The state of Oklahoma has approximately 21,715 nonprofit organizations in the nonprofit sector. These nonprofit organizations have a total of 134,228 employees and earn around $17 billion in revenue per year.
Among the most popular Oklahoma nonprofit organizations are Hugs Project Incorporated, Love Without Boundaries Foundation, and Feed The Children, Inc. Starting a nonprofit corporation allows you to use your experience, education, and business talent for the good of humanity or the natural world.
But the process of starting a nonprofit organization may seem daunting. However, provided you complete the necessary documentation and comply with the relevant laws on both the federal and state levels, you’ll soon have your nonprofit organization up and running.
The benefits of starting a nonprofit organization in Oklahoma include credibility with the Internal Revenue Service, access to funding from both the public and private foundations, limited liability protection for the Board of Directors, etc.
In the following step-by-step guide, you’ll learn more about starting a nonprofit organization in Oklahoma.
1. Select a name for your organization
Irrespective of your organization’s purpose or mission, it will still need a name that potential benefactors and stakeholders may easily find. Therefore, careful consideration should go into picking a name for your nonprofit corporation.
Additionally, you need to comply with both the federal and state naming requirements. The following Oklahoma naming guidelines will help you choose an appropriate name for your nonprofit organization.
Your nonprofit corporation’s name must contain one of the following words:
Company, association, club, corporation, fund, foundation, Institute, Inc., union, society, syndicate, or limited.
Alternatively, it should have one of the following abbreviations co.”, “corp.”, “inc.”, or “ltd.”
The Oklahoma statutes will provide insight into the complete rules required on naming an Oklahoma-based nonprofit.
You may also conduct a name search on the state of Oklahoma website to ensure that the name is not already taken.
In the event that you plan on creating a website for your nonprofit, you’ll also need to check that the web domain is available.
2. Nominate an Oklahoma registered agent
The registered agent often referred to as a statutory or service of process agent, is simply an individual appointed to accept service of process on the nonprofit’s behalf. This individual will be responsible for accepting legal documentation and official mail on your business’s behalf in the event that it is sued.
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You may choose to appoint any individual as your Oklahoma nonprofit registered agent provided they meet the following requirements:
- The Oklahoma registered agent must be a resident of the state
- The Oklahoma registered agent must be at least 18 years of age
- The Oklahoma registered agent must maintain normal business hours
- The Oklahoma registered agent must consent to the appointment
You may also choose to appoint yourself as a nonprofit’s own registered agent.
3. Recruit your board members
The next step in the process is appointing your incorporators and initial directors. While most states allow nonprofits to have one incorporator, the state of Oklahoma requires that Oklahoma nonprofits have a minimum of three incorporators.
Incorporators are responsible for signing and filing the Articles of Incorporation on the nonprofit’s behalf.
When it comes to recruiting directors, you only need one for your nonprofit corporation. The director does not need to be a resident of the state, nor do they need to be a member of the nonprofit organization.
The director will serve a term until a successor is qualified and elected.
You’ll also need to recruit officers to fulfill the roles of president and secretary. These recruited individuals combined make up your board of directors.
4. Consent to bylaws and conflict of interest policy
Prior to filing the nonprofit Articles of Incorporation, your nonprofit needs to compile bylaws that comply with Oklahoma law. The organization’s Bylaws are basically the regulations and mechanics of how the nonprofit is going to be run.
It will contain procedures set in place to govern how meetings will be held, officers and directors will be elected, and how corporate formalities will be handled by the nonprofit.
Additionally, you need to compile another document called the Conflict of Interest Policy. The Conflict of Interest Policy is a selection of rules or practices put in place to ensure the board of directors is always acting in the nonprofit’s best interests.
Ultimately, it ensures that all of the decisions taken by the Board of Directors benefit the nonprofit and not the members’ individual agendas.
The Bylaws and Conflict of Interest Policy should be adopted during the nonprofit’s first board meeting.
They do not need to be filed with the state, but as they are your nonprofit’s management handbook, they should be kept on file for reference as and when needed.
