Form a Nonprofit in Kentucky
Step 1: Select and Secure Your Nonprofit's Name
The name you select for your nonprofit will establish its brand. It is the first thing most people will learn about your organization. It is important to pick a name that both aligns with your mission and follows the rules of naming in Kentucky.
The name of a nonprofit corporation must be distinct from that of any existing corporations in Kentucky. To check availability and secure your corporation’s name we recommend the business entity search through the state. You can also call 502-564-3490.
Here are the complete rules about naming a corporation in Kentucky.
If you plan to have a website for your organization, make sure that a suitable URL is currently available. You can check on GoDaddy.
You may want to buy any URLs you are interested in to make sure that they will be available when you are ready to finalize and create your website.
Once you have decided on a URL, you can set up your professional email account (@yourNonprofit.com). Google's G Suite offers an easy to use business email service that comes with many handy tools including cloud storage space where you can share documents with everyone else in your organization. Try it for free.
Step 2: Decide if you Want to Incorporate
Not all non-profit organizations choose to become corporations. Non-profit organizations can choose to form in one of two ways:
- Unincorporated Non-Profit Associations
- Non-Profit Corporations
There are certain benefits to each option:
Unincorporated Non-Profit Associations
An unincorporated non-profit association is an informal way of forming a non-profit. This option may be a suitable choice for low-risk, low-scale groups. In Kentucky, this structure has the following features:
- Requirement: In Kentucky, an unincorporated non-profit needs a minimum of 2 people to come together for a cause.
- Formation: No legal paperwork required.
- Liability: Individual members are personally responsible for debts and legal issues that come against the organization.
NOTE: If you are only interested in forming an unincorporated non-profit, you can skip ahead to Section 2: How to Apply for Tax Exemptions
A non-profit corporation is a more formal way of forming a non-profit. This option involves more paperwork and compliance but offers more protection for its members. In Kentucky, this structure has the following features:
- Requirement: A non-profit organization that needs to file the Articles of Incorporation with the Secretary of State. Also requires bylaw adoption and paperwork filing.
- Personal Liability Protection: Organization is considered a separate legal entity from its members.
- Credibility: This is especially helpful if an organization needs to raise larger funds.
NOTE: If you are interested in forming a non-profit corporation, continue onto steps 3-11 of this section below.
Step 3: Appoint a Registered Agent
A nonprofit corporation in Kentucky is required to have a resident agent with a Kentucky address.
A registered agent is a person or business who will be responsible for receiving any legal documents on behalf of your nonprofit.
It is required by law that the registered agent must always be available at the address listed during normal business hours. So while you can legally list yourself as a registered agent, it is usually more convenient to hire a third-party service for this purpose. If you list yourself as the registered agent, you must plan to be always available at that address every Monday-Friday from 9am to 5pm.
For a third-party registered agent service you can expect to pay up to $160/year, or you can get a qualified registered agent free of charge when you go through the process of incorporation with Incfile.
Step 4: Decide How Your Organization will be Managed
If you have decided that being a nonprofit corporation is best for your organization, you must decide whether your corporation will be managed by a board of directors or by the members themselves.
If you decide that it will be managed by directors you will need a minimum of three directors who will make up the governing body of the nonprofit. To meet IRS requirements at least 3 of the directors must be unrelated.
Step 5: File the Articles of Incorporation
To become a nonprofit corporation in Kentucky you must file the Articles of Incorporation for nonprofit corporations.
Here are the sections that you will need to complete.
Article I: Name
This is where you will put in the name you selected in step 1.
Article II: Purpose
Here is where you will describe the purpose of your nonprofit organization.
NOTE: If you intend to seek federal tax-exempt status for your organization there is specific language required by the IRS that must be included in this section. Click here for the exact IRS guidelines.
Article III: Registered Agent
Enter the name and address of the registered agent you selected in step 3.
Article IV: Principal Office
Put in your organization’s principal address. If you do not plan to have a physical office you may use that of your registered agent.
Article V: Directors
Enter the names and business addresses of the directors you selected in step 4. Since this will become a public document, you can list a PO Box instead of a personal address.
Article VI: Incorporator(s)
An incorporator is any person filing the Articles of Incorporation for an organization. This may be you or a lawyer helping you with the process. Enter the name and address of each incorporator. You must have at least one.
Article VII: Effective Date of Organization
This section allows you to determine when you want your nonprofit corporation to officially form.
Typically the corporation forms on the date of filing but you can choose a date up to 90 days after the date of filing.
When you sign and date the form you are affirming everything written in the form. Your Articles of Incorporation will need a signature from an incorporator and from the selected registered agent.
