In this guide, we’ll break down all the steps and show you how to apply for tax-exempt status.
Directors are the people who govern your Ohio nonprofit corporation. Together, they make up its board.
To meet IRS guidelines for tax exemption, your new nonprofit should select three or more directors. Consider choosing directors with skills that will complement each other and serve your nonprofit’s overall mission.
As you ponder what to name your nonprofit, keep Ohio’s restrictions in mind. To comply, pick a name that is unique and not already in use. At the end of your name, include one of the following:
Ohio Nonprofit Corporation Law, Chapter 1702, also permits “any abbreviation of those words.” Note that if you choose “company,” you can’t use “and” or an ampersand immediately before the word “company.”
Next, search Ohio’s database to see whether your name is taken or not. The government maintains a list of all registered entities, so it’s easy to see if your desired name is similar to an existing business or charity. If it’s available, you can put a hold on it until you’re ready to file for incorporation. Names are held for 180 days in Ohio, and the fee is $39.
To form an Ohio nonprofit corporation, you must select a statutory agent. The statutory agent accepts a nonprofit’s legal notices and forwards them and other official documents to the nonprofit’s contact person. An agent must be an Ohio resident, 18 or older, with a physical address in Ohio, who is available during normal business hours. Note that in other states, a statutory agent is usually called a registered agent.
You can be your nonprofit’s statutory agent, but this means you’ll have to be available during regular business hours, or you could miss a crucial legal notice, such as a subpoena related to a pending lawsuit. Many people prefer to avoid the hassle and hire a professional services company to do the work for them. Sign up for ZenBusiness’s registered agent service and never worry about missing a legal notice.
By filing your Articles of Incorporation, you’ll legally form your Ohio nonprofit corporation. First, decide which filing form you need. This depends on whether your nonprofit is domestic or foreign. Domestic means your nonprofit will be created and will operate in Ohio. Foreign means that your corporation will operate in Ohio but was created in another state.
For a domestic corporation, fill out Form 532B. For a foreign corporation, fill out Form 530B. The filing fee is $99 for either form plus an additional $100-$300 for optional expedited processing.
To be approved as a nonprofit, you must add specific clauses to your Articles of Incorporation. You can see examples of the federal requirements on the IRS website and read more about Ohio’s requirements here in Section 1702.04 | Articles of incorporation on the Ohio Legislative Service Commission website.
Finally, your Articles of Incorporation must be signed by your statutory agent. Once everything is complete, you can submit it online or mail it to the P.O. Box listed on your form.
The IRS requires your nonprofit to have and follow bylaws. These are the written rules used to govern your organization. Bylaws cover topics including your organization’s mission, membership, voting procedures, and how to handle any conflicts of interest. Together, they form a roadmap for your directors to follow when making decisions.
Your first board meeting will have a crowded agenda. In addition to officially appointing your directors, you’ll need to choose officers, including a president, treasurer, and secretary. During this meeting, you will also approve bylaws, and a conflict-of-interest policy. Appoint someone to take notes detailing everything that happens during the meeting. These notes, called meeting minutes, are an important record of your nonprofit’s activities and should be saved.
To stay in compliance with state and federal nonprofit guidelines, it’s essential to keep good records. Use a binder, a cloud service, or another record-keeping system to store all your nonprofit’s important paperwork. Whichever system you choose, be sure to keep copies of your nonprofit’s IRS approval letter, bylaws, and meeting minutes.
The next step is to apply for an Employer Identification Number (EIN). The federal government uses your EIN to identify your nonprofit corporation. Before you can open a business bank account, hire employees, or apply for certain business licenses, you’ll need to have an EIN. Sign up for ZenBusiness’s EIN service and let us take care of the application process for you.
Every nonprofit may have slightly different licensing requirements. For example, if you plan on running charitable games, such as bingo, to raise funds, you may need a license specifically for that activity. Unfortunately, there’s no central place to look up which licenses and permits you may need. Make sure to consider license requirements at the local, state, and federal levels.
Let ZenBusiness’s business license report service do the research for you and provide you with a detailed report.
To apply for a federal income tax exemption, fill out IRS Form 1023. In some cases, you may be eligible to fill out Form 1023-EZ. You’ll submit your request under 501(c)(3), the portion of the U.S. tax code that covers nonprofit corporations. Your completed application can be submitted online at www.pay.gov. A state-level income tax exemption should be granted automatically once you have IRS approval, but you may need your Letter of Determination.
To operate in the state of Ohio, all charitable organizations are required to register with the Ohio Secretary of State.
There are several types of insurance that a nonprofit corporation may need, such as general liability and worker’s compensation. Because each nonprofit corporation’s insurance requirements can be different, we recommend you consult a qualified Ohio insurance agent. They can help you to know the best insurance program to protect your nonprofit.
You must keep your private finances separate from those of your nonprofit. Begin by setting up a business bank account for your nonprofit. Be sure to have your Articles of Incorporation, a Certificate of Continued Existence, and your federal tax ID number handy because you may need these documents to open an account.
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service or are 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.
Yes, founders can receive reasonable compensation for the work they do as employees of their nonprofit.
It costs $99 to file for your nonprofit in Ohio. You can request a quicker turnaround for an additional fee.
Contrary to popular belief, many nonprofits make more money through donations and fundraising activities than they spend on operating expenses. When that happens, any net earnings get reinvested in the business.
Many types of businesses can be nonprofits, including charitable organizations with educational, scientific, or humanitarian purposes. In general, a nonprofit is an organization dedicated first and foremost to serving a local or global cause rather than the financial interests of its shareholders. Learn more about which kinds of businesses can qualify as nonprofits according to the IRS.
Yes, but sales may be subject to sales taxes. Activities may or may not be tax exempt based a number of factors, including how often your organization holds sales events. Check with an attorney, a tax professional, or the Department of Taxation for more information.
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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