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How To Start a Nonprofit in Ohio

Starting an Ohio nonprofit is a different experience than launching a for-profit startup. While some aspects overlap, forming a nonprofit has some unique laws and requirements. You will need to interact with various government agencies, complete several forms and applications, and meet both Ohio and federal guidelines throughout this process.

Most small business owners organize their nonprofits as corporations. Incorporation protects the organization's officers, directors, and members from personal liability for the organization's debts and obligations. You are not legally required to incorporate your nonprofit, but if you structure your nonprofit as an unincorporated association, you risk personal liability should a party sue your organization.

The following steps outline how to start an Ohio nonprofit corporation that protects members from personal liability and complies with state and federal law.

For additional information and resources for starting and running a nonprofit, see our Nonprofit Organizations section.

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Choose a Name for Your Nonprofit

The first step in forming a new nonprofit is choosing a memorable name that resonates with your target audience. From a branding standpoint, your business name should accurately describe the nature of your nonprofit.

Registering your corporation with the state requires a business name "distinguishable upon the records" from any other business name registered or reserved in the state.

Conduct a name search on the Ohio Secretary of State website to see if another business has already claimed or reserved your selected name. If your corporate name is available but you are not ready to register with the state, you can reserve the name for six months. Secure your name by filing a Form 534B, Name Reservation, and paying a $39 filing fee.

In addition to ensuring you can register your preferred name with the state, you also want to verify another organization has not already filed for a federal or state trademark. It's unlikely that a trademark holder would sue a small nonprofit for monetary damages, but it could force you to change your organization's name if it grows enough to cause confusion. Changing your business name down the line is expensive and can disrupt your branding cohesion.

Appoint a Registered Agent

When you file your articles of incorporation with the state, you must appoint a registered agent, also called a statutory agent in Ohio. The registered agent must have an address for receiving legal documents. They should also be available during regular business hours to receive service of process. You can choose an individual who resides in Ohio or a business entity with a business address in the state.

Register Your Nonprofit Corporation With the State

For the state to legally recognize your nonprofit corporation, it must file its articles of incorporation with the Secretary of State using Form 532B, Initial Articles of Incorporation (Nonprofit, Domestic Corporation). This requires a $99 filing fee. You can start the registration process on the Ohio Business Gateway.

You must include the following information in your articles of incorporation:

  • Your corporation's name
  • A statement of your corporation's purpose
  • Corporate office address
  • A signature from the individual who starts the corporation, known as the incorporator

The statement of purpose must include any activities your nonprofit corporation expects to pursue. This is important because those are the only activities your corporation can undertake. In addition, the Internal Revenue Service (IRS) will review the statement of purpose when determining your eligibility as a tax-exempt organization under Section 501(c) of the Internal Revenue Code.

While not required by the state, the IRS must see the following information in your articles of incorporation before granting corporation tax-exempt status:

  • Provisions on how the corporation will govern its internal affairs
  • The rights and privileges enjoyed by members among themselves or on the property of the corporation
  • How your organization will distribute corporate assets in the event of dissolution, which is the closure of your nonprofit
  • The names and addresses of the initial directors
  • The location and county of the corporate office

The IRS also requires the articles of incorporation to include language that restricts the corporation's activities to one or more of the following purposes:

  • Charitable
  • Educational
  • Religious
  • Scientific
  • Fostering amateur sports competition
  • Prevention of cruelty to children or animals
  • Testing for public safety

Although not required by the state or the IRS, your organization should also include a statement regarding whether it will be subject to the authority of any national association or entity.

Build Your Nonprofit's Board of Directors

Ohio law requires all nonprofit corporations to have a board of directors. The board provides overall governance and leadership for your organization. Your board members will make key decisions for your organization, so it is important to choose qualified individuals.

Under Ohio law, your board must consist of at least three people. You also must appoint three specific offices:

  • President
  • Secretary
  • Treasurer

A single board member can hold two or more of these offices.

Look for some of the following qualities in potential board members:

  • Networking and community connections
  • Legal background
  • Expertise in your nonprofit's field
  • Grant writing experience
  • Leadership and communication skills
  • Passion for your nonprofit's mission

When selecting your board, consider how an individual's skills, background, and qualifications could benefit your nonprofit.

Hold an Initial Meeting of the Board of Directors

The initial organizational meeting of your nonprofit corporation's board of directors is crucial. This first meeting is when board members will:

  • Approve your organization's bylaws
  • Elect directors and appoint officers
  • Adopt a conflict of interest policy, which outlines the process if a member's personal interests conflict with the best interests of the organization
  • Approve financial matters, like opening a corporate bank account

The IRS will likely reject your 501(c)(3) status application if the board has not adopted corporate bylaws or a conflict of interest policy when you file your application.

Obtain an Employer Identification Number

Your nonprofit corporation will need a federal employer identification number (EIN) from the IRS. An EIN is a unique identifying number that operates like your corporation's Social Security Number. You will need an EIN before your nonprofit can:

  • Apply to the IRS for tax-exempt status
  • Open a bank account
  • Hire employees

You can get an EIN instantly and at no cost by applying on the IRS website. You can also get a free EIN by filing IRS Form SS-4 by fax or mail. Watch for commercial websites that charge a fee to register you for an EIN, as many of these sites mimic the appearance of the official IRS website.