There is an $8.00 filing fee which can be paid by check made out to “Kentucky State Treasurer”
Alison Lundergan Grimes
Office of the Secretary of State
P. O. Box 718
Frankfort, KY 40602-0718
Room 154, Capitol Building
700 Capital Avenue
Frankfort, KY 40601
Hours of Operation: 8:00 AM-4:30 PM ET
Step 6: Start a Corporate Records Book
As a nonprofit, your organization will need to keep track of many important documents. This includes things like:
- The Articles of Incorporation
- Tax forms
- Nonprofit bylaws
- Meeting minutes
We recommend having a dedicated corporate records book so that as you start receiving these critical legal documents, they can be kept organized from the very beginning.
While you can keep track of everything using supplies from any office store, it may be easier to use a pre-assembled kit that has the things you need in one place. Blumberg and Bindertek have some options specifically designed to meet the needs of nonprofit corporations.
Step 7: Draft Bylaws and Conflict of Interest Policy
Now is a good time to start drafting the bylaws and conflict of interest policy documents for your nonprofit. These documents will be central to the running of your nonprofit and you will want to have both of these ready in time for your first organizational meeting (Step 8).
Bylaws are the rules that determine how your organization is governed and run. You can think about it as a constitution for your nonprofit. It makes the rules and priorities clear for everyone involved.
In your bylaws be sure to include:
- How the nonprofit is governed – by a board (directors) or membership.
- How meetings are held, voting procedures, electing officers or directors.
- How records will be kept and managed
- How disputes will be handled
- How bylaws will be added amended in the future
Keep in mind that the bylaws will supplement any rules set forth by the federal government or the state.
Ready to get started? Check out these bylaws templates which you can customize to suit the needs of your organization.
The Conflict of Interest Policy contains the rules that ensure that the people governing the nonprofit are making decisions that are best for the organization and not by what is best for them as an individual.
In Appendix A the IRS provides a sample Conflict of Interest Policy. This would be a good place to start, especially if you plan to later apply for tax-exempt status at the federal level.
Step 8: Conduct an Organizational Meeting
An organizational meeting is the first official meeting of your nonprofit! Some of the things that are discussed in a typical organizational meeting:
- Taking attendance to show you have a quorum (minimum number needed)
- Appointing temporary officers, chairmen, secretary, etc.
- Adoption of the bylaws established in Step 7
- Adoption of conflict of interest policy established in Step 7
- Don’t forget to record “minutes” of the meeting and have it signed by all attending directors. Here are some corporate minutes templates to help you get the ball rolling.
NOTE: This meeting must occur before your organization can apply for 501(c)(3) federal tax exempt status.
Step 9: Get an EIN
An EIN or Employment Identification Number (also called a Federal Tax Identification Number or Federal Employment Identification Number), is used to uniquely identify a business entity. You can think of the EIN as a social security number for your nonprofit. You can apply for an EIN whether or not you plan to incorporate your nonprofit.
The EIN number will be used for many things including opening a bank account, applying for tax exemption status and submitting tax returns.
You can easily apply for an EIN via the IRS online application. This is the fastest method as you’ll get your EIN as soon as you complete the application. You can also apply by mail or fax.
Keep in mind, however, that if you are using a nonprofit formation service, EIN assistance might already be included in the package.
Q: How do I get an EIN if I don't have a social security number?
A: An SSN is not required to get an EIN. You can simply fill out IRS Form SS-4 and leav section 7b blank. Then call the IRS at 267-941-1099 to complete your application.
Step 11: Start a Business Bank Account
You will typically need to take with you the following items to open a bank account for your nonprofit:
- The EIN for the nonprofit
- A copy of the nonprofit’s bylaws
- A copy of the Articles of Incorporation
In addition, if your nonprofit has several directors or officers, some banks may ask you for proof that you are authorized to open the account on behalf of the nonprofit.
It is always best to call ahead and ask in case the bank requires any additional documents
There are many great options when it comes to picking a bank. Here are the reviews of the top 5 business bank accounts we recommend.
Get $200 when you open a business checking account with Chase.
Having access to financing is essential for all nonprofits. Credit cards can be a great financial tool to help with the day to day running of your organization. There are many factors to consider when picking the right credit card for your organization. Learn about the best small business credit cards here.
How to Apply for Tax Exemptions
A nonprofit is like any other business in that it is an entity expected to pay taxes at both the federal and state level.
Your nonprofit organization can apply to the IRS to be exempt from federal taxes. If your nonprofit is declared as a tax-exempt nonprofit by the IRS, you can use your Letter of Determination to obtain state tax-exempt status from the Kentucky Department of Revenue
Applying for Exemption from Federal Taxes
Most nonprofits apply to be recognized under section 501(c)(3).
In order to be approved as a 501(c)(3) organization, you must have included specific language in your Articles of Incorporation that shows that your organization will operate exclusively for one or more tax-exempt purposes.
The exact language that needs to be included depends on the nature of your particular organization. Click here for the IRS guidelines. We recommend that you seek legal counsel to help you craft your Articles of Incorporation.
This overview course created by the IRS. will help you understand the timeline and steps involved with the 501(c)(3) application.
On pages 68 & 69 of Publication 557 IRS provides a handy chart to help you determine which application form you would need to fill to apply for exemption from federal taxes.
