Most nonprofits are 501(c)(3) organizations, which means they are formed for religious, charitable, scientific, literary, or educational purposes and are eligible for federal and state tax exemptions. To create a 501(c)(3) tax-exempt organization, first you need to form a Oklahoma nonprofit corporation. Then you apply for tax-exempt status from the IRS and the state of Oklahoma. Here are the details.
First, you need to form a nonprofit corporation under Oklahoma state law (Oklahoma General Corporation Act (“GCA”), Title 18, Section 1001).
Oklahoma requires that you have a minimum of three incorporators to form a nonprofit. Your incorporators can be individuals, partnerships, associations, or corporations, and can be residents of or domiciled in any state.
You must have a minimum of one director on your board. The name and mailing address of your initial director or directors is included on your certificate of incorporation.
The name of your nonprofit corporation must be distinguishable from the name of any other corporation on record with the Secretary of State at the time of filing or during the preceding three years. It also must be distinguishable from the name of any other type of business entity on record at the time of filing. Your nonprofit’s name must contain one of the following words: “association,” “company,” “corporation,” “club,” “foundation,” “fund,” “incorporated,” “institute,” “society,” “union,” “syndicate,” “limited,” or one of the abbreviations “co.,” “corp.,” “inc.,” or “ltd.”
To see if your proposed name is available, you can call the Secretary of State’s office or search the Oklahoma business name database on the Secretary of State’s website. You can reserve a name for 60 days by filing a Application for Reservation of Name with the Oklahoma Secretary of State. The reservation may be filed online through the Oklahoma Secretary of State Entity Filing webpage or by mail. The filing fee is $10.
Every Oklahoma nonprofit corporation must have an agent for service of process in the state. This is an individual or corporation that agrees to accept legal papers on the corporation's behalf if it is sued. The agent must have a physical street address in Oklahoma, not a post office box. Small nonprofit corporations typically name a director or officer to serve as the initial agent. The agent must consent to the appointment.
To legally establish your nonprofit, you must file a certificate of incorporation with the Oklahoma Secretary of State. Your certificate of organization must include:
The Secretary of State has an online certificate of incorporation form for nonprofit corporations on its website which you can complete and file electronically. The filing fee is $25.
The Secretary of State also has a fillable pdf form you can complete and mail. However, this form should not be used because it does not contain space for all the clauses required by the IRS.
The certificate form available from the state has the minimal information necessary to create a nonprofit in Oklahoma. It does not include language required by the IRS to obtain 501(c)(3) tax-exempt status. To receive 501(c)(3) tax-exempt status from the IRS, your corporation must have certain specific language in its certificate, including:
You'll need to add these clauses to your articles yourself. You can add these clauses as an attachment to your online certificate form. You can find sample language for these clauses approved by the IRS in the Instructions for IRS Form 1023-EZ, (see Part II).
For more information on IRS requirements for tax exemption, including sample language, consult How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
Before you file your articles of organization, you’ll need to have bylaws that comply with Oklahoma law. Your bylaws contain the rules and procedures your corporation will follow for holding meetings, electing officers and directors, and taking care of other corporate formalities required in Oklahoma. Your bylaws do not need to be filed with the state -- they are your internal operating manual.
For more information on bylaws, see Nolo's article Nonprofit Formation Documents: Articles of Incorporation, Bylaws, and Organizational Minutes. For help creating your bylaws, see Nolo's book How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
Your first board meeting is usually referred to as the organizational meeting of the board. The board should take such actions as:
After the meeting is completed, minutes of the meeting should be created. Set up a corporate records binder to hold the corporation's articles, bylaws, consent forms, minutes and other important documents. For more information, as well as minutes forms, consent forms, and other resolutions, see Nonprofit Meetings, Minutes & Records, by Anthony Mancuso (Nolo).
Your nonprofit corporation must obtain a federal employer identification number (EIN). You may obtain an EIN by completing an online application on the IRS website. There is no filing fee.
Depending on the type of activities your nonprofit intends to carry on and where it is located, it may need to obtain a state business license. For local licenses, check with the clerk for the city where the nonprofit's primary office is located (or county if it is in an unincorporated area). For state license information, consult the Business Licensing & Operating Requirements section of the Oklahoma Department of Commerce website.
Now that you have created your nonprofit corporation, you can obtain your federal and Oklahoma state tax exemptions. Here are the steps you must take to obtain your tax-exempt status:
To obtain federal tax-exempt status from the IRS, you will need to complete and file IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. This long and detailed form asks for lots of information about your organization, including its history, finances, organizational structure, governance policies, operations, activities, and more. For line-by-line instructions on how to complete the Form 1023, see How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
Smaller nonprofits may be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. This is a much simpler, shorter form that is filed online. Only smaller nonprofits--those with projected annual gross receipts of less than $50,000 and total assets of less than $250,000--are eligible to use the streamlined 1023-EZ application.
See the IRS website for more information on the Form 1023 and Form 1023-EZ filing requirements.
Nonprofits who receive 501(c)(3) tax-exempt status from the IRS are generally automatically exempt from Oklahoma’s income tax. Your nonprofit must apply for an exemption from Oklahoma state sales taxes. For more information, download the Oklahoma Tax Exemption Packet from the Oklahoma Tax Commission website.
Depending on your activities and the size of your organization, you may need to register with the state before doing any fundraising activities. The Secretary of State has a Charitable Organization packet on its website with information and forms about fundraising and registration requirements for nonprofits. For more information about fundraising registration requirements in all 50 states, see Nonprofit Fundraising Registration Digital Guide, by Ronald J. Barrett and Stephen Fishman.