How to Start a Nonprofit in Arkansas

Welcome to our Arkansas Nonprofit Startup Guide.

Want to organize your cause, concerns, and passion into an official entity?

Start a nonprofit if you are passionate about helping others and have an idea for how to help your community.

There are many types of nonprofits: religious, educational, human services oriented, animal welfare, environmental, and others. These are some of the top nonprofits in Arkansas: The Walton Family Foundation, Arkansas Athletes Foundation, The Elizabeth Richardson Foundation

All nonprofits share a common trait: a desire to help others and improve their communities. If you think these goals are important, you’re already on your way.

This guide will help you understand the basics of starting a nonprofit in Arkansas.

References for this article.

Step by step guide to starting an Arkansas non-profit

The process of creating an Arkansas nonprofit entity is very straightforward. It is as simple as picking a few people to fill out paperwork. However, it is the requirements immediately forming the nonprofit that can get complex.

1. Pick & Claim a Name

Name selection is an important decision when starting a business. Names should be memorable, relatable, and compliant with Arkansas law.

Arkansas has very simple laws regarding nonprofit names

Your name can’t contain phrases that are illegal or contrary to your Articles of Incorporation
Your name must “be the same as or deceptively alike to” other entities within the state. In other words, it can’t be so similar to another entity that it could cause confusion

For more information about Arkansas naming law, see the Corporate name requirements and limitations Section Arkansas Code.

You have plenty of options to choose a name that resonates with your target audience, potential donors, as well as with you. The ideal Arkansas nonprofit name reflects the mission of the organization, is memorable when spoken aloud, and sticks in the minds all who hear it.

You should verify that a name you are considering is available by using a Business Entity Search. If there are no matches, your name will be available. Although this seems like an simple step it is crucial for streamlining your filings.

After you have found the name you like, you may reserve it by filling out the Application to Reservation of Entity Name form. The optional filing is $22.50 ($25 mail-order documents), but your name will remain protected for 120 days after approval. This gives you ample time to prepare any other business documents, without risking your name being transferred to another company or non-profit. Don’t delay, however; this reservation can only be renewed once.

2. Assemble board members

The people who lead a nonprofit organization are what make it successful. Your initial board of directors should be passionate about your cause.

It’s important to select a group that has complementary strengths. A board of directors for a medical outreach organization might include three doctors, a nurse and a financial expert. It could also have a creative visionary and a lawyer. Your nonprofit will thrive if it has the right board of directors.

Arkansas does not have many rules regarding who can be on the board. Your board must have at least three directors as its initial directors. However, your bylaws may allow you to add more as long as your minimum is met. Your board members must serve a minimum of one year and a maximum period of six years. Your bylaws will also determine how each director is appointed, when they can resign early if necessary, how you will replace them, and many other details.

3. Designate a registered agent

Each Arkansas entity, including non-profits, corporations, and LLCs, must appoint an registered agent. This person accepts service of process from the state for your account. The state will contact your registered agent if they need to notify you about a lawsuit or an upcoming year-end report due date. This notice is sent to you by the agent.

Arkansas has very strict criteria regarding a registered agent for nonprofits, as described in the Registered Agenct Section of the Arkansas Business and Commercial Law.

Each entity must have a registered agent who is able to accept service of process for the entity
A registered agent is either an individual resident or a business entity authorized to do business within the state.
The Secretary of State will be the registered agent if the business fails or is unable to appoint one.
Agents must be maintained continuously

You might wonder, “Can I be my nonprofit’s registered administrator?” Technically yes. We don’t recommend it. This makes your personal information (and sometimes private details such as your primary email and address) public. It’s likely that you’ll be busy with your nonprofit and working towards your goals. You won’t want to be tied down to a registered address, especially for something like service of process. We recommend that you appoint someone you trust.

You can also hire a registered agent service if that’s what you prefer. These services can act as your agent for a small fee. This allows you to concentrate on your nonprofit’s operations for a small annual fee.

4. Your Articles of Incorporation must be filed

Your nonprofit is a concept. The state government has not yet recognized it. Businesses don’t technically exist until they file the proper paperwork. Arkansas nonprofits must file the Articles Of Incorporation.