5. Select an Oklahoma nonprofit startup corporation structure
The following organizational structures are available in Oklahoma:
- Social and recreational clubs: Social and recreational clubs are described as 501(c)7 organizations. Social and recreational clubs include garden-variety clubs, country clubs, hobby clubs and amateur fishing, hunting, and sports.
- Trade and professional associations: Trade and professional associations are regarded as 501(c)6 organizations as per Internal Revenue Code. Chambers of commerce, real estate boards, and merchants associations are all regarded as Trade and professional associations organizations.
- Charitable organizations or charities: Charitable organizations are known as 501(c)3. Charities are exempt from taxes and are created for one or more of the following purposes:
- Charitable, religious, literary, educational, scientific
- Testing for public safety
- Fostering international or national amateur sports competition
- Prevention of cruelty to children or animals
Examples of charitable organizations include low-income housing corporations, food banks, and daycare centers.
- Civic needs and social welfare organizations: These organizations are regarded as 501(c) 4 nonprofits under the Internal Revenue Code. The main focus is to improve the overall good and welfare of the community.
Health care organizations, housing, social action groups as well as civic groups are all examples of civic needs and social welfare nonprofit organizations.
6. Prepare and file nonprofit Articles of Incorporation
All nonprofits in Oklahoma must file the Articles of Incorporation in order to officially create and register their organization with the state.
The Articles of Incorporation must include the following information:
- The nonprofit’s name
- The nonprofit effectual date of the certificate
- The duration of the nonprofit
- The name and address of the nonprofit registered agent, incorporators, and directors
- The number of directors elected at the first board meeting
Additionally, your Articles of Incorporation must have the specific language required by the Internal Revenue Service to obtain 501(c)(3) tax-exempt status.
Therefore, ensure that your articles contain the following information:
- A statement of purpose that meets Internal Revenue Service requirements
- A dissolution clause declaring the corporation’s assets to another charitable organization or to the government upon dissolution
- A statement declaring that the nonprofits will not be engaging in any activities that are unrelated to the purposes under which it is granted its tax-exempt status
You’ll need to complete the Certificate of Incorporation Form or template and then file it with the Oklahoma Secretary of State Business Filing Department.
7. File an initial report
Oklahoma nonprofit organizations do not need to file an initial report with the state.
8. Secure an EIN (Employer Identification Number)
Every nonprofit in Oklahoma needs an Employer Identification Number. This is also referred to as an EIN or Federal Tax Identification Number. Ultimately, it’s considered a Social Security number for your nonprofit corporation. It’s also used by the Internal Revenue Service to identify business entities in the state.
In order to obtain an Employer Identification Number, you need to complete IRS Form SS-4. Thereafter, file it online with the Internal Revenue Service. The application may be made online, and if so, you’ll receive your EIN immediately.
However, please note that the IRS website is only available during certain operating hours; therefore, you need to print your EIN prior to closing a session.
Once you’ve obtained your Employer Identification Number, you may use it to open a business bank account for your nonprofit, federal, and state tax purposes and higher staff for your nonprofit organization.
The EIN is completely free of charge. For further information on how to obtain an EIN and the benefits of having an Employer Identification Number, refer to the IRS Pub 1635.
9. Apply for federal tax exemption
Receiving federal tax exemption from the Internal Revenue Service comes with many benefits.
Some of those benefits include access to funding from public and private foundations, tax-deductible donations, limited liability, credibility with the Internal Revenue Service, discounts on US postal services, and more.
Prior to applying for federal tax exemption, you’ll need to have completed the following in order to have tax exemption eligibility:
- Elected a minimum of 3 incorporators and one director for your nonprofit
- Obtained an Employer Identification Number
- Filed your Certificate of Incorporation
- Prepared and ratified your Bylaws and Conflict of Interest Policy
The latter form is a simple application that requires much less information and is often processed quicker.
After completing the relevant form, go ahead and file it with the Internal Revenue Service.
You’ll receive an IRS determination letter if the application is approved. The determination letter means that you are exempt from federal income tax.
10. Apply for Oklahoma state tax exemption
After applying for federal tax exemption and receiving your Internal Revenue Service determination letter, it means that you are automatically exempt from corporate income tax.
