How To Start a Non-Profit Organization in Ohio
Starting and operating a non-profit organization can be a little overwhelming. Unfortunately, it can be easy to miss a legal requirement which could jeopardize your organization or your tax-exempt status, if you are also seeking to be tax-exempt. In order to make this process as seamless as possible for you, we’ve put together a shorthand checklist to assist you get your new Ohio non-profit organization off to a great start.
Step 1: Name your Organization.
This may seem like an obvious step; however, there are certain requirements for naming a non-profit corporation in Ohio. The legal name of your nonprofit corporation must not conflict with any other organization registered in the state. You should make sure the name is available and meets state requirements. Please note, a suffice such as “Inc.” or “Corp.”, is allowable but not required.
To search your proposed organization name, go to https://businesssearch.ohiosos.gov
Step 2: Recruit Incorporators and Initial Directors.
The Incorporators are the people who start your organization. You only need one person to incorporate, who will sign the Articles of Incorporation (See Step 5).
Directors, or Trustees, are the people who run the organization and manage its’ corporate affairs. Ohio’s Nonprofit Corporation Law requires a minimum of 3 directors, none of whom are required to be Ohio residents to serve. We do recommend that no more than 49% of your Directors be related by blood or marriage.
Step 3: Have your Directors hold a meeting and elect officers.
You are only required to have a president, a secretary, and a treasurer, though you may want to have other positions. These officers are often your directors.
Step 4: File Articles of Incorporation.
It is advisable to enlist the help of legal counsel starting at least with this step. The Articles should have clauses that the IRS will look for when you apply for 501(c)(3) exemption. You should also appoint a statutory agent, which is an Ohio resident or company that maintains a physical address in Ohio and is willing to accept legal documents on your behalf. The Articles should have clauses that the IRS will look for when you apply for 501(c)(3) exemption.
Step 5: Obtain an employer identification number (EIN) and open a bank account. This number is be used for tax purposes and for opening bank accounts. An attorney or other professional can also assist you with this, or you can do it yourself.
Step 6: Establish initial governing documents and policies. These are usually referred to as “by-laws” or a constitution. You should also establish a conflict of interest policy, which will assist in being granted tax-exempt status under 501(c)(3), if applicable to your organization.
Step 7: Get Ohio State Tax Identification Numbers/Accounts. You should register with the Ohio Department of Taxation even though you will likely be exempt from many taxes. You can register online for commercial activity tax (CAT), sales tax, employer withholding, unemployment compensation, workers’ compensation, and municipal income taxes for nearly 500 cities and villages online using Ohio Business Gateway or by phone (888) 405-4089. Generally, nonprofit corporations are not subject to the Ohio commercial activity tax. Ohio nonprofits that have received their IRS determination letter are automatically exempt from paying state sales tax. They must present Form STEC-B: Sales and Use Tax Blanket Exemption Certificate to sellers.
Step 8: Apply for Federal Tax Exemption with Form 1023. Completing the federal application for tax exemption is significantly easier with the assistance and support of a professional. A well-prepared application takes time, over 100 hours by IRS estimates.
Step 9: Register for Charitable Solicitation. The Ohio Attorney General’s Charitable Registration department oversees charitable contributions and solicitations in Ohio. Certain non-profit organizations, such as some religious organizations, are exempt from registration, but still should register online. The registration requirement for charities in Ohio is established in two separate sections of law, meaning that charities may be exempt under one act but required to register under the other. Charities should file an online request for exemption determination if they believe they are exempt.
If you are not exempt, you will need to register. Registration is currently free for organizations that have not yet solicited in Ohio. Fees range from $0-$200, depending on contributions, for organizations that have previously solicited in Ohio. There may be several attachments required.
Step 10: Report newly hired and re-hired employees to the Ohio New Hire Reporting Center.
Step 11: Contact the Ohio Bureau of Workers’ Compensation and the Ohio Department of Job & Family Services. Also, contact your local and county government to determine if any special requirements exist for your type of business.
Step 12: If applicable, apply for a nonprofit postal permit.
Disclaimer. This information is provided for the public as general information and does not intend to be, nor should it be construed to be, legal advice, nor does it result in an attorney-client relationship between the White Law Office, Co. and any recipient of this information.