Most nonprofits are 501(c)(3) organizations, which means they are formed for religious, charitable, scientific, literary, or educational purposes and are eligible for federal and state tax exemptions. To create a 501(c)(3) tax-exempt organization, first you need to form a Missouri nonprofit corporation. Then you apply for tax-exempt status from the IRS and the state of Missouri. Here are the details.
Create Your Missouri Nonprofit Corporation
1. Choose who will the initial directors on your board
In Missouri, your nonprofit corporation must have three or more directors.
2. Choose a name for your Missouri nonprofit corporation
The name of your nonprofit corporation must be distinguishable from the name of any other business entity on file with the Missouri Secretary of State. To see if your proposed name is available, you can search Missouri's name database on the Secretary of State’s website.
3. Prepare and file your nonprofit articles of incorporation
You will need to create and file nonprofit articles of incorporation with the Missouri Secretary of State’s office. The articles of incorporation contain basic information about your nonprofit, including:
- its name
- whether it is a public benefit or mutual benefit corporation
- the street address of its initial registered office and the name of its initial registered agent at that office
- the name and address of each incorporator
- whether it will have members, and
- a statement regarding distribution of assets upon dissolution.
See RSMo 355.096 for more on requirements for nonprofit articles of incorporation.
The Secretary of State has a fillinable nonprofit articles of incorporation form on its website which you can use to create your Missouri nonprofit corporation. The articles form does not include certain language required by the IRS to obtain your federal tax-exempt status. The instructions to the form on the Secretary of State’s website has the language you need to add to your articles for IRS purposes. This additional language includes provisions related to:
- inurement of income
- legislative and political activities
- operational limitations, and
- a dissolution clause.
Be sure to include this language in the articles you create. For more information on IRS requirements for tax exemption, see IRS Publication 557, Tax-Exempt Status for Your Organization, available on the IRS website.
Follow the instructions included with the form on the Secretary of State’s website for completing and filing your nonprofit articles of incorporation.
4. Prepare bylaws for your Missouri nonprofit corporation
You'll need to prepare bylaws that comply with Missouri law and contain the rules and procedures your corporation will follow for holding meetings, electing officers and directors, and taking care of other corporate formalities required in Missouri. Your bylaws do not need to be filed with the Missouri Secretary of State -- they are your internal operating manual.
For more information, see Nolo's article Nonprofit Formation Documents: Articles of Incorporation, Bylaws, and Organizational Minutes. For help creating your bylaws, see Nolo's book How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
5. Hold a meeting of your board of directors
Your first board meeting is usually referred to as the organizational meeting of the board. The board should take such actions as:
- approving the bylaws
- appointing officers
- setting an accounting period and tax year, and
- approving initial transactions of the corporation, such as the opening of a corporate bank account.
Be sure to keep minutes that accurately record your board’s actions.
6. Set up a corporate records binder
You should set up a corporate records binder for your nonprofit to hold important document such as articles of incorporation, bylaws, and minutes of meetings. For more information, as well as minutes forms, consent forms, and other resolutions, see Nonprofit Meetings, Minutes & Records, by Anthony Mancuso (Nolo).
Obtain Your Federal and State Tax Exemptions
Now that you have created your nonprofit corporation, you can obtain your federal and Missouri state tax exemptions. Here are the steps you must take to obtain your tax-exempt status:
1. File your Form 1023 federal tax exemption application.
To obtain federal tax-exempt status from the IRS, you will need to complete and file IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. This long and detailed form asks for lots of information about your organization, including its history, finances, organizational structure, governance policies, operations, activities, and more. For line-by-line instructions on how to complete the Form 1023, see How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
Smaller nonprofits may be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. This is a much simpler, shorter form that is filed online. Only smaller nonprofits--those with projected annual gross receipts of less than $50,000 and total assets of less than $250,000--are eligible to use the streamlined 1023-EZ application.
See the IRS website for more information on the Form 1023 and Form 1023-EZ filing requirements.
2. Obtain your Missouri state tax exemptions
Once you have your federal tax exemption, you need to obtain your Missouri state tax exemptions. In Missouri, you are automatically exempt from state corporate income tax when you obtain your 501(c)(3) tax-exempt status. You will need to check with the Missouri Department of Revenue to find out the requirements for sales and property tax exemptions.
3. Other state reporting and registration requirements.
Depending on your activities and the size of your organization, you may need to register with the Missouri Attorney General before doing any fundraising activities. Check the Missouri Attorney General’s website for additional rules.
Last updated November 2014.