
This is quite an exciting step, because once you’re through you’ll be a legally-recognized nonprofit corporation (not a 501(c)(3) yet, but still a big move)! Your Articles of Incorporation require the following information:
Once you’ve got all the proper information down, you’ll send the document to the Secretary of State at the following address:
Alison Lundergan Grimes
Office of the Secretary of State
P.O. Box 718
Frankfort, KY 40602-0718
Make sure to include a check for $8.00, too — that’s Kentucky’s filing fee for nonprofit corporations.
So, we’ve outlined the DIY approach above, which you may very well be up for. However, the process of forming a 501(C)(3) is more complicated than most other business types. Eventually you’ll probably want to invest in professional help, and we believe that now is as good as time as any.
You have two options here: 1) consult with an attorney, or 2) use an nonprofit formation service. There are perks to both, and determining which is right for you really depends on the size, complexity, and overall goals of your nonprofit corporation. Using an online incorporation service is definitely the cheaper route, so we encourage you to read up on a few providers and feel out if any of them will be sufficient for your needs.
An EIN, or Employer Identification Number, is basically a social security number for your organization. The federal government requires all U.S. corporations to have EINs in order to track their activity for tax purposes. It’s actually even more important for 501(C)(3) nonprofits because they have to be highly monitored in order to keep the status of tax-exempt.
Your EIN is going to pop up as a requirement all over the place, including on the application for a business bank account, so it’s a good idea to get it ASAP.
Read our EIN guide for more information on what an EIN is, why it’s necessary to have one, and how to go about obtaining one for your organization. Truth be told, it’s really not that complicated. The quickest, cheapest way to go about obtaining an EIN is by simply filling out the IRS online application yourself — just be sure all the information you provide is accurate.
A corporate records book isn’t a legal requirement, but it’s a good idea to have one for your Kentucky nonprofit. This is where you’ll keep your:
So, the contents are all mandatory — it’s the pretty package that’s optional. But believe it or not, it really can be helpful to invest in one of these when it comes to asserting the legitimacy of your nonprofit corporation.
Lots of businesses sell corporate binders, but not all of them offer ones specifically for nonprofit corporations. Blumberg and Bindertek are a couple that do, so their products are worth checking out. You might also consider upgrading to a full-fledged corporate kit, which includes a corporate seal and other customized pieces your nonprofit can use to demonstrate the legitimacy of the company.
Your first meeting with your initial directors will be a formative time for your nonprofit. It’s when you’ll draft your bylaws, which will outline:
Your nonprofit bylaws will play a role in determining whether or not you’re approved for 501(C)(3) status, as well as carve out a path for the future of your nonprofit — so it’s worth it to put in the necessary time and energy during your organizational meeting. You’ll also need to record the meeting minutes, since these will be submitted to the IRS, too. And of course, don’t forget to put all the paperwork from your meeting in your corporate records book for safekeeping!
Rocket Lawyer has templates specifically for nonprofit corporation bylaws and meeting minutes, which is great since nonprofit and for-profit corporations require quite different governance. We highly recommend taking advantage of these resources, if only to get an idea of what information you need to include.
Once you’ve completed steps 1-6, you’ll be all set to apply for tax exemption!
To apply for 501(C)(3) status, you have to fill out and submit IRS Form 1023. You may be eligible to use Form 1023-EZ instead, which is a streamlined version of the application. Reference the eligibility worksheet on pages 11-18 of the Form 1023-EZ Instructions to find out if your nonprofit qualifies. It’s definitely worth checking out, as it’s a shorter form with a quicker turnaround time (within 90 days vs. within 180 days).
Kentucky also requires all nonprofit organizations to fill out the Unified Registration Statement for Charitable Organizations and send it to the Attorney General at the following address:
Office of the Attorney General
1024 Capital Center Drive, Suite 200
Frankfort, KY 40601
Attn: Charity Registration
The URS form is a hefty one, so be ready to sit down and dedicate some time to it. You can find more information about registering and staying compliant with the state on the Kentucky Attorney General website.
Harbor Compliance is one of the only online filing companies that will actually take care of the tax exemption process for you. Their services aren’t cheap, but it may be worth the financial investment to ensure that nothing slips through the cracks — and truthfully, there are some wide cracks along the way.
You might also consider working one-on-one with an accountant on your 1023 and URS forms. Either way, the most important thing is to get professional assistance during this step, as re-submitting your forms may require you to wait another 6 months to find out if you’ve been approved.
Finally, it’s time to open a dedicated bank account for your nonprofit! A normal business bank account may be perfectly sufficient for you, but several banks offer options specifically designed for nonprofits. While searching for the right fit, you might consider:
Shop around. Find out which banks offer the right features to suit the financial conditions and plans of your nonprofit. We’ve ranked what we believe to be the top business bank accounts, which is a great place to start.
Once you’ve chosen a bank, contact them and find out what documents you need to present in order to set up your account. Most will only require your Articles of Incorporation or EIN, but they may need to see extra documentation if you’re taking advantage of nonprofit-specific benefits.
The final step to building your financial infrastructure is to invest in a business accounting software and get it synced with your bank account to start monitoring your financials ASAP. This is especially important for nonprofits because immaculate record-keeping is 100% necessary for maintaining tax-exempt status.
Each year you’ll file an annual return (Form 990) with the IRS, where you’ll have to include detailed, accurate information about your nonprofit’s finances. Take a look at our top accounting software recommendations to get started!
Forming any business is a difficult task, but a 501(C)(3) is next-level. We highly recommend getting professional help along the way.
Harbor Compliance is our favorite provider of comprehensive assistance for 501(C)(3) nonprofits. They help you with every step in this guide from getting incorporated to achieving tax-exempt status. We trust them implicitly and are confident you’ll feel the same.