If you’re the kind of person that thinks of ways to improve your community, maybe an Arkansas nonprofit corporation is a good place to start. Read on to find out the steps to form your nonprofit and how to apply for tax-exempt status.
Steps to Form an Arkansas Nonprofit Corporation
If you follow the steps described below, you’ll have your nonprofit corporation started in no time.
Select the initial directors
Arkansas requires nonprofits to have a board with at least three directors who aren’t related. In Arkansas, filing the list of initial directors is optional, but some banks require this filing before you can open an account.
Choose a name for your nonprofit corporation
Your name has to be different from other Arkansas registered corporate names and must be relevant to the purpose of the nonprofit. To see if a name is available, you can search the Arkansas corporate name database.
If you find that the name you want is available, you should make sure it follows state law. If you aren’t quite ready to form your nonprofit, you can reserve it for 120 days. Or, use ZenBusiness’s Name Reservation Service to prevent others from taking your name while you focus on other aspects of your nonprofit.
You may want to obtain a domain name for corporate email addresses and a website. A domain name similar to your chosen corporate name reinforces your brand and identity. Register your domain name with the ZenBusiness Domain Registration Service to secure it.
Choose an Arkansas registered agent
To incorporate in Arkansas, you need a registered agent with a physical address in Arkansas. The registered agent has to be able to receive legal documents and paperwork from the Secretary of State on behalf of the corporation during normal business hours. While you can act as your own registered agent, there are drawbacks. You risk the chance of being served legal papers in front of customers or employees, and have to worry about being in the same place during business hours. Avoid that hassle, and use ZenBusiness’s Registered Agent Service to take this off your plate so you can focus on helping others.
File Arkansas Articles of Incorporation
To file for incorporation as a nonprofit in Arkansas, you need the following information:
- Corporate name.
- Whether the corporation is for public benefit, mutual or religious benefit. If you’re planning to apply for tax-exempt status, your corporation will have to be for public or religious benefit.
- Whether the corporation will have members.
- The power of the corporation, dealing with corporate earnings. Earnings must not benefit directors or members if the corporation is to be tax-exempt.
- The purpose of the corporation.
- Distribution of assets upon dissolution.
- The name and street address of the registered agent.
- The names, addresses, and signatures of one or more incorporators.
- The names and addresses of the initial directors (optional).
You can find more information on the Arkansas Secretary of State’s website.
Create corporate bylaws
Bylaws detail how you’ll run the nonprofit. They specify how meetings will be run, what responsibilities the directors have, and the nonprofit’s purpose. They also set down how new directors are elected, removed, or resign, as well as how long their terms are.
Hold organizational meeting of the board of directors
The initial meeting of the board votes to approve the bylaws and any other actions the incorporators have taken or want to take like opening a bank account. The directors elect or appoint officers such as president, vice president, treasurer, and secretary. You’ll decide your tax and fiscal year, create a conflict of interest policy, and designate someone to record the minutes at meetings.
Set up corporate records
Nonprofits have to keep good records to maintain their tax-exempt status. Set up a corporate records binder or use online storage such as the cloud. Records have to include the incorporation documents, bylaws, and minutes of meetings of the board of directors.
Get your tax ID numbers
To hire employees and open a bank account you need a federal tax ID number called the Employer Identification Number (EIN). You can get one through the IRS or use the ZenBusiness EIN Service and save yourself time.
Apply for all Arkansas licenses and permits
It’s the responsibility of the nonprofit to determine what licenses and permits it requires. Since there’s no way to be sure you have all federal, state, and local licenses or permits, check with the ZenBusiness License Report Service to verify what your nonprofit may need.
Apply for tax-exempt status
If you’re planning to become a tax-exempt (501)(c)(3) corporation, you should check for the required wording on the IRS’s website. The form used to apply for exempt status is form 1023. There’s a long version and a short one. Fill out the one that best meets the needs of your nonprofit. Read the directions carefully so you include everything they need to make sure your application process goes as smoothly as possible.
Register as a charity
After you receive your letter of determination confirming your status under section 501(c)(3), you’re officially a tax-exempt nonprofit corporation. Now, you have to apply to register as a charity with the Arkansas Secretary of State.
Obtain insurance coverage
If your nonprofit has more than three employees you must have worker’s compensation insurance. You’ll also need unemployment insurance. Depending on the type of nonprofit you have, you may need insurance to cover vehicles, property, or director liability. Check with a qualified insurance agent to get the coverage you need.
Open a bank account
Your banking services depend on the type of nonprofit you have. Shop around for the best combination of features and monthly cost. Make sure you know who’s authorized to sign and how many signatures are needed. You’ll need your EIN and Articles of Incorporation. Call ahead to find out if there’s anything else they’d like you to have on hand when you open the account.
Foreign (out-of-state) Arkansas nonprofit corporations
Arkansas designates all nonprofits not incorporated in the state as foreign (out-of-state) corporations. If you’re incorporated elsewhere and want to carry out activities within Arkansas, you may have to apply for a Certificate of Authority from the Arkansas Secretary of State. It depends on the kind of activity you’re planning, so check first.
Ready to Kick Start Your Business?
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service, want to reserve a business name, or looking to register a domain, our goal is to help you stay on the road to success. Check out our services, and contact us today to see how we can help you grow your company.
Arkansas Nonprofit Corporation FAQs
Can the founder of an Arkansas nonprofit receive a salary?
A founder can receive a salary as long as it’s not excessive and they work as an employee of the nonprofit.
What happens if a nonprofit makes money in Arkansas?
If your nonprofit makes money, you have to reinvest it into the nonprofit.
What kinds of businesses can be a nonprofit in Arkansas?
Nonprofits in Arkansas have to be operated for public benefit or for religious purposes.
Can Arkansas nonprofits sell products?
Yes. Any surplus from the sale has to go towards supporting the nonprofit activities of the corporation.