How to Start a Nonprofit in Michigan


Steve Goldstein
Steve Goldstein
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Start a Nonprofit in Michigan

Are you looking to start a nonprofit in Michigan? You’ve come to the right place. Known for its vibrant community and rich culture, Michigan (often referred to as The Great Lakes State) is an ideal location for establishing a nonprofit organization. Unlike for-profit businesses, nonprofits focus on addressing pressing social issues and require a strong foundation, thorough research, and a clear mission targeting a specific community problem.

Embarking on the journey of creating a nonprofit entails various crucial steps, such as obtaining 501(c)(3) status. A 501(c)(3) organization is designed for charitable, religious, educational purposes, and more, qualifying it for federal and state tax exemptions.

In the spirit of Michigan’s motto, “If you seek a pleasant peninsula, look about you (Si quaeris peninsulam amoenam, circumspice),” thousands of nonprofits are founded within the state each year. This article will provide a comprehensive guide to starting your own nonprofit corporation in Michigan. Keep in mind that the steps discussed here are general guidelines, and modifications may be necessary depending on your specific circumstances. To gain a deep understanding of how to start a nonprofit in Michigan, we encourage you to read this article in its entirety.

What is a Nonprofit in Michigan?

Nonprofit organizations are legal entities that operate to serve public benefits and address community issues. Unlike for-profit organizations, nonprofits do not aim to generate any profit. The Internal Revenue Service (IRS) generally exempts nonprofit organizations from tax. However, based on the business entity structure, you will receive tax exemptions as a nonprofit.

In Michigan, ensure you have a community issue to address before you start forming your nonprofit. It can generally be education, religion, charity, social service, or other social issues. Nonprofits do not pay taxes on the money they receive through fundraising programs, donations, or any charitable funding.

Types of Nonprofits in Michigan

The first thing one has to decide is what type of nonprofit structure one wants. There are several types of nonprofits one can start. Here is a list of nonprofit types one can choose from-

  1. Nonprofit LLC
  2. Nonprofit Corporation
  3. Unincorporated Nonprofit

Forming an LLC in Michigan for your nonprofit can be a smooth option. However, having a corporation is less complex than having a nonprofit LLC. Hence, it is wise to start a nonprofit corporation instead of an unincorporated nonprofit or nonprofit LLC.

LLCBuddy Editorial Team.

Technically, starting a corporation for your nonprofit protects your personal assets but also is eligible for Federal and State tax exemptions. When you form an LLC for your nonprofit, it only protects your personal assets but does not give you any tax exemptions. On the other hand, a nonprofit Corporation has both corporation and limited liability company benefits. You can also have an unincorporated structure where you don’t have to register it. Unincorporated nonprofits in Michigan might be eligible for tax exemptions (check with Michigan Department of Treasury), but this type of organization does not get to enjoy limited liability and personal asset protection.

How to Start a Nonprofit Corporation in Michigan

Setting up a nonprofit corporation requires a few things to consider. Name of the nonprofit, initial directors, drafting bylaws, get a Resident Agent, obtain tax IDs, insurance, and a bank account – these are important steps you must follow. The steps mentioned here are general business formation steps. State-wise, some steps can be different. Getting an expert consultation before you start your nonprofit corporation formation is recommended. Here are the steps explained below-

Step 1: Get a Suitable Name for Your Michigan Nonprofit Corp

The first step is to name your nonprofit corporation. You must be sure that the name is available and that no other organization is using this name. You can check the Michigan LLC name search to find the best suitable name for your organization. You must follow those rules to avoid any legal issues later. You can reserve the name for 6 months for any domestic entity (such as a nonprofit LLC) if you’re not forming the nonprofit immediately.

Step 2: Appoint the Initial Board of Directors

The next step is to get your nonprofit’s initial board of directors. It is very important when you are setting up a nonprofit corporation. You need at least Three unrelated directors to start the organization. If you don’t choose a minimum of Three directors, it will automatically become a member-managed corporation.

Step 3: Appoint Your Michigan Resident Agent

The third step is to get a Michigan Resident Agent for your nonprofit corporation. The Resident Agent is a person who receives all the legal documents on your behalf. It is necessary to get a registered agent. He/she must be above 18 years old and have a physical address in Michigan.

Step 4: Write Michigan Nonprofit Bylaws

The next important step is to write the company bylaws. The directors and board members must decide how the meetings, elections, voting, and other corporate activities will be held. These bylaws must comply with the Michigan state law. It is similar to an LLC operating agreement in Michigan for the LLC owners.

