A fraternity is a non-profit organization led by a mission or purpose statement to provide intellectual, personal and social development for college-aged men. Fraternities typically work in unison to perform community service projects and sponsor social gatherings for university students. A fraternity can incorporate as a new chapter or as a local chapter under an established grand chapter. A fraternity is not required to incorporate for operation, but in order to avoid paying corporate federal taxes and to gain university funding, the fraternity must prove its not-for-profit status. However, your fraternity may have to pay unemployment and Social Security taxes if it employs workers.
Secure a resident agent, which is a responsible adult of legal age willing to accept served legal notices in the event the fraternity experiences legal troubles. A resident agent can help your fraternity comply with state requirements. A fraternity member can't serve as the resident agent; the resident agent must operate outside of the fraternity.
Obtain an articles of incorporation form for a tax-exempt non-stock corporation from your secretary of state's office or state department of assessments and taxation's website or local office. These two state departments typically handle corporations.
Complete the articles of incorporation form with the fraternity's name, purpose and street address of the principal office or fraternity house. The description should provide a one- to two-sentence overview of your fraternity's educational purpose and commitment to service.
Ask the resident agent to sign the form along with all fraternity members or incorporators. If the form provides insufficient space for signatures, attach an additional sheet of signatures and reference the original section on the form.
Return the form to the secretary of state or department of assessments and taxation and pay the required filing fee.
Mail a copy of your state certificate of incorporation to the grand chapter of your fraternity if you filed to incorporate a local chapter under an established fraternity.
Obtain a SS-4 form from the Internal Revenue Service site to apply for a federal employer identification number (FEIN). The FEIN allows the fraternity to open a bank account for chapter dues and other financial transactions, and this number exempts the fraternity from paying federal corporate taxes.The fraternity still must withhold federal income tax for employees and pay Social Security tax and unemployment tax and any applicable state taxes. If your fraternity falls under an established chapter, send this number to the grand chapter for tax-exemption purposes.
Tips & Warnings
- Even if your fraternity is exempt from federal corporate taxes, you may still have to file an annual tax return with the IRS. Contact your secretary of state office to determine if your fraternity has to file an annual return regardless of it's tax-exempt status.
- Tau Kappa Epsilon Fraternity: What Is an Incorporation
- Maryland State Department of Assessments and Taxation: Articles of Incorporation Form
- Northwestern University: Purpose of Fraternities and Sororities
- University of Illinois at Urbana-Champaign: Office of the Dean of Students Frequently Asked Questions
- Tau Kappa Epsilon Fraternity: Taxes
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