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How Can I Start a Nonprofit in 2022?

Posted by Jonathan Krems | Dec 28, 2021 | 0 Comments

Well, its another holiday season, and many business owners are planning for 2022.  It is also the season for charitable giving, but someone more entrepreneurial might be interested in planning something else in the new year --- every year, at least once or twice, I give consultations to individuals or groups interested in starting nonprofits.  One of the services that Liberty Legal Solutions, LLC, provides our clients is assisting with nonprofit formation.  So, in today's Freedom Friday blog and email newsletter I want to answer the question, “How Can I Start a Nonprofit in 2022?”

The first part of the answer to this question is that you are asking the wrong question.  Instead of asking, “How can I start a nonprofit?” you need to ask, “How can we start a nonprofit?”  The reason why this is a better question is that in Oklahoma it takes at least three (3) people to start a nonprofit.  If you have at least three (3) people who wish to come together and form a nonprofit, here are the next steps you all will need to take from there:

1.  Define Your Purpose

The first step in starting a nonprofit is to define your purpose.  You need to be able to articulate a charitable purpose to the Internal Revenue Service (IRS) in order to receive 501(c)(3) status.  Its important to hire an attorney who can assist you with this first step because the charitable purpose statement must be included in your Certificate of Incorporation and/or your nonprofit's bylaws, both of which are usually submitted with your 501(c)(3) application to the IRS.

2.  Choose a Name for Your Nonprofit

The second step in starting a nonprofit is choosing the name for the nonprofit.  This is also an important step because you can't choose a name taken by another nonprofit, or even a name used for a for-profit entity, either.  There are a lot of options here, but its always best to consult with an attorney who can lead you in this process and conduct a name search to make sure you're not using a name already used by someone else.  You might also consider a name that can be trademarked, and you might ask your attorney to perform a trademark search on your behalf, as well.

3.  Choose a Business Entity for Your Nonprofit

The third step in starting a nonprofit is choosing a business entity.  Many people assume that by starting a nonprofit that “501(c)(3)” is the entity for the nonprofit, and that is not correct.  “501(c)(3)” is a tax designation with the IRS, it is not a legal entity which you can form like an LLC.  In Oklahoma, the correct business entity for a nonprofit is usually a nonprofit corporation.  In some limited circumstances, you can choose an LLC, but an LLC will need to meet 12 additional requirements with the IRS.  The Oklahoma Secretary of State will also require you to list three (3) incorporators for your nonprofit corporation.  Thus, you can't form a nonprofit in Oklahoma by yourself, it is a team sport.

4.  Draft the Nonprofit's Bylaws

The fourth step in starting a nonprofit is drafting the nonprofit's bylaws.  Your nonprofit's bylaws should be drafted by an attorney, and then signed by your board of directors.  Not only should your bylaws include your purpose statement, but they should also include the responsibilities of the board of directors, and the roles of each officer of the nonprofit corporation.

5.  Maintain Business Formalities

The fifth step in starting a nonprofit, and this is especially important after you form your nonprofit corporation, is to maintain business formalities to separate the assets of the nonprofit from your own personal assets.  The nonprofit needs to obtain its own EIN number and have its own bank account.  It's also important to document everything, including the minutes of each board meeting once the nonprofit is formed.

If you're interested in starting a nonprofit anywhere in Oklahoma, or if you already have a nonprofit in Oklahoma and you're looking to grow, contact our experienced business attorney Jonathan Krems at [email protected], or call (405) 509-9096 to schedule a FREE strategy session today.

For more information about Liberty Legal Solutions, LLC, please visit our website at http://www.libertylegalok.com/

About the Author

Jonathan Krems

Jonathan is the Founder and Managing Attorney of Liberty Legal Solutions, LLC, a law firm dedicated to building, protecting, and defending the business and personal interests of our clients in Oklahoma.  Jonathan's primary practice areas are business law, contracts and agreements, business liti...

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