There are more than 30,000 nonprofit organizations in Missouri. Some of the most popular public charities in the Missouri nonprofit sector striving for the greater good of the community are Butterfly Haven, Inc., Callaway County United Way Inc, and Foundation for Photo/Art in Hospitals.
Anyone is free to start a nonprofit organization in the state of Missouri as long as you can confirm the need for your organization. Aside from advancing the greater good of the community, when you create a nonprofit organization, your organization will enjoy certain benefits such as:
- Tax exemption
- Credibility with the IRS
- Discounted postage rates
- Limited liability
Unlike for-profits, nonprofits aim to meet a need in the community, and these organizations are not developed to generate a profit for founders or nonprofit members.
Starting a nonprofit in the state of Missouri can take as little as two weeks or as long as three months, depending on whether or not you have filed the relevant forms and complied with federal and state laws.
The following step-by-step guide will show you how to go about starting a nonprofit in the state of Missouri.
1. Select a name for your organization
Determining a name for the Missouri nonprofit organization is one of the main steps in getting your nonprofit up and running. Considering that the organization’s name is also its brand, you should opt for a name that is descriptive, unique, straightforward, and can be found by potential donors.
You may also choose to include a designation in your nonprofit name, such as Company, Inc., or Corporation. When naming your Missouri nonprofit, ensure that it is easily distinguishable from other businesses registered in the state.
To ensure that the name is available in the state of Missouri, conduct a name search on the Missouri Secretary of State website.
Checking the domain availability is also recommended if you plan to create a website to boost your nonprofit’s online visibility.
2. Nominate a Missouri registered agent
Every Missouri nonprofit organization will need to have a business point of contact with the state. This point of contact is referred to as a registered agent.
The registered agent is the person responsible for accepting service of process on behalf of the nonprofit corporation.
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You may nominate anyone as a registered agent provided they meet the following requirements:
- They must reside in Missouri
- They must be over the age of 18
- They must maintain normal business hours
- They must consent to the appointment
- They must have a registered street address in the state of Missouri
You may choose to point yourself as your nonprofit’s own registered agent.
3. Recruit your board members
Your Missouri nonprofit needs to have directors, officers, and incorporators. The incorporator is responsible for signing the Articles of Incorporation. You only need to nominate one individual as an incorporator.
Incorporators must be at least 18 years of age or older, and your incorporator cannot be amended later. Therefore this decision is permanent. The incorporator is responsible for not just delivering the Articles of Incorporation but certain legal documents as well. The incorporator’s name and address must be provided in writing.
Next, you’ll need to select a board of directors who will serve as the nonprofit organization’s governing body. The board of directors is in charge of creating and adopting the nonprofit’s bylaws and implementing key decisions on an ongoing basis.
You are required to nominate at least three directors, including officers who will fulfill the roles of president, secretary, and treasurer.
There are no residency requirements for your board of directors; however, they must act in the best interest of the nonprofit organization at all times.
4. Consent to bylaws and conflict of interest policy
In order to register your Missouri nonprofit organization, you’ll need to prepare and adopt bylaws. The bylaws are governing documents that determine how the organization will operate internally.
While there are state and IRS guidelines on how to go about compiling bylaws, certain things will be left up to your Board of Directors.
Your bylaws, however, must include the following:
- Provisions for selecting new officers and directors
- Evergreen information as amending your bylaws at a later stage can prove to be tedious
- Your bylaws should also contain some flexibility on when board meetings are held, etc.
- Carefully consider the wording in your bylaws as words such as “shall” means that your organization is obligated to do something, whereas using “will consider” or “may” is considered more flexible
Additionally, while the bylaws should have some flexibility, they should not be so flexible that they lack routine and structure.
Secondly, you need to include a Conflict of interest policy. This Conflict of interest policy or nonprofit guidelines is set in place so that the board acts in the nonprofit’s best interest at all times and not in the personal or business interests of the individual members of the board.
5. Select a Missouri nonprofit startup corporation structure
Missouri has various types of nonprofits or organizational structures, but they usually fall under one or more of the categories below:
- Mutual benefit common interest development corporations: These are the organizational formations created under the Davis Stirling Common Interest Development Act to administer common interest development, such as a homeowner’s association.
- Religious organizations: These types of nonprofit structures are intended purely for religious purposes like synagogues, places of worship, and churches
- Mutual benefit organizations: This type of organizational structure is a type of nonprofit much like other mutual benefit nonprofits. Their purpose is for the greater good, but of a specific group and not the general public.
Nonprofits under the mutual benefit category have members, and these members are charged monthly or yearly fees. This is how these types of nonprofits raise funds. The money is then used to benefit the paying members since dividends are expected. An example of this type of organization is a union. These existing organizations may choose to apply for state and IRS tax-exemptions, but it is not compulsory.
- Public benefit corporations: Public benefit nonprofit organizations are the most popular type of nonprofit corporation and are formed for charitable purposes. Therefore, they are referred to as public charities. They are meant to benefit a part of the public, meet a need, or target a specific community.
Some of the different types of charitable corporations that fall into this category are educational programs, artistic ventures, and social welfare services.
6. Prepare and file nonprofit Articles of Incorporation
Your nonprofit must file Articles of Incorporation. This should be filed with the Missouri Secretary of State – Corporations Division in order to legally register the organization in the state. The articles are important documents that capture information on when and where the organization was formed, and the requirements may vary from state to state.