However, you may still need to obtain a sales tax exemption for your Oklahoma nonprofit. Start by completing Form 13-16, which is the application for sales tax exemption. File the form with the Oklahoma Tax Division.
11. Other applicable permits and licenses
While the state of Oklahoma does not issue a single or general business license, there may be certain license requirements required by state departments, counties, and cities. Therefore, it’s recommended that you visit the Oklahoma Department of Commerce website to learn more about the required licenses and permits prior to starting your nonprofit’s activities.
Additional state registration and reporting requirements
All nonprofit organizations that solicit donations in the state of Oklahoma must register as a charity with the Oklahoma Secretary of State.
12. Submit an annual report
Nonprofit organizations in Oklahoma do not need to file an annual report. However, it is required that all non-Oklahoma nonprofits submit an annual business certificate report with the Secretary of State as proof of the organization’s operation.
Costs of starting a new nonprofit in Oklahoma
The following filing fees apply to all Oklahoma nonprofits:
- Certificate of Incorporation: $25
- Application for tax-exempt status or 501(c): $275 or $600 IRS fee
- Oklahoma Business Registration: fees for needed licenses
- Oklahoma Charitable Registration: $15 – $65
After you’ve started your nonprofit, there are a few necessary steps that you should take to keep your organization running smoothly. Let’s take a closer look at them below:
Open a business bank account
- Maintain accounting and tax filing
- Ensure that your personal assets are kept separate from your nonprofits’ assets
To open a bank account, you will need to provide:
- Your EIN
- A copy of your articles of incorporation
- A copy of your organization’s bylaws.
Hire a business accountant
- Simplify payroll and bookkeeping
- Prevent your nonprofit from avoiding penalties and tax errors
- Manage your nonprofit’s funding
- Focus on growing your nonprofit
- Manage risks
You may opt for General liability, Personal liability, or Worker’s compensation insurance.
Build a website
As we mentioned earlier, you may want to create a website for your organization to legitimize your business or give it more credibility. A dedicated website is also one of the best ways to share your nonprofit’s vision, mission, and story with supporters. Consequently, it’s also a great way to announce upcoming events and goals.
Sign legal documents
One aspect that tends to get overlooked is signing legal documents in your personal capacity instead of as an authorized representative of your nonprofit.
If you’ve appointed yourself as a registered agent of the nonprofit, then the following tips will help avoid personal liability:
- State the registered name of your nonprofit
- Use your name and signature
- State your position/role in the organization as its authorized representative
When signing legal documents on behalf of the nonprofit, it is important that you do so in your capacity as the registered agent, as opposed to your capacity as an individual.
Example: Instead of signing your name only, state the name of the nonprofit and then your name and position within the organization before signing.
For-profit organizations are created to serve the business owners. For-profit companies generate profit by either directly or indirectly selling goods and services. On the other hand, nonprofit organizations may sell goods and services; however, they mainly source revenue through donations and are focused on giving back to the community. So all funds generated through fundraising efforts are cycled back into the organization to serve its primary mission.
Public charities are one of the types of nonprofits. Charitable organizations have a primary objective that’s geared toward social well-being and philanthropy. These types of nonprofits use their income generated through charitable solicitation to support the organization’s mission. They also engage in activities aimed at improving the lives of people in the community. Hospitals, churches, research facilities, schools, universities, and colleges are usually regarded as public charities.
Exempt organizations are foundations, charitable organizations, or other similar organizations that are exempt from federal income tax. In order for an organization to receive tax-exempt status, they will need to be organized to meet the exempt purposes set forth in section 501c3. Existing organizations that are exempt include churches and religious organizations, political organizations, public foundations as well as charitable organizations, among others.
Successful nonprofits don’t just raise funds but play an essential role in building healthy communities by offering essential services that contribute to both economic mobility and stability. Successful nonprofits also have a powerful mission statement, usually included in their business plan, that they use as a way for people to work together for the common good.
Compliance laws for nonprofits are set in place to protect the public and ensure that nonprofit corporations are not abusing their financial privileges. Therefore, nonprofits are held to high standards by the government due to their exemption from federal and state taxes. The IRS compliance guide helps nonprofits comply with the law by providing concise and easy-to-use information.