Minnesota gives a small-town feel to a big state. The people are friendly, and the scenery is beautiful. Still, there are high rates of poverty. By starting a nonprofit in Minnesota, you can help address the poverty issue, ensure the environment remains beautiful for future generations, or help connect people within your community. Nonprofits are an essential part of Minnesota. Starting a nonprofit in the state can feel confusing, but this article will walk you through the steps.
Naming an organization can be the chance to define your organization. Choosing a name can be personal and exciting. Minnesota does not have many restrictions for your organization’s name, but you will need to make sure no other nonprofit has chosen the name before. Visit the Minnesota Secretary of State to see if your name is available. If your nonprofit name is available, register it right away. Print out your registration so it can be saved and used to continue the process.
An incorporator will sign your nonprofit’s Articles of Incorporation. That individual can either be a member of your board of directors or not. Your Directors will be the leaders of your nonprofit, so taking the time to find the right people for your board is vital. To learn more about how to find the best board members for your organization, visit our blog post on the subject.
In Minnesota, you will need a minimum of three directors. The Internal Revenue Service (IRS) will look at your number of directors when deciding your 501(c) status, so make sure you have at least three. These directors must be adults and natural persons. There is no residency requirement in the state and no membership requirement for your nonprofit. Term limits are one year unless your bylaws state differently.
At the head of your board will be officers. Minnesota requires nonprofits to have a president and treasurer, but both of these offices can be held by the same person if needed. When signing official documents, officers can only sign once, so make sure you have at least two officers on your board for documents requiring two signatures.
A registered agent will be in charge of receiving all legal documentation for your nonprofit. This role can either be held by an individual or a corporation. The registered agent must be located in the state and be open during regular business hours.
Your Articles of Incorporation are the legal start to your nonprofit. You can file the articles in Minnesota by mail, in-person, or online. The cost of filing by mail is $70. The price rises to $90 online and in-person due to the shorter 24 hour wait time. Mailing your articles will mean a wait time of 5 to 7 business days.
All filings for your Articles of Incorporation are final, so double-check your paperwork before sending it in. Once done, print and keep all paperwork together safely for future use. When filing for your 501(c) status, you will need to use the exact wording used on your Articles of Incorporation.
Now it is time to file with the IRS. The first step to file with the IRS is obtaining an Employer Identification Number (EIN). This nine-digit number will be used to file your 990 forms, your 501(c) status paperwork, and to open a bank account in the state of Minnesota. Once again, you will want to print and save this paperwork with your files.
Your bylaws must be established before filing for your 501(c)3 status with the IRS. Your bylaws are a road map for your nonprofit to follow when deciding on your organization’s culture, rules, and structure. Minnesota does not require your nonprofit to file a copy of the bylaws with the state, but they must be created to follow state and federal law.
When creating your nonprofit’s bylaws, they must include the following:
When your bylaws are finalized, they must be approved and adopted by the board before filing for 501(c) status with the IRS.
You will approve and adopt the bylaws during your nonprofit’s first board of directors meeting. Your bylaws are only part of the action that takes place during this first board meeting.
Your first board meeting will establish the way your board does things from then on. You will want to prepare an agenda and determine whether you will be strict about timing and the rules during this meeting. Running an effective board meeting can be difficult if you don’t start off on the right foot.
After approving and voting on your nonprofit’s bylaws, you will be voting on the members and officers of your board. Remember to follow the rules stated in your bylaws. You will also want to create a conflict of interest policy and one to open a bank account.
Be sure to take detailed minutes of your board meeting and file these with your organization’s other essential paperwork.
As a nonprofit, you do not have to file for a tax exemption from Minnesota sales tax. If your nonprofit plans to sell products or services and will file at least one type of tax (sales and withholding, income, excise, and gross receipts) in Minnesota, you must file for a state tax identification number.
As a nonprofit, you will want to apply for tax exemptions with the IRS if you can. To file for 501(c) status, your organization will need to file IRS Form 1023, Form 1023-EZ, or Form 1024. To determine which one you need to file, visit Form 1023-EZ to view the eligibility requirements.
The cost to apply for 501(c) status depends on the form. Form 1023-EZ costs $275, and Form 1023 and 1024 is $600. Generally, it will take less than a month to receive your letter of determination from the IRS if you file online. By mail, you may wait 3 to 6 months.
Minnesota does not require nonprofits to apply for state tax exemption if they have already filed and been approved federally.
Nonprofits must register with the office of the Attorney General if they meet any of the following:
Registration costs $25, and your nonprofit must file a Charitable Organization Initial Registration Form with the state. This form must be filed before soliciting any funds.
If you have solicited funds for your nonprofit, you are required to file an annual report every year with the Attorney General’s office. Charities that file a 990 form can submit the annual report form with their taxes. If your nonprofit files a shortened version (Form 990-EZ, 990-PF, or 990-N), you must file the financial statement part of the annual report.
The filing must be done by July 15th each year or on the 15th day of the seventh month following your organization’s fiscal year. A $25 fee must be paid with your annual report.
Pro tip: Annual reports are more than just a tax requirement. If done right, your nonprofit can take this opportunity to share your organization’s accomplishments with donors and potential sponsors, and foundations. We have written a step-by-step guide to writing an effective nonprofit annual report to help.
Minnesota is a welcoming place to form a new nonprofit. We hope we have helped make the process even easier with our step-by-step guide.
We have answered some commonly asked questions on how to start a nonprofit in mn.
Costs for anything can be hidden in the fine print. With all the paperwork required to start a nonprofit, you can forget to add up the price. We have listed all costs below for your convenience:
Minnesota requires all nonprofits to file an Annual Report or the financial portion of the Annual Report with the Attorney General’s office. Visit the AG website for more information.
Forming a nonprofit in Minnesota can take a month or almost half a year, depending on the organization’s size. When filing by mail, the longest wait times will be with your Articles of Incorporation and your 501(c) status.
If you file everything online, you can cut that time to 24 hours for your Articles of Incorporation and less than one month for your 501(c) status.
All nonprofits must have a Board of Directors. In the state of Minnesota, you will need at least three board members, a President, and a Treasurer. To obtain tax-exempt status with the IRS, you will also need at least three board members.