Step 5: File the Michigan Articles of Incorporation

This is the most important step. File your Articles of Incorporation with the Michigan Secretary of State. You can do it through three ways, online, by mail and in-person. All the formation forms, such as the Michigan LLC Articles of Organization form, the Michigan Articles of Incorporation form for corporations, forms for LLPs, and all others can be found on the Michigan SOS official website. Submit the details of your nonprofit corporation, like the name of the nonprofit, address, name and address of the registered agent, operation dates, directors’ details, and more information related to your company. You can send the form (for offline filing) and the filing fee of $60 for filing online, in person, and by mail to the Michigan Department of Licensing and Regulatory Affairs, Corporations, Securities & Commercial Licensing Bureau — Corporations Division, P.O. Box 30054, Lansing, MI 48909 or upload it online (if available).

Step 6: Obtain Tax ID for Your Michigan Nonprofit Corporation

The subsequent step involves obtaining a Tax ID for your nonprofit corporation. You will need to acquire an Employer Identification Number (EIN) from the official IRS website. To obtain the EIN, submit your application to the IRS office either by mail or through their online platform. There is no associated cost for this process.

Step 7: Get Business Licenses in Michigan

The next step is to get the business licenses you need to run your nonprofit organization in Michigan. Check with the local government office if any special licenses you need to run your nonprofit. You can file your nonprofit as a charity if you want.

Step 8: Federal Tax Exemption

You must submit Form 1023 to the IRS to file for federal tax exemption. This form, titled “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” is required for all nonprofit corporations. Smaller nonprofits have the option to file Form 1023-EZ instead. You will be prompted to provide details about your organization upon obtaining the relevant form. Complete the form with the necessary information and submit it. The filing fees are $600 for Form 1023 and $275 for Form 1023-EZ.

Step 9: State Tax Exemption

Once you get the Federal Tax Exempt, it is time for State Tax Exempt. In Michigan, you must apply for the tax exemption to Michigan Department of Treasury. Get the form, fill it up with the correct details, and send it to the office. You may need to pay a fee along with the form and supportive documents to apply for the State Tax Exemption. You need Form 3372 to apply for the state tax exemption. Read Michigan classification of taxes to learn more about the Michigan tax structure.

Step 10: Get Insurance for Your Michigan Nonprofit

Once you start your nonprofit, you must get insurance to protect your organization. You must get workers’ compensation and unemployment insurance if you have employees. Based on your nonprofit structure, you might need general liability insurance, property, vehicle, auto insurance, etc. You can contact the insurance providers to learn more about which are required for your organization. Also, you can contact Michigan Department of Insurance and Financial Services for more information.

After Forming Your Michigan Nonprofit Corporation

Once your nonprofit is formed, there are additional steps to complete:

  • Get a Business Bank Account: You must get a business account for all types of business-related transactions in Michigan. You may need different documents based on the bank and place of business. Check with the bank for it.
  • File Nonprofit as Charity: This is optional. Your nonprofit is either for charity purposes or any purpose that meets your community’s needs. If your organization is for charity purposes, then you can file your nonprofit as a charity to enjoy tax exemptions.
  • Other Business Compliances: You may need additional compliances based on your nonprofit type. Check with your attorney or local authority for more information.

Names of Nonprofit Corporations in Michigan

Following are some of the Nonprofit Organizations in Michigan. The contact information of these organizations can be found on Michigan SOS official websites.

  • Gladwin Charities
  • Goodrich Charities
  • Grand Blanc Charities
  • Grand Haven Charities
  • Grand Ledge Charities
  • Grand Rapids Charities
  • Grandville Charities
  • Grayling Charities.

