When anyone starts a nonprofit organization, they can use their education, business talent, and experience for the good of humanity. So while there are tangible rewards to starting a nonprofit organization in Kansas, this kind of purpose-driven experience brings forth intangible benefits that are often more valuable than any amount of wealth.
The state of Kansas has approximately 18,406 nonprofit organizations in the nonprofit sector. Some of the most popular Kansas nonprofit organizations are Fundamental Learning Center Inc, Variety Children’s Charity of Greater Kansas City, and Star of Hope International America Inc.
Getting a nonprofit organization up and running may take as little as two weeks or as long as three months, as long as you have filed the necessary documentation and have all your paperwork in order.
The following step-by-step guide will give you an idea of what it entails to start a nonprofit in Kansas.
1. Select a name for your organization
Every nonprofit needs a name and the first step in starting a Kansas nonprofit corporation is choosing a name for the organization. The name of the organization cannot be the same as any other nonprofit or for-profit in the state of Kansas or any other nonprofit name filed with the Kansas Secretary of State.
Therefore, to check the availability of the Kansas nonprofit name, refer to the BEES or Kansas business entity search station.
Additionally, the name of the Kansas nonprofit must include the following designations:
If it does not include the above-mentioned designations, then it must include one of the following abbreviations:
The name of the Kansas nonprofit must also be written in Roman letters or characters.
2. Nominate a Kansas registered agent
Every nonprofit organization in the state of Kansas must choose a registered agent. The role of the registered agent is to receive legal documentation and service of process on behalf of the Kansas nonprofit.
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Ultimately, the registered agent is a business point of contact with the state of Kansas. You may appoint anyone as a registered agent; however, they must meet the following requirements:
- Must reside in the state of Kansas
- Must be at least 18 years of age
- Must maintain normal office hours
- Must agree to the appointment
You may nominate anyone as the nonprofit’s point of contact with the state, including yourself.
3. Recruit your board members
The next step in creating your Kansas nonprofit organization is nominating the initial members of the organization’s governing body.
You need to select at least three directors for the nonprofit organization who are unrelated to each other, and at least one officer will record or make notes of detailed records of meetings.
You also need to elect a president and secretary for the Kansas nonprofit, and these individuals are known as the officers of the nonprofit organization.
These individuals will make up your nonprofit’s board of directors. Aside from helping to write the Articles of Incorporation, they will also help to compile the bylaws.
4. Consent to bylaws and conflict of interest policy
The bylaws and conflict of interest policy are two important documents that your nonprofit will need to compile in order to be eligible for 501(c)(3) tax exemption.
The bylaws is a document that specifies the governing procedures and rules that the nonprofit must abide by when taking care of corporate formalities such as holding meetings and electing directors and officers for the nonprofit organization.
A collection of rules to ensure that the nonprofit’s decisions made by the board of directors benefit the organization and not individual members’ agendas is referred to as the conflict of interest policy.
The organization must adopt the conflict of interest policy and bylaws at the first board meeting where the officers and directors are officially nominated.
5. Select a Kansas nonprofit startup corporation structure
Kansas consists of various types of nonprofits or organizational structures, but they usually fall under one or more of the following categories:
- Religious organizations/corporations: These nonprofits are solely for religious purposes, such as synagogues and churches.
- Mutual benefit common interest development corporations: These are the nonprofit formations created under the Davis Stirling Common Interest Development Act to administer common interest development, such as a homeowner’s association.
- Mutual benefit corporations: This type of nonprofit structure is a type of organization much like other mutual benefit corporations found in common law nations. They work for the greater good of a particular group and not the general public.
Organizations under the mutual benefit category raise money by normally charging their members monthly or annual fees. The funds are then used to benefit the paying members as dividends are expected. Unions are an example of a mutual benefit corporation. These corporations may or may not opt for state and IRS tax-exemptions.
- Public benefit corporations: Public benefit nonprofit organizations are created for the purposes of charity and are the most popular type of nonprofit. They are meant to benefit a part of the public or target a specific community.
