How to Start a Nonprofit in MN
The process of starting a nonprofit in Minnesota is not so complicated when it is broken down into the basic steps to get your organization up and running. The following is a step-by-step guide to help you through the process.
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Step One: Name Your Nonprofit
Choose a unique name for your nonprofit organization. Minnesota requires that every business have a distinct name, but some exceptions exist. A nonprofit can have a name that is already registered with the State of Minnesota if:
- Your organization gets consent in writing to use the name that is already registered;
- You have a certified copy of a court order that states you are allowed to use the name; and
- You have an affidavit that another business is not using the name.
Step Two: Choose a Registered Agent
Every business must have a registered agent. A registered agent is a person or company, registered agent service, responsible for receiving service of process on behalf of your nonprofit. Any person that is 18 years or older can be a registered agent for your company. You can even name yourself as the registered agent.
Step Three: Select Board Members and Officers
Your board of directors will be the governing body of your organization. They will be responsible for taking care to ensure that your nonprofit follows the law and remains true to its purpose.
The board of directors must include:
- At least three unrelated people to serve as your directors
Step Four: Draft Bylaws and Conflict of Interest Policy
Bylaws are a set of rules that are in place to govern the organization. You will use these bylaws to make decisions for your nonprofit. Some common areas should be addressed in your bylaws. You may have more details that you wish to add to your nonprofit's bylaws, but consider including the following in your bylaws:
- The name you registered or reserved with the Minnesota Secretary of State
- The nonprofit's business address and street address
- A statement of the nonprofit's purpose
- The names of the officers and what position they each hold
- Your nonprofit's removal policy for officers and a statement of how your organization agrees to add new officers if desired
- Rules about quorum
- The date of the board of directors annual meeting
- The procedure for dissolving the nonprofit
- How to make amendments to the bylaws
A conflict-of-interest policy is a written agreement that shows a strategy that your board of directors agrees to follow if there is a conflict between the interests of the nonprofit and an individual director.
Your nonprofit must create a conflict-of-interest policy and a set of bylaws before applying for 501 (c)(3) status. Your organization will not be eligible for federal tax exemptions if it does not present a set of bylaws and a conflict-of-interest policy.
Step Five: Have Your First Organizational Meeting of the Board of Directors
You will need to have an initial meeting with the board of directors before your nonprofit files for 501 (c)(3) status. It is essential to take and record minutes from that meeting because you will be discussing and adopting bylaws and the conflict-of-interest policy, electing the board of directors, concerning the management structure for the nonprofit, and adopting various resolutions, including when to open a bank account for the business.
Step Six: Draft and File Articles of Organization
Minnesota requires every business to file Articles of Organization with the secretary of state. The filing fee is $90. Typically, the Articles of Organization include the name and address of the organization, the name and address of the registered agent, the bylaws, the conflict-of-interest policy, and the names and addresses of at least one incorporator.
An incorporator is an individual who signs and files the Articles of Incorporation on behalf of the nonprofit. A nonprofit, or any other organization, cannot officially begin until the articles of incorporation are filed.
Step Seven: Get an EIN
An EIN is an employer identification number. It is a number used by the Internal Revenue Service (IRS) to identify businesses across the country. Each company must have an EIN. You can apply for an EIN online, by phone, via fax, or through the mail. Note that applying for an EIN is free. Do not fall prey to websites that advertise that they will complete an EIN application for a fee. There is no fee for applying for an EIN with the IRS.
Step Eight: Apply for Federal Tax Exemption
Next, apply for federal tax exemptions for your nonprofit. Do this by applying for 501 (c)(3) status with the IRS. 501 (c)(3) status is only available to specific organizations. Bylaws should specify your nonprofit's purpose. The IRS will not accept your application for federal tax exemptions unless you provide a copy of your nonprofit's bylaws.
Step Nine: State Tax Exemptions
Minnesota nonprofits are automatically exempt from state income tax if the organization is approved for 501 (c)(3) status. However, your nonprofit will still need to apply for state sales and property tax exemptions. These applications can be submitted to the Minnesota Secretary of State.
Step Ten: File Annual Reports
Your nonprofit organization must file an Annual Renewal Form with the Minnesota Secretary of State each year. This form can be filed in person, through the mail, or online. There is no filing fee. In the annual report, you will update the state about corporate details, including the business name and address and the registered agent's name. Annual Renewal Forms must be submitted by December 31st of each year.
Step Eleven: Charitable Registration Requirements
Every Minnesota nonprofit that intends to elicit donations must register with the Minnesota Secretary of State before it begins to have fundraisers. You will register as a charity by filing a Charitable Organization Initial Registration Form and paying a $25 filing fee. After that, your organization is required to continue to register with the Minnesota Attorney General's Office every year.
Need Help Forming a Minnesota Nonprofit?
Forming a tax-exempt nonprofit corporation can be a complex process. However, it is made simpler through the use of online business formation services. By answering some simple questions, you can ensure that your organization is set up correctly.
Check out FindLaw's directory of qualified business formation attorneys in Minnesota if you have additional questions and would like a lawyer's help.
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