FAQs

What are the steps to starting a nonprofit in Michigan?
The steps to starting a nonprofit in Michigan involve researching the organization’s purpose, writing articles of incorporation, creating a board of directors, registering with the state, and obtaining tax-exempt status from the IRS.
What is the process for filing articles of incorporation in Michigan?
To file articles of incorporation in Michigan, you must fill out the Articles of Incorporation form and submit it to the Michigan Department of Licensing and Regulatory Affairs.
What information do I need to include in the articles of incorporation for my Michigan nonprofit?
The articles of incorporation for a Michigan nonprofit must include the name of the organization, its purpose, the names and addresses of its directors, and the name and address of its registered agent.
What is a registered agent and why do I need one in Michigan?
A registered agent is a person or business designated to receive legal documents on behalf of the nonprofit. In Michigan, all nonprofits must designate a registered agent in order to comply with state law.
How do I register my Michigan nonprofit with the state?
To register your Michigan nonprofit with the state, you must submit a completed Application for Certificate of Authority to the Michigan Department of Licensing and Regulatory Affairs.
What is the cost to register a Michigan nonprofit?
The cost to register a Michigan nonprofit depends on the type of organization. For most nonprofits, the filing fee is $20.
How do I obtain tax-exempt status for my Michigan nonprofit?
To obtain tax-exempt status for your Michigan nonprofit, you must submit an application for tax-exemption to the IRS.
What is the timeline for starting a nonprofit in Michigan?
The timeline for starting a nonprofit in Michigan will vary depending on the complexity of your organization, but typically it can take up to a few months to complete the process.
Does a Michigan nonprofit need to register with the Secretary of State?
Yes, a Michigan nonprofit must register with the Secretary of State in order to be recognized as a legal entity.
What is the Michigan Nonprofit Corporation Act?
The Michigan Nonprofit Corporation Act is a set of laws and regulations governing the formation, operation, and dissolution of nonprofit corporations in Michigan.
What is the Michigan Charitable Solicitations Act?
The Michigan Charitable Solicitations Act is a law that requires non-profits to register with the Michigan Attorney General’s Office in order to solicit donations from the public.
What is a 501(c)(3) in Michigan?
A 501(c)(3) is a designation from the IRS that recognizes a nonprofit organization as tax-exempt. In Michigan, 501(c)(3) status is required for nonprofits to be eligible for certain grants and donations.
Are there any resources for nonprofits in Michigan?
Yes, there are a number of resources available for nonprofits in Michigan, including the Michigan Nonprofit Association, Michigan Nonprofit Network, and the Michigan Small Business Development Center.
Are there any grants available for Michigan nonprofits?
Yes, there are a number of grants available for Michigan nonprofits, including state grants, federal grants, and foundation grants.
What is a nonprofit board of directors in Michigan?
A nonprofit board of directors in Michigan is a group of individuals responsible for overseeing the organization’s activities and ensuring that its mission is being fulfilled.
How do I recruit members for my Michigan nonprofit’s board of directors?
To recruit members for your Michigan nonprofit’s board of directors, you should identify individuals who have the skills and experience to help further the organization’s mission. You can then reach out to them to gauge their interest in joining the board.
Are there any laws governing nonprofit boards of directors in Michigan?
Yes, the Michigan Nonprofit Corporation Act outlines the responsibilities and duties of nonprofit boards of directors in Michigan.
Are there any reporting requirements for Michigan nonprofits?
Yes, all Michigan nonprofits must file an annual report with the Michigan Department of Licensing and Regulatory Affairs.
Are there any tax obligations for Michigan nonprofits?
Yes, Michigan nonprofits may owe taxes on income earned from activities that are unrelated to their exempt purpose.
Are there any requirements for Michigan nonprofits to be transparent?
Yes, Michigan nonprofits are required to make certain financial information available to the public, including annual reports and IRS Form 990s.
How do I dissolve a Michigan nonprofit?
To dissolve a Michigan nonprofit, you must file a Certificate of Dissolution with the state and notify the IRS and other government agencies.
What is the Michigan Charitable Trust Act?
The Michigan Charitable Trust Act is a law that regulates the formation, operation, and management of charitable trusts in Michigan.
Are there any restrictions on nonprofit fundraising in Michigan?
Yes, Michigan nonprofits are subject to certain restrictions on fundraising activities, including those imposed by the Michigan Charitable Solicitations Act.
What are the advantages of forming a nonprofit in Michigan?
The advantages of forming a nonprofit in Michigan include tax-exempt status, access to grants and donations, and potential liability protection.
Are there any restrictions on how Michigan nonprofits can use donations?
Yes, Michigan nonprofits must use donations for the purpose for which they were given.
Are there any requirements for Michigan nonprofits to hold annual meetings?
Yes, Michigan nonprofits must hold an annual meeting of members and directors in order to remain in good standing with the state.
Where can I get help with starting a Michigan nonprofit?
You can get help with starting a Michigan nonprofit from organizations such as the Michigan Nonprofit Association, Michigan Nonprofit Network, and the Michigan Small Business Development Center.
What are the steps for starting a nonprofit in Michigan?
The steps for starting a nonprofit in Michigan are to 1) choose a name for the organization, 2) file a formation document with the Michigan Department of Licensing and Regulatory Affairs, 3) draft bylaws and articles of incorporation, 4) hold an organizational meeting, 5) obtain an employer identification number, 6) apply for tax-exempt status, 7) register with the Michigan Department of Treasury, and 8) obtain any necessary local licenses.
What type of formation document do I need to file in Michigan?
In Michigan, you will need to file Articles of Incorporation with the Michigan Department of Licensing and Regulatory Affairs.
Are there any other requirements to starting a nonprofit in Michigan?
Yes, there are additional requirements for starting a nonprofit in Michigan. These include obtaining an employer identification number, applying for tax-exempt status, registering with the Michigan Department of Treasury, and obtaining any necessary local licenses.
Is there a fee for filing the formation document in Michigan?
Yes, there is a filing fee for filing the formation document in Michigan. The fee is currently $20.
What type of tax-exempt status do I need to apply for in Michigan?
In Michigan, you will need to apply for a 501(c)(3) tax-exempt status with the Internal Revenue Service.
Do I need to register with the Michigan Department of Treasury?
Yes, all nonprofits in Michigan are required to register with the Michigan Department of Treasury.
Do I need to obtain any local licenses to operate a nonprofit in Michigan?
It depends. Some localities may require nonprofits to obtain certain licenses in order to operate. It is best to check with your local government for more information.

