Starting a non-profit
Read on for key information when starting a nonprofit in Kentucky.
501(c)(3) and other non-profits
Multiple non-profit types are recognized in Kentucky: charitable, educational, religious, scientific, healthcare, veterans, and others. None qualifies for tax-exempt status from federal and/or state taxes automatically.
501(c)(3) corporations enjoy federal tax exemption. To achieve this status, Kentucky non-profit organizers need to file Form 1023, the Application for Recognition of Exemption to the IRS and pay a filing fee tagged to annual revenues.
Considerations in creating a non-profit
- Assets or property at risk in legal proceedings or creditor claims belong to the corporation and attach only to corporate assets and property, not to personal property belonging to trustees, officers, or managers
- Incorporation creates a legal protection buffer between the corporation, on one hand, and trustees, officers, and members in management, leadership, and governance, on the other.
- Non-profits may qualify for tax-exemption.
- Significant time and effort expenditures are involved in planning new nonprofits.
- Time and money requirements for Kentucky incorporation and meeting filing requirements can be prohibitive.
- If control, autonomy, and independence in corporate governance are key attributes for you, then non-profit status is not well-suited to your purposes.
Requirements and mandatory forms for creating non-profits
When creating a Kentucky nonprofit, you must meet several requirements. Here is a roadmap:
- File Articles of Incorporation with the Kentucky Secretary of State's Office using the official form.
- Continuously maintain a Registered Office, as disclosed in filings.
- File a Statement of Consent of Registered Agent with the Secretary of State, using the official form.
- Continuously maintain a Registered Agent, as disclosed in filings.
- File any change in Registered Office or Registered Agent with Kentucky's Secretary of State immediately.
- File an Annual Report yearly.
To operate and form a Kentucky not for profit, file these mandatory documents:
- Articles of Incorporation
- Statement of Consent of Registered Agent
- Reservation or Renewal of Reserved Name (if applicable)
- Certificate of Assumed Name (if applicable)
- Annual Report
Retaining your Kentucky not for profit status
Not for profit organizers initially focus upon securing nonprofit status. After accomplishing that goal, focus shifts to retaining that status. We understand those concerns and assist you in meeting requirements to retain your non-profit status:
- Articles of Incorporation: File form and two copies with Commonwealth of Kentucky, Secretary of State's Division of Business Filings, Business Filings, P.O. Box 718, Frankfort, KY 40602-0718, with $8.00 filing fee. File one file-stamped copy of Articles with the clerk in the county where the nonprofit's registered office is located.
- Statement of Consent of Registered Agent: File form that conveys signatory's consent to act as registered agent for disclosed entity with the Secretary of State's Division of Business Filings. No filing fee.
- Reservation or Renewal of Reserved Name: File form that applies to reserve or renew a corporate name with the Secretary of State's Division of Business Filings, with a $15.00 filing fee.
- Certificate of Assumed Name: File form that applies to assume a name under which business will be conducted, with a $20.00 filing fee.
- Annual Report: Nonprofits must file their first Annual Reports with the Office of the Secretary of State between January 1 and June 30 of the year after the calendar year in which they were formed.
Tax exemption status and related benefits
After completing mandatory tasks for achieving nonprofit status, there are additional requirements to acquire and retain tax-exempt status (being a nonprofit does not equate to earning tax-exempt status):
- To obtain status as a 501(c)(3) corporation, a Kentucky non-profit must file Form 1023, the Application for Recognition of Exemption with the IRS; P.O. Box 12192; Covington, KY 41012-0192. Filing fee is $850 unless annual revenues are below $10,000. If lower, filing fee reduces to $400.
- Tax-exempt status has federal and state components. 501(c)(3) is the federal component with the IRS for income taxes.
- To retain tax-exempt status, file Form 990-N, Form 990-EZ, or Form 990 with IRS, based on receipts for annual gross income.
- For state tax-exemption, nonprofits must register with the Kentucky Department of Revenue by submitting Form 10A100-1 to P.O. Box 299, Station 20, Frankfort, KY 40602-0718. Under state law, federally tax-exempt entities are exempt from Kentucky's Corporate Income Taxes.
- To obtain sales tax exemption on purchases of tangible personal property or services to be used within the exempt functions of the entity, 501(c)(3) corporations may submit Form 51A125, with a copy of their Determination Letter from the IRS and Articles of Incorporation to Sales and Use Tax Section, Revenue Cabinet, P.O. Box 1274, Frankfort, KY 40602-1274.
What it costs to form a non-profit in Kentucky
As a non-profit in the 'Bluegrass State,' it costs $8.00 to file Articles of Incorporation with the Secretary of State's Office.
Kentucky and national non-profit resources
The Commonwealth offers online resources to assist your not for profit:
- Kentucky Nonprofit Network: The association is a statewide resource for board members, staff, leaders, advocates, and others that exists to serve, strengthen, and support nonprofits by offering assistance with governance, planning, accountability, fundraising, communications, volunteers, and technology.
- Center for Nonprofit Excellence: The Center of 400 members offers nonprofits a central informational access point for exchanging ideas on best practices, consultation, and professional development.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.