How to form a 501(c)(3) nonprofit corporation.
A nonprofit corporation is purpose-driven.
A company whose goal is not to make profit for themselves.
Typically they are an organization that wants to make money
in order to help further a social cause
or provide a public benefit.
Let's get you started on the right path
to forming a nonprofit corporation in Ohio.
If you're not sure what a non-profit is
check out our other video.
What is a nonprofit linked below?
How do you form a nonprofit corporation?
There are two ways.
You can do it yourself
or you can hire a service to do it for you.
Let's take a look at both options
and help you decide how to go
about forming your own nonprofit corporation.
Option one, do it yourself.
If you want to save money
you can form a nonprofit corporation on your own.
Let's take a look at the six steps
to forming a nonprofit corporation on your own.
One, choose and secure your nonprofits name.
The name you select for your nonprofit
will establish its brand.
It's the first thing most people will learn
about your organization.
It's important to pick a name that both aligns
with your mission and follows the rules
of naming guidelines in Ohio.
You'll need to check Ohio specific naming requirements
but in general, follow these rules when choosing a name.
The name you pick for your organization
should not include any words or terms
that could be considered grossly offensive or misleading.
The name must be distinct from that
of any other corporation in Ohio.
For more information on what makes the name distinct
check out our other video
How to Name Your Business in Ohio, linked below.
Once you have a name selected
do a name search to make sure it's available in Ohio.
After doing an Ohio name search
you'll want to do a domain search to see
if your name is available as a URL.
Even if you don't plan on making a website today
you may want to secure the URL.
so someone else doesn't take it.
Two, appoint a statutory agent.
The statutory agent also known as a registered agent
in other states can be an individual
in the company, including yourself.
Or you can hire a professional service authorized to
do business in Ohio.
They will send and receive legal papers on your behalf.
These documents include official correspondence
like legal summons and document filings
which your statutory agent will receive and forward to you.
Your statutory agent will also help remind you
to file necessary reports.
Failure to properly maintain your nonprofit can result
in fines and dissolution.
So this assistance is valuable.
Three, select directors and officers.
Your nonprofit corporation will be made
up of some number of directors and officers.
The directors of a nonprofit are responsible
for overseeing the operations of the organization.
Together they form the Board of Directors.
The power and influence of the directors
over the organization comes from them as a Board.
The directors themselves do not have any authority
as individuals.
The board typically creates the policies
that govern the nonprofit.
They also oversee management level hiring such
as the company officers.
The officers of the nonprofit, such as the president or
secretary are individuals with the responsibilities
and the authority to execute based on their job description.
Together, the officers on the board will come together
to make up the organizational structure of your nonprofit.
An officer may also be on the Board
of Directors and serve both roles, if allowed to do so
by the organizational bylaws, which we will discuss later.
If your organization plans to apply for 501C3 status
for federal tax exemptions it must elect
at least three directors not related to each other,
a president, a secretary and a treasurer.
Four, File the articles of incorporation.
To form a nonprofit corporation,
you will need to file official papers with Ohio.
In Ohio, this is called the articles of incorporation.
Some possible information in the articles of incorporation
you may have to include is entity name, principle office
effective date, purpose, original appointment
of statutory agent, incorporator signatures
and any additional provisions.
For more information on the sections
of Ohio's articles of incorporation,
check out our page linked below.
Five, operating procedures and housekeeping.
Once your nonprofit corporation has been formed
you'll want to start getting the structure of it together
and determine how your nonprofit will be run
starting with the bylaws and conflict of interest policy.
Your bylaws are the rules that determine how
your organization will be governed and run.
You can think about it as a constitution for your nonprofit.
It makes the rules and priorities clear
for everyone involved
In your bylaws, be sure to include how the nonprofit
will be governed, the roles of directors and officers,
how meetings are held, voting procedures,
electing officers or directors, how records will be kept
and managed, how disputes will be handled,
and how bylaws will be added and amended in the future.
When you're ready to get started,
check out some bylaws templates linked in the description
below.
The conflict of interest policy are the rules set to ensure
that decisions being made for the non-profit are based
on what is best for the organization
and not being motivated by what is best for individuals.
You'll want to make sure you have a draft
of both the bylaws and conflict of interest policy
before your organizational meeting.
We have templates of both bylaws
and conflict of interest policy linked
in the description below.
An organizational meeting
is the first official meeting of your nonprofit.
Some of the things that are discussed
in a typical organizational meeting are taking
attendance to show you have a Quorum, appointing
temporary officers and chairman, adoption
of bylaws and adoption of conflict of interest policy.
It's important to record minutes of the meeting
and have it signed by all attending directors.
We have some corporate minutes templates linked
below to help you get the ball rolling.
After your nonprofit has been formed, you'll need to apply
for an EIN or employment identification number.
An EIN is like a social security number for your nonprofit.
And it's used for things like filing
for 501C3 status, opening a bank account
applying for tax exempt status and submitting tax returns.
For more information on EINs check
out our other video linked below.
Nonprofits in the State of Ohio will also need
to register for Ohio tax accounts.
This can be accomplished by registering
and using the Ohio business gateway link below.
Six, apply for 501C3 status, federal tax exemption.
What is federal tax exempt status?
And why do you want it?
When a corporation generates income
that corporation has to pay a federal income tax.
As a nonprofit your goal is to generate income
that is used to help further a cause rather
than fill the pockets of the company employees.
Because of this the federal government allows
that nonprofits income not be taxed
so that more of the money can go towards the cause
that the nonprofit is supporting.
Before your nonprofit can apply for 501C3 status,
it must file the articles of formation
with the required provisions, adopt the bylaws
and conflict of interest policy and have an EIN number.
In order to file for tax exempt status
most organizations will need to file form 1023 online
or by mail and pay a fee of $600.
If your organization's annual gross receipts are
below $50,000, then you may be able to file form 1023EZ
with a fee of $275.
You can check your eligibility
with the link in the description below.
Once you've received your 501C3 determination letter
from the IRS, your organization will generally be exempt
from Ohio commercial activity tax.
Option two.
The second way to form a nonprofit is to
hire a professional service to create
your nonprofit for you.
Hiring a professional service to file your forms
and act as your registered agent
for the nonprofit will cost you an additional $50 to $150.
This fee only covers formation of a nonprofit corporation.
If you wish for the professional service to file
for 501C3 status the cost may go up
to as much as $1,700 plus filing fees.
However, there are several benefits to working with a pro.
A hired registered agent helps with
getting your reports filed on time,
helps you stay organized by keeping your business mail
separate, and is available at all regular business hours
to accept official mail and legal papers
on your nonprofits behalf.
If you want to form an organization or company
in Ohio with the purpose being to help a cause rather
than make a personal profit,
a nonprofit corporation is the best way to do that.
Now, you know, all the steps to form a nonprofit in Ohio.
For a more detailed guide, visit our site
at startupsavant.com.
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If you have questions or encounter any roadblocks
leave a comment below good luck on starting your nonprofit.