Some of the types of charitable organizations that fall into this category are educational programs, social services, and artistic endeavors.
6. Prepare and file nonprofit Articles of Incorporation
Every Kansas nonprofit organization is expected to file Articles of Incorporation. The Articles of Incorporation is what officially marks the formation of your nonprofit.
The articles will document when and where the organization was formed and capture all the information necessary to verify the nonprofit’s existence.
The Articles of Incorporation must be customized to your Kansas nonprofit and should also meet state and IRS requirements to ensure that you are eligible for federal tax exemption.
Your articles must contain two specific statements, which are:
In order to register your nonprofit with the Internal Revenue Service and be eligible for 501(c)(3) tax-exempt status, the organization’s purpose must be clearly stated and limited to the following categories:
- Testing for public safety
- Fostering national/international amateur sports competition
- Preventing cruelty to animals
Your Kansas nonprofit’s Articles of Incorporation must state explicitly what the assets of the organization are going to be used for and, in the event of dissolution, what’s going to happen to these assets.
In order to be approved tax exemption in the state of Kansas, your organization’s assets must never be used for anything other than what’s approved under section 501(c)(3).
Use this sample IRS document to learn more about the provisions required for tax-exempt status in Kansas.
7. File an initial report
You won’t need to file an initial report for your Kansas nonprofit as it is not required by law.
8. Secure an EIN (Employer Identification Number)
An EIN is required in the state of Kansas by all nonprofit organizations. An EIN is an Employer Identification Number and is required by all nonprofits irrespective of whether you plan on hiring employees or not.
In fact, it is considered a social security number for your nonprofit and is used by the IRS to identify a business entity. The EIN is also useful when it comes to:
- Opening a business bank account for your Kansas nonprofit
- Hiring employees
- State and federal tax purposes
To obtain an EIN, you’ll need to complete IRS Form SS-4, which is free of charge.
Once completed, submit it online via the IRS website, and your EIN will be provided immediately.
9. Apply for federal tax exemption
All public charities are required to apply for 501(c)(3) tax exemption as per Internal Revenue Code in the state of Kansas. Tax exemption does come with many benefits, including:
- Enjoying lower postage rates when you mail more than 250 similar copies of mail
- Officers and directors of NPO’s that have obtained 501(c)(3) status can take advantage of limited liability for the operation of the nonprofit
- Access to both private and government grants
- Discounts offered by certain stores and businesses to nonprofits and employees
- Free public service announcements on radio and TV
- Permanent tax exemption as 501(c)(3) status will never need to be renewed
- Tax-deductible donations
In order to be eligible for 501(c)(3) status, the Kansas nonprofit must have already completed the following processes:
- Obtained an EIN
- Adopted conflict of interest policy and bylaws
- Filed Articles of Incorporation
- Elected three directors who have no relation to each other
When putting in your federal tax exemption application, you’ll need to complete IRS Form 1023. Small organizations or small businesses may choose to file Form 1023-EZ, a much simpler and shorter application form with quicker processing times.
Once completed, you must file the relevant form with the Internal Revenue Service and wait for the application to be approved.
Once the application has been accepted and approved, you’ll receive a determination letter. This letter makes you a tax-exempt organization or one of the existing organizations with 501c3 status, and you’re free to enjoy all of the benefits that come with it.
10. Apply for Kansas state tax exemption
Once the Kansas nonprofit has received their Determination letter, they are automatically free from state and federal income tax. However, you will still need to file to obtain sales and use tax exemption with the Kansas Department of Revenue.
File the relevant application Form or template online and submit it to the Kansas Department of Revenue. Please note that not all 501(c)(3) nonprofits are eligible for this exemption, and you need to use the online system to file for the exemption.
11. Other applicable permits and licenses
Since the range of requirements varies on federal, state, and local levels, you should access the Small Business Administration Business License and Permit Lookup tool to search your Kansas nonprofit type and locality.
