In today’s Freedom Friday blog and email newsletter, I want to talk about a question that I get asked, maybe at least two or three times a year in different ways, and that’s how to start a nonprofit. Given that today is Black Friday, and this coming Tuesday is often called “Giving Tuesday,” in the spirit of the holiday season, in today’s Freedom Friday blog and email newsletter, I’m talking about how to start a nonprofit in 2025.
First of all, if you’re going to start a nonprofit in Oklahoma, you can’t do it by yourself. Oklahoma law requires that you have three (3) “incorporators” to start a nonprofit and serve as the initial board of directors. Of course, you can have more than (3) to start out with, but you can’t have just one, being yourself. But, if you do have at least (3) people to get started, here are five (5) steps to start a nonprofit in 2025:
1. Define Your Purpose
The first step to starting a nonprofit is to define your purpose. This is because you need to be able to articulate a charitable purpose to the Internal Revenue Service (IRS) when you apply for 501(c)(3) status. If you want to apply for 501(c)(4) status, you will need an educational purpose rather than a charitable one (I get questions about both). It’s important to hire an attorney to assist with the first step because the purpose statement must be included with your Certificate of Incorporation and/or your bylaws, both of which must be submitted with your application to the IRS.
2. Choose Your Nonprofit’s Name
The second step to starting a nonprofit is to choose your nonprofit’s name. This is also an important step because you can’t choose a name taken by another nonprofit, or even a name taken by a for-profit business. There are many options here, but it’s always best to consult with an attorney who can guide you through this part of the process and conduct a name search with the Oklahoma Secretary of State. You might also consider a name that can easily be trademarked, so you might wish your attorney to a trademark search, as well.
3. Choose Your Business Entity
The third step to starting a nonprofit is to choose a business entity for your nonprofit. It might seem obvious, but some people think an LLC can be considered for a nonprofit, and that’s not true. Some people also think that a “501(c)(3)” or a “501(c)(4),” and those are not business entities, either; they are only tax-designations with the IRS. However, in Oklahoma, if you want to form a nonprofit, you must form a “nonstock corporation,” which is the formal business entity required by the Oklahoma Secretary of State.
4. Draft Your Nonprofit’s Bylaws
The fourth step to starting a nonprofit is to draft your nonprofit’s bylaws. Your bylaws should be drafted by an attorney and then signed by your initial board of directors. Not only should include your purpose statement, but they also need to define the responsibilities of your board of directors, and the roles of each officer on the board, as well as any at-large board members.
5. Maintain Business Formalities
The fifth step to starting a nonprofit is to maintain business formalities. This is important because it is critical to separate the assets of your nonprofit from your own personal assets, from the personal assets of your fellow incorporators (or board members), and also from the assets of any for-profit business you might be involved in. You also need to obtain an EIN number from the IRS for the nonprofit, and the nonprofit needs to have its own bank account, too. It’s also important to document everything, especially the minutes of each board meeting.
Thinking about starting a small business? Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth? Please contact me at Jonathan@libertylegalok.com to schedule a FREE strategy session.
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