How to start a nonprofit in Ohio, from articles to tax exemption

What does it take to start a nonprofit in Ohio?

Starting a nonprofit in Ohio means dealing with three separate offices, and each one answers a different question. Founders often assume one filing covers everything. It does not.

Ohio nonprofit corporations are governed by ORC Chapter 1702. The state filing comes first, because the IRS application and the Attorney General registration both ask about the corporation that the articles created. This guide follows that order.

Step 1: Choose a name and recruit a board of at least three directors

Search your proposed name on Ohio Business Central to see whether another business or nonprofit already uses it. If you need time to line up your board before filing, a name reservation holds it for a $39 state fee.

The board is the part people underestimate. ORC 1702.27 sets the number of directors at not less than three, and at three if the articles or regulations do not fix a number. The one exception is a nonprofit with only one or two members, which may have fewer directors, but never fewer than the number of members. Each director must be a natural person.

Pick directors who will show up. They approve budgets, sign off on the IRS application, and answer for the organization if something goes wrong. If the board is all family members or all employees, ask your attorney whether that raises any issue for your plans.

Step 2: Write a purpose clause that works for Ohio and the IRS

Unlike a for-profit corporation, an Ohio nonprofit must state its purpose. ORC 1702.04(A)(3) requires the articles to set out "the purpose or purposes for which the corporation is formed."

If you plan to seek 501(c)(3) status, write the articles with the IRS in mind too. The IRS instructions for Form 1023-EZ say the organizing document must limit the organization's purposes to section 501(c)(3) purposes and must permanently dedicate its assets to a 501(c)(3) purpose if it dissolves. Articles that lack that language can stall the federal application until you amend them.

• A purpose statement limited to charitable, educational, religious, or other 501(c)(3) purposes.
• A dissolution clause sending remaining assets to another exempt organization or purpose.
• Optional detail on what the organization will actually do: run a food pantry, fund scholarships, operate a youth league.

ORC 1702.04(B) lets the articles add more: initial directors, initial members and membership qualifications, subordination to a national body, and rules on how assets are distributed at dissolution. The exact wording of your clauses belongs with your attorney. We file articles; we do not draft purpose or dissolution language.

Should your Ohio nonprofit have members, or only a board?

This is a structural choice you make before filing, and it is hard to undo later. An Ohio nonprofit can have voting members who elect the board and approve big decisions, or it can be run by a self-perpetuating board that elects its own successors.

• Membership organizations: ORC 1702.04(B)(2) and (B)(3) let the articles name initial members and set membership qualifications and classes. Members then hold real power. By default under ORC 1702.11(B)(1), voting members amend the regulations at a meeting.
• Board-only organizations: the board fills its own seats. Under ORC 1702.14, when the articles and regulations make no provision for members, the directors are treated as the members, with members' rights. There is no separate member meeting to call or member list to maintain.

Neighborhood associations, clubs, and trade groups often want members, because the people paying dues expect a vote. Charities that raise money from the public often prefer a board-only structure, since a "member" in the legal sense is not the same as a donor or supporter. Whichever you choose, write it into the articles and regulations consistently, and talk to your attorney before you promise anyone a vote.

Step 3: Appoint a statutory agent for the nonprofit

Every Ohio nonprofit corporation needs a statutory agent on record. ORC 1702.06(A) allows an Ohio resident or a business entity with an Ohio business address. Under ORC 1702.06(B), the Secretary of State will not accept original articles without a written appointment signed by the incorporators, or a majority of them, and the agent's signed acceptance.

Volunteer groups often name a founder as agent, then the founder moves on and nobody updates the record. When that happens, lawsuits and state notices go to someone who is no longer involved. Our Ohio registered agent service costs $49 per year, and it keeps one stable Ohio address on file at 3416 Erhart Road in Litchfield while officers and board members change. For agent rules specific to nonprofits, see our guide to the statutory agent for an Ohio nonprofit.

Step 4: File nonprofit Articles of Incorporation (Form 532B)

Form 532B is the Secretary of State's Initial Articles of Incorporation for a nonprofit corporation. The state fee is $99 under ORC 111.16. Nonprofits do not pay share-based fees, because they do not issue shares. You can file online through Ohio Business Central or on paper.

What Form 532B has to include

• The nonprofit's name.
• The place in Ohio where its principal office will be located (ORC 1702.04(A)(2)).
• Its purpose or purposes (ORC 1702.04(A)(3)).
• The statutory agent's appointment and signed acceptance (ORC 1702.06(B)).
• The incorporators' signatures.