Apply to the IRS for 501(c)3 Status

Despite running your corporation as a nonprofit or charitable organization, federal tax-exempt status is not automatic. You must apply and be approved as a 501(c)3 organization by the IRS.

Applying for a 501(c)(3) exemption can be the longest and most arduous part of establishing your nonprofit organization. Receiving the 501(c)(3) designation has many benefits for a nonprofit. The most important benefits are:

  • An exemption from paying federal income taxes
  • Donors can deduct contributions to your organization from their federal income tax returns

To apply for exempt status, your organization must file Form 1023 or Form 1023-EZ with the IRS. Form 1023-EZ is a streamlined form designed for smaller organizations. Organizations eligible to use this condensed form must:

  • Have projected annual gross receipts of less than $50,000 for the next three years
  • Have not earned $50,000 in any of the prior three years
  • Not have assets valued at more than $250,000
  • Meet certain other qualifications

All other nonprofits must file the standard Form 1023.

There is a $275 filing fee for Form 1023-EZ and a $600 fee for filing Form 1023.

If the IRS approves your application for exempt status, you will receive a determination letter recognizing your exemption. The IRS will also add your nonprofit to its organization search tool on its website. Donors often use this list to confirm an organization's exempt status before donating.

After the IRS approves your federal tax-exempt status, you'll need to file Form 990 informational return each year. Your gross receipts determine the specific form you will use:

  • Form 990-N for corporations with $50,000 or less in gross receipts
  • Form 990-EZ​ for organizations with gross receipts of less than $200,000 and total assets of $500,000 or less
  • Form 990​ for all other exempt organizations

Failure to file a Form 990 for two consecutive years will revoke your federal tax-exempt status.

Register To Solicit Donations in Ohio

A 501(c)(3) corporation planning on fundraising or soliciting charitable contributions in Ohio must register with the Ohio Attorney General's office and file annual financial reports. Using the Attorney General's charitable registration page, your nonprofit must register within six months of creation.

The Ohio Revised Code allows the Attorney General to charge a sliding scale registration fee determined by the contributions received by an organization.

Apply for Ohio State Tax Exemptions

Nearly all nonprofits that receive the 501(c)(3) designation from the IRS are exempt from the Ohio commercial activity tax, or the state's business income tax.

Additionally, your nonprofit can apply for an exemption from the state's sales tax by filing a Form STEC B, Sales and Use Tax Blanket Exemption Certificate, with the Ohio Department of Taxation.

If your nonprofit owns property used for charitable purposes, it may be eligible for a property tax exemption. Contact your county's tax office to learn more.

File a Statement of Continued Existence Every Five Years

Ohio requires nonprofit corporations operating in the state to file a Form 522, Statement of Continued Existence. You must file this with the Secretary of State every five years. The office will notify your corporation's statutory agent that Form 522 is due approximately four months before the filing deadline.

Failure to file can prompt the Secretary of State to cancel your corporation's registration or charter.

Differences Between 501(c)(3) and 501(c)(4) Organizations

501(c)(3) and 501(c)(4) organizations both fall under the category of tax-exempt organizations regulated by the IRS. While they share some similarities and are both eligible for federal income tax exemption, there are also some differences:

  • 501(c)(3) organizations are for charitable and educational purposes, with restrictions on political activities.
  • 501(c)(4) organizations focus more on social welfare and have more flexibility to participate in political and lobbying activities.

501(c)(3) organizations have limitations on political activity to ensure their primary purpose remains charitable, without a political agenda.

The most crucial distinction is that donations to 501(c)(3) organizations are deductible on federal income tax returns, while donations to 501(c)(4) organizations are not. Because most nonprofits rely on fundraising and donations to fund their mission, 501(c)(3) status is necessary to secure financial contributions from donors.

Can an LLC Be a Nonprofit in Ohio?

Ohio has no law restricting a limited liability company (LLC) from forming with a nonprofit purpose, but structuring your nonprofit as a corporation gives your organization the best chance of receiving federal tax exemption from the IRS. Without the federal tax-exempt designation, your organization will also face greater difficulties obtaining state tax exemptions.

Need More Help With Your Ohio Nonprofit? Get Legal Advice

Forming an Ohio nonprofit organization and ensuring it qualifies for tax exemptions is complex. This process can take a significant amount of time and money, and you'll want to get it right the first time. This is why some entrepreneurs turn to an attorney for legal help.

skilled local attorney with a solid understanding of state and federal rules can help ensure your organization meets the legal requirements to enjoy tax-exempt benefits and operate in good standing. Contact an Ohio business organizations attorney today to learn more about how they can help with your nonprofit business venture.

You can also use FindLaw's DIY nonprofit formation tool. This tool guides business owners through each step of the nonprofit formation process. Get support applying for tax exemptions, filing your articles of incorporation, registering as a charitable organization, and more.

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