Applying for Exemption from State Taxes
If you have received your Letter of Determination from the IRS, submit a copy of that letter to the Kentucky Department of Revenue to be exempt from state taxes.
Kentucky Department of Revenue
200 Fair Oaks Lane
Frankfort, KY 40602
Information: (502) 564-8139
If you would like to apply to be exempt from sales taxes, you can use form 51A125.
Protect Your Nonprofit
Get Insurance Coverage
Nonprofits get started out of a passion to make a difference in the world. It is important to realize that like in any other business, there may be risks involved in running the nonprofit.
Getting insurance for your nonprofit will allow you to focus on your passion while minimizing your liability.
Here are some of the common types of insurance you may want to consider for your organization:
- General Liability Coverage
- Directors and Officers Coverage
- Improper Sexual Conduct Coverage
- Social Service Professional Coverage
Your coverage needs will vary based on your business.
How much will the right insurance cost you? Click here to find out.
Properly Signing Legal Documents
There will be times when you will be signing a document on behalf of your nonprofit. It is important that these times are easily distinguishable from when you are signing a document as an individual. If a document isn’t properly signed, you might suddenly find yourself personally responsible for something the organization should have been liable for.
To avoid such confusion we recommend you and all the members of your organization follow the following format:
- The official name of your nonprofit
- Your signature
- Your full legal name
- Your position in the organization
Keep Your Nonprofit Compliant
Kentucky Business Licenses
Business licenses in the state of Kentucky are regulated by individual counties and cities. Contact your local authorities to find the requirements for your organization in your area.
Kentucky Annual Report
All Kentucky nonprofit corporations must file an annual report each year with the Kentucky Secretary of State so the the information on file about your organization is kept up to date. You can file online or by mail, due between January 1st and June 30th of each year. There is a filing fee of $15.00.
Secretary of State
700 Capital Ave
P.O. Box 718
Frankfort, KY 40602-0718
Information: (502) 564-3490
Kentucky Statement of Change
If there is a change of registered agent, registered office or of the principal office of your organization you must file a statement of change with the office of the Secretary of State. You can do this at the one stop online portal.
If your organization will have employees you must register with the Kentucky Department of Taxation and the Kentucky Office of Employment and Training.
You can register with the Kentucky Department of Taxation online for an employer withholding account or contact them at:
Kentucky Department of Revenue
P.O. Box 299, Station 20
Frankfort, KY 40602-0299
Information: (502) 564-3306
Fax: (502) 227-0772
You can refer to the Kentucky Instructions for Employers for additional information.
To register with the Kentucky Office of Employment and Training you must contact them for form UI-1s at:
Kentucky Office of Employment & Training
275 East Main Street 2nd Floor
Frankfort, Kentucky 40601
Information: (502) 564-2272
Public Inspection Rules for 501(c)(3) Organizations
Organizations that have been granted the 501(c)(3) status are required to disclose the following documents to the public when requested:
- Annual returns for 3 years after the due date (this includes returns like Form 990, 990-EZ, 990-PF, and any Forms 990-T)
- All Form 990 Schedules (except portions of Schedule B), attachments and supporting documents.
- Application of exemption and all supporting documents such as Form 1023
- The official paperwork from the IRS that shows that your organization has tax exempt status.
The following do NOT need to be shared with the public:
- Portions of Schedule B of Form 990/990-EZ that identify the contributors. ( You only need to disclose the amount contributed and the nature of the contributions)
- Any unfavorable rulings such as an earlier denial of tax-exempt status.
- Any information the IRS has said you can withhold. This may include things like sensitive patents and trade secrets.
Q: How long do I have to produce these documents if requested?
A: Ideally within in the same day. If your organization doesn’t have an office or maintains limited hours during parts of the year, the information should be made available within two weeks.
Q: Do I need to provide copies of the documents?
A: If someone asks for copies in person or in writing you must provide them with copies.
Q: Can I charge for copies?
A: You can charge a reasonable amount for making copies of the documents requested.
It may be easiest to have the documents available on your website so that anyone who requests copies can be sent to the site. This allows you to stay compliant without having to spend a lot of time dealing with document requests.
Annual Returns for Tax-Exempt Organizations
Most tax-exempt nonprofit organizations are required to file an annual return with the IRS (Click here for a list of exceptions).
Which form you should use to file the annual returns depend on the gross receipt amounts for your organization.
NOTE: All private foundations, regardless of financial status. should file 990-PF
For any questions you can call:
1. (800) 829-3676 (form-related questions)
2. (800) 829-1040 (general information)
Q: When is form 990 due?
A: You have a little over 4 months after your taxable year comes to an end to file Form 990. It is due on the 15th day of the 5th month. So if your taxable year ends on Dec 31st, your form 990 is due on May 15th.
NOTE: If your organization fails to file form 990 for 3 consecutive years, it will automatically lose its tax-exempt status.