Also Read

Why Michigan Nonprofit Corporation is So Important

Michigan nonprofit corporations are essential for several reasons. Firstly, they provide essential services to underserved populations who may not have access to the assistance they need otherwise. Nonprofits in Michigan often serve as a safety net for vulnerable individuals and families facing challenges such as poverty, homelessness, domestic abuse, and mental health issues. These organizations work tirelessly to provide support, resources, and advocacy to those in need, filling gaps where government and for-profit entities may fall short.

In addition to addressing immediate needs, Michigan nonprofit corporations also play a crucial role in advocating for policy change and social justice. By mobilizing communities, raising awareness, and engaging in advocacy efforts, these organizations work to address systemic issues and create lasting change. Nonprofits in Michigan are often on the front lines of important social movements, championing causes such as racial justice, environmental conservation, healthcare access, and education equity.

Furthermore, Michigan nonprofit corporations contribute significantly to the state’s economy and job market. These organizations employ thousands of individuals across various industries, from healthcare and education to arts and culture. In addition to providing job opportunities, nonprofits in Michigan also stimulate economic growth by generating revenue through donations, grants, and fundraising activities. This revenue is then reinvested in the organization’s mission, benefiting the community at large.

Another key aspect of Michigan nonprofit corporations is their ability to foster collaboration and partnership within the community. By working together with other nonprofits, businesses, government agencies, and community stakeholders, these organizations can leverage resources, expertise, and influence to create a more significant impact. Collaboration is crucial for addressing complex social issues that require a multifaceted approach and innovative solutions.

Moreover, Michigan nonprofit corporations are essential for promoting volunteerism and civic engagement. These organizations rely on the dedication and passion of volunteers to carry out their mission effectively. By empowering individuals to get involved in their communities, nonprofits in Michigan foster a sense of belonging, purpose, and connection among residents. Volunteerism not only benefits the organization, but also the volunteers themselves, as they gain valuable skills, experiences, and personal fulfillment from giving back.

In conclusion, Michigan nonprofit corporations are vital to the well-being and vitality of the state. These organizations fulfill critical roles in providing services, advocating for change, fostering economic growth, promoting collaboration, and fostering civic engagement. Without the tireless efforts and dedication of nonprofits in Michigan, many individuals and communities would be left without essential support and resources. It is essential that we recognize and support the invaluable work of Michigan nonprofit corporations in creating positive social change and improving the quality of life for all residents.

Conclusion

Starting a nonprofit corporation in Michigan is an incredible way to give back to your community and positively impact the causes that matter most to you. By forming a nonprofit, you can provide essential services, promote awareness, and make a lasting difference in the lives of those who need it most. In Michigan, a lot of nonprofit organizations are there to cater to people in need. Starting a nonprofit corporation is better than an LLC, as it provides limited liability and tax benefits. It helps you save taxes. If you want to start a nonprofit in Michigan, you must follow the steps mentioned above in the article.

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