This document of three pages requires foundational information about the nonprofit. These are the essential data that you will need:

Name of your nonprofit
Your nonprofit can be religious, public or mutual benefit.
How many members your business will have
Language that describes the power of your organization in legal language
Language used to describe the purpose of your organisation
How assets will be divided
Your initial registered agent’s name and address
Name, signature, address, and email of each incorporator
Contact information to receive your annual report filing

This form is fairly straightforward and you should have all the information you need by the time you get to this step. The powers, purpose, and asset distribution section can be confusing. You’ll see lots of text. This is the IRS’s suggested language for your Articles in order to quickly obtain tax-exempt status. This section may be a good starting point. You might also seek the guidance of a lawyer to help you create the right language for your company. This section doesn’t have to be as difficult as it looks. You can either use the recommended language, or add your own.

Once you have completed the information, you are good to go. You can also file the online form if you prefer. Online filing is recommended as it lowers the filing fee to $45 than $50 for paper filings.

Processing speed for online: 2-3 days, up to 2 weeks for mail

Extra Quick Processing: $50 additional

Prepare your first board meeting and hold it

Once your Articles of Incorporation are complete, it is time to get your nonprofit’s activities started. It’s now time to hold your first board meeting.

Each nonprofit has its own set of tasks and no two board meetings are the same. Arkansas does not have any specific requirements for board meetings. The Voting Section in the Nonprofit Corporation Act outlines voting requirements. You can leave your bylaws to decide the rest as long as they are satisfied.

The president and possibly the CFO report on the achievements and financial status of the nonprofit at the regular board meetings. While yours may do the same thing, the details will depend on your bylaws.

However, your very first board meeting will be a little different. Here are the steps you need to take:

Create and approve the bylaws for your nonprofit: These bylaws will set out how you want to run it. These include a description of your corporate purpose, the selection and replacement of your board, how you will raise funds, how you will hire staff or solicit volunteers, as well as how the bylaws will be amended. You can draft prior to the meeting, and then revise it once your entire board is present. This will save you time. It is important that your board approves the final, non-profit bylaws. This will make them the governing documents for your organization.
Create and approve a Conflict of Interest Policy: Sometimes, one of your non-profit’s contributors may have personal affairs that are interrelated with your organization’s activities. The conflict of interest policy covers what happens when these situations occur, protecting both the contributor and the nonprofit.
Identify someone to take minutes at every meeting: Each Arkansas nonprofit corporation must create and maintain a corporate records. Every board should appoint someone who will take minutes of each meeting. This document will record what was said and which decisions were made.
Identify the responsibilities of each board member. You should assign these roles at the first board meeting. One board member may be responsible for fundraising, while the other raises awareness.
Nominate officers for the non-profit (if necessary): Many corporations prefer to have their officers, such the CEO and CFO, join the board. Some companies appoint members of the board to fill these positions, creating a division between governance and day-today operations. While both options are acceptable, these crucial roles must be filled.

The initial meeting will be very technical and may last several days. These aspects are important to establish a nonprofit that is compliant with Arkansas law and efficient in operation.

Take care of your taxes

Taxes for nonprofits can be a complicated beast. We recommend consulting a tax attorney, accountant or other consultant to ensure you have all the facts. Let’s start with the basics of nonprofit taxes.

6. Apply for tax-exempt status at the federal level

You’ll be subject to corporate income taxes if you don’t apply for tax-exempt status. This is the last thing that a nonprofit wants. You’ll need to file Form 1023 or Form 1024 for applications for educational, charitable, and religious groups, as well as other non-profits. Once you have submitted your application, you will need to wait. It can take the IRS up to 180 days for your application to be approved or rejected by the IRS. We recommend that you complete the application correctly the first and last time.

After your application has been approved, you will receive a letter confirming that you are tax-exempt. After receiving your letter of tax-exempt status, you will need to submit a copy of the Articles of Incorporation and bylaws to request exemption from corporate income taxes at the Arkansas Department of Finance and Administration. You cannot apply for exemption from the state’s sales tax. It will be your responsibility to collect and pay the sales tax on any products or services that you offer. The DFA has more information.

7. Get an EIN

An EIN (or Employer Identification Number) is a vital identifier that you should get. It acts in a similar way to a Social Security Number but for a business entity. You are not automatically assigned one.