One person can be the sole incorporator; ORC 1702.04 lets any person form a nonprofit corporation alone or with others, regardless of where they live. Our Ohio filing guides cover the form, or our business formation service prepares and files Form 532B with us as agent for $100 plus the state fee.

Step 5: Adopt regulations and get the nonprofit's EIN

Ohio calls a nonprofit's bylaws its regulations, the same word Chapter 1701 uses for business corporations. They set how directors are elected, how meetings are called and noticed, quorum, officer roles, and whether the organization has voting members. Once adopted, ORC 1702.11(B)(1) lets the voting members amend them at a meeting unless the articles or regulations set a different method. Plan the amendment process deliberately if you will have members.

At the first board meeting, directors typically adopt the regulations, elect officers, approve opening a bank account, and authorize the IRS application. Keep minutes. They are the record that the board actually met and approved what the organization is doing, and funders and auditors ask for them.

Next, get an Employer Identification Number. The IRS charges nothing for it and says to form the entity with the state first, since applying earlier may delay the EIN. You need the EIN for the bank account, the IRS exemption application, and the Attorney General registration. Our EIN service can apply for you.

Step 6: Apply for federal tax exemption on Form 1023 or 1023-EZ

Incorporating in Ohio does not make the organization tax-exempt. For 501(c)(3) status, you apply to the IRS, electronically, through Pay.gov. A user fee is due when you file.

Which form fits

• Form 1023-EZ is the short form. You are not eligible if you project annual gross receipts over $50,000 in any of the next three years, had gross receipts over $50,000 in any of the past three years, or hold total assets with a fair market value over $250,000. The IRS requires you to complete its eligibility worksheet first.
• Form 1023 is the full application for everyone else. It must also be filed electronically.

The 27-month window

The IRS instructions say that if you file within 27 months after the end of the month you were legally formed, exemption can reach back to your formation date. File later, and the effective date is the date you submit. Put the application on the calendar the week the articles are filed, not when the first big donor asks for a determination letter.

Whether to apply for 501(c)(3) or another status, and how to describe your programs, are questions for an accountant or attorney who works with exempt organizations.

Step 7: Register with the Ohio Attorney General's charitable law section

The Attorney General asks for annual reports from charitable organizations located in Ohio and from groups that ask Ohioans for contributions. Two statutes drive it, and everything is filed through the Attorney General's online system.

Charitable trust registration

ORC 109.26 requires every charitable trust established or active in Ohio to register with the Attorney General, generally within six months after it is created or becomes subject to registration. ORC 109.23 defines a charitable trust by the duty to hold property for charitable purposes, and says that being organized as a corporation creates no presumption against being one. Whether your nonprofit has to register is a question to confirm with the Attorney General's office or your attorney.

Charitable solicitation registration

ORC 1716.02 requires a charitable organization to register before soliciting contributions in Ohio, and annually after that, unless ORC 1716.03 exempts it. The fee depends on contributions received in the last year:

Exemptions under ORC 1716.03 include religious agencies and organizations, and charities whose gross revenue, not counting government and 501(c)(3) grants, was $25,000 or less in the prior fiscal year and that do not pay anyone primarily to solicit. A small charity that crosses $25,000 must register within 30 days after receiving that revenue. Renewals are due by the 15th day of the fifth month after the fiscal year ends, and late filings can carry a $200 fee.

Keeping an Ohio nonprofit active, and what it all costs

Once the nonprofit is set up, the recurring obligations come from all three offices:

• Secretary of State: a Statement of Continued Existence within each five years under ORC 1702.59. Our guide to the Ohio nonprofit Statement of Continued Existence covers the form, the fee, and reinstatement.
• Secretary of State: keep a statutory agent on record and update it on Form 521 ($25) when it changes. Failing to do so leads to cancellation of the articles under ORC 1702.06(M) if not cured within 30 days of the state's notice.
• IRS: an annual 990-series return. Organizations with gross receipts normally $50,000 or less can file the Form 990-N e-Postcard. Missing three years in a row automatically revokes exemption.
• Attorney General: annual charitable reports and solicitation renewals, as they apply to you.

Put all of these on one board calendar with a named person responsible for each. Most lapses happen not because a nonprofit decided to skip a filing but because the volunteer who handled it left.

What starting an Ohio nonprofit costs, filing by filing

The state side is small. The larger costs are usually professional help with the purpose clause, regulations, and IRS application, which vary by organization. Our pricing page lists what we charge, and nothing on it renews except the agent service.