However, there are some basic provisions that the IRS will keep an eye out for, especially when you apply to be an exempt organization. These provisions may be found on the IRS website.
Therefore, it is recommended that you customize your articles according to your nonprofit and ensure that they meet both IRS and state requirements. The Articles of Incorporation play a crucial role in tax exemption eligibility and therefore should clearly and openly state the following:
Your organization’s purpose must be clearly stated and also bound to one of the below categories:
- Preventing cruelty to animals and children
- Testing for public safety
- Fostering national/international amateur sports competition
Every organization has assets, resources, or possessions, and your articles will need to state exactly what these resources are used for. It should also state what will transpire if the nonprofit is dissolved. The resources of the organization should only be used for grounds that are sanctioned under section 501(c)(3).
7. File an initial report
Missouri nonprofits are required to file an initial report after filing the Articles of Incorporation. The initial report must be filed with the Missouri Secretary of State – Corporations Division.
Anyone with authority may file the initial report, and original signatures are not a requirement.
The initial report is due within 30 days of registration; however, as per common practice by the Secretary of State, the due date can be extended to three months after the month of registration.
8. Secure an EIN (Employer Identification Number)
An EIN or Employer Identification Number is something that all Missouri nonprofits will need to apply for. The EIN is a nine-digit number that is assigned by the Internal Revenue Service to identify your nonprofit organization.
When applying for an EIN, complete IRS Form SS-4 and submit it to the Internal Revenue Service. Online applications are recommended as your EIN will be issued immediately when applying using this method.
Some of the benefits of an EIN includes having the option to:
- Hire employees for your Missouri nonprofit
- Submit 990 returns to the Internal Revenue Service
- Open a nonprofit bank account
- Apply for tax-exempt status
9. Apply for federal tax exemption
All nonprofits in Missouri need to apply for federal tax exemption under the Internal Revenue Code. The benefits of federal tax exemption include:
- Limited liability
- Credibility with the IRS
- Discounted postage rates
- Access to private and government grants
- The ability to accept tax-deductible donations from sponsors
Before your nonprofit organization may apply for 501(c)(3) tax exemption, you’ll need to recruit at least three directors for your nonprofit organization, adopt the Conflict of interest policy and Bylaws, file the Articles of Incorporation, and have already obtained an EIN.
In order to apply for federal income tax exemption, your Missouri nonprofit organization will need to complete and file Form 1023 with the IRS. Small business organizations may complete Form 1023-EZ, a much simpler and more streamlined application form for smaller nonprofits.
All nonprofit organizations that are granted tax-exempt status will receive a determination letter from the Internal Revenue Service.
10. Apply for Missouri state tax exemption
Missouri nonprofits that have already received their IRS determination letter need not apply for state income tax. Additionally, nonprofits that file IRS Form 990 do not need to apply for corporation income tax in the state of Missouri.
However, if you would still like to apply for sales tax exemption for your Missouri nonprofit, you may do so by filing Form 1746 with the Missouri Department of Revenue.
11. Other applicable permits and licenses
The business licenses and permits required for nonprofits vary from state to state. This is why we suggest you read over the US Small Business Administration Guide that outlines state and federal permits and licenses.
Certain activities conducted by charitable organizations may require additional licenses. So feel free to check with the US Small Business Administration website to determine whether you need to obtain additional licenses and permits prior to getting your nonprofit off the ground.
Additional state registration and reporting requirements
Before undertaking to fundraise in the state of Missouri, your nonprofit must register with the Missouri Attorney General.
Irrespective of whether you plan to raise funds or undertake charitable solicitation, you’ll need to register with the Office of the Attorney General. Thereafter, you may participate in legal fundraising from sponsors.
12. Submit an annual report
Your Missouri nonprofit organization will need to submit an annual report to the state. The annual report needs to be submitted each year or every other year to the Missouri Secretary of State Corporations Division.
Costs of starting a new nonprofit in Missouri
The filing fees below apply to all Missouri nonprofits:
- Filing Articles of Incorporation: $25
- Applying for tax exemption or 501(c) status: $275 or $600 IRS fee
- Missouri Charitable Registration: $15
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.
If an existing nonprofit organization shares your organization’s mission, then there are many advantages to pursuing partnerships with them. Some of these advantages include saving on administrative costs, improving the range of services, increasing brand exposure, adding on new leadership, and bringing about new ideas.
The employees of nonprofit organizations are the most obvious stakeholders. Additionally, they are a powerful force when it comes to creating a successful nonprofit organization. Therefore, employees should feel free and empowered to contribute to the nonprofit in terms of ideas, relationships, and feeling valued in the decision-making process.
Private foundations are considered legal entities which are independent and set up purely for charitable purposes. However, funding for private foundations is derived from a single individual or corporation, whereas public charities depend on public fundraising efforts to support their activities.
Nonprofit organizations are not established to make a profit but rather to operate for the greater good of the public or serve a specific public purpose. This is why most nonprofit organizations who qualify for tax exemption do not pay federal income taxes and various other types of state taxes.
The amount of time it takes to start a nonprofit organization will depend on a number of factors. The requirements and laws vary from state to state, so it is important to complete the relevant and correct paperwork and do so correctly to avoid costly delays and rejections.