Additional state registration and reporting requirements
Depending on the size of the nonprofit and the activities you plan on running, you may or may not need to register with the Kansas Attorney General before attempting to raise funds or participate in charitable solicitation. Refer to the Kansas Attorney General website for additional rules and further information about Kansas fundraising registration requirements.
12. Submit an annual report
Nonprofits operating in the state of Kansas are required by law to file an annual report each year with the Kansas Secretary of State Business Services Division. The annual report must be filed on the 15th day of the 4th month after the end of the taxable year.
Your annual report must include the following information:
- Business name
- Business ID number
- Principle address
- Name of the state that your nonprofit was formed in
- Names and addresses of officers and directors
- A brief statement of purpose
- Name, contact number, and signature of the individual filing the annual report
Once completed, file your annual report on the Kansas Secretary of State website.
Costs of starting a new nonprofit in Kansas
The following filing fees are applicable to all Kansas nonprofit organizations:
- Articles of Incorporation: $20 + optional $20 expedite fee
- 501(c): $275 or $600 IRS fee
- Kansas business tax registration: varies based on tax accounts/licenses
- Kansas Charitable Registration: $35
Payments can be made via Pay.gov.
After you’ve started your nonprofit, there are a few necessary steps that you should take to keep your organization running smoothly. Let’s take a closer look at them below:
Open a business bank account
- Maintain accounting and tax filing
- Ensure that your personal assets are kept separate from your nonprofits’ assets
To open a bank account, you will need to provide:
- Your EIN
- A copy of your articles of incorporation
- A copy of your organization’s bylaws.
Hire a business accountant
- Simplify payroll and bookkeeping
- Prevent your nonprofit from avoiding penalties and tax errors
- Manage your nonprofit’s funding
- Focus on growing your nonprofit
- Manage risks
You may opt for General liability, Personal liability, or Worker’s compensation insurance.
Build a website
As we mentioned earlier, you may want to create a website for your organization to legitimize your business or give it more credibility. A dedicated website is also one of the best ways to share your nonprofit’s vision, mission, and story with supporters. Consequently, it’s also a great way to announce upcoming events and goals.
Sign legal documents
One aspect that tends to get overlooked is signing legal documents in your personal capacity instead of as an authorized representative of your nonprofit.
If you’ve appointed yourself as a registered agent of the nonprofit, then the following tips will help avoid personal liability:
- State the registered name of your nonprofit
- Use your name and signature
- State your position/role in the organization as its authorized representative
When signing legal documents on behalf of the nonprofit, it is important that you do so in your capacity as the registered agent, as opposed to your capacity as an individual.
Example: Instead of signing your name only, state the name of the nonprofit and then your name and position within the organization before signing.
An organization’s mission statement is essentially a description of why the organization exists and exactly what it hopes to achieve by existing. Additionally, the mission statement may include how the organization hopes to achieve its impact and what resources it finds most valuable in achieving its mission. The mission statement is a guide for nonprofit members and stakeholders and should be included in the nonprofit’s business plan.
Nonprofit organizations in Kansas must fulfill a number of requirements to attain 501(c)(3) tax exemption eligibility. This is as per the Internal Revenue Code. However, the most important requirement is that the nonprofit must be operated and formed solely for exempt purposes that fall under section 501(c)(3). All organization proceeds must be used to further the nonprofit’s cause.
Private foundations are nonprofit charitable entities that single benefactors typically create, and the funds gained by the private foundation are normally derived from a single source. On the other hand, a public charity uses funds collected from the public to support its cause. The only substantive difference between the two is the manner in which funds are acquired.
The short answer is yes. Most nonprofits choose to elect just one president, but if you plan on having two, all you need to do is adopt bylaws that allow for two people to be co-presidents. They will then share the nonprofit duties.
The executive director is responsible for making operational decisions that affect the nonprofit organization and its purpose. Ultimately, the executive director should be an individual fully committed to the organization’s cause and must drive the corporation’s mission.