How to Start a Nonprofit in Minnesota


Steve Goldstein
Steve Goldstein
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Start a Nonprofit in Minnesota

Are you looking to start a nonprofit in Minnesota? You’ve come to the right place. Known for its vibrant community and rich culture, Minnesota (often referred to as The North Star 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 Minnesota’s motto, “The Star of the North (L’Étoile du Nord),” thousands of nonprofits are founded within the state each year. This article will provide a comprehensive guide to starting your own nonprofit corporation in Minnesota. 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 Minnesota, we encourage you to read this article in its entirety.

What is a Nonprofit in Minnesota?

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 Minnesota, 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 Minnesota

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 Minnesota 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 Minnesota might be eligible for tax exemptions (check with Minnesota Department of Revenue), but this type of organization does not get to enjoy limited liability and personal asset protection.

How to Start a Nonprofit Corporation in Minnesota

Setting up a nonprofit corporation requires