It’s easy to apply online for an EIN with the IRS. Even if you do not plan on having employees immediately, it is a good idea for this number to be available. This number may be required for various forms such as bank accounts or license applications.

Account for employment & miscellaneous taxes

Every business is different, and each nonprofit will have its own taxes. Arkansas nonprofits that have employees must account for unemployment insurance and withholding taxes at both the federal and state levels.

Miscellaneous taxes that Arkansas has to pay are also available. These include fees for hard cider and paid fantasy sports. These taxes will not apply to your nonprofit in most cases. However, it is a good idea double-checking with the Arkansas Department of Finance and Administration to make sure you have met all your obligations.

This is the essence of Arkansas nonprofit taxes. As a result, we recommend that you consult with a tax professional to get specialized advice specific to your situation.

Register for Permits and Licenses

Permits and licenses are particularly important for non-profits. There are three main categories of permits and licenses that could be issued: lobbying, fundraising, and licensing. Let’s take a look at the Arkansas requirements in each of these three areas.

1. Fundraising

Many states require that you register your nonprofit to solicit charitable donations. Arkansas is not an exception. Register using the Charitable Organization Registry Form, and send it to the Secretary Of State. This registration is free. After registering, you will be able compliantly to collect donations. This requirement can be found at the Charitable Entities resource from the Secretary-of-State.

2. Lobbying

You must ensure that all paid lobbyists are registered if your nonprofit or its employees will lobby for your cause in formal capacity in exchange for monetary compensation ($400/business quarter). The Secretary Of State must receive this registration within five days after you begin lobbying.

3. General licensing

Nonprofits are exempted from tax but are still subject to licensure requirements. You will need to obtain the licenses necessary to operate your organization.

Arkansas does not require all entities to obtain a general business license, as some other states do. Instead, most licensing requirements are at the industry level. Arkansas holds all federally regulated industries licenses. The Directory Of Licensed, Certified and Registered Occupations Arkansas can be used to find out state-level licensing requirements. You can find out if licenses are available for your industry by following this step.

We recommend that you inquire about renewal requirements when applying for a license. This will allow you to know how often your licenses must be renewed (if applicable).

Meet your insurance requirements

We recommend that all business entities have at least one general responsibility policy, even non-profits. No matter how vigilant you are, there’s always the possibility that something could go wrong.

Natural disasters can strike, and a break-in could result in the loss of valuable equipment. An accident that occurs during your day might also cause property damage or broken bones. If something like this happens, a general liability policy can protect your business.

Arkansas law requires that you obtain workers’ compensation insurance if you have employees. The Arkansas Workers’ Compensation Commission can provide more information about this requirement.

1. Opening a bank account for your business:

You must separate your personal assets and your company’s assets in order to protect your assets.
It makes it easier to file taxes and accounting.

The following information is required to open a bank account in your non-profit corporation:

The EIN is for nonprofits
A copy of the bylaws for the nonprofit
A copy of Articles of Incorporation

2. How to get a business credit card

This tool helps you to separate your personal and business expenses.
This helps to build your credit history and can be used later to raise capital.

3. Hire a business accountant:

This prevents your company from paying too much in taxes and helps you avoid fines and other costly tax mistakes.
Bookkeeping and payroll made easy, so you can spend more time on growing your business.
This tool will help you manage your business finances and identify areas where there is potential loss or additional profit.

4. Get Insurance

Insurance for business helps you to manage risk and to focus on your business’ growth.

These are the most popular types of business insurance:

General Liability Insurance – A policy that covers your business against lawsuits. General liability insurance is a common option for small businesses.
Professional Liability Insurance – A business insurance policy for professionals (consultants, accountants etc.). This insurance covers against malpractice claims and other business errors.
Workers’ compensation Insurance: This type of insurance provides coverage for employees who are injured or die as a result of their job.

Resources

Brian Wilson Writer and Editor

Brian Wilson is the content manager and founder of LLC Radar. Brian grew up in North Texas, just outside of Dallas, and has a bachelor's degree in business from Southern Methodist University. Since graduating from SMU, Brian has gained over 10 years of experience in business writing for several online publications. Brian resides in Plano, Texas and he can be reached by email: info@llcradar.com Phone: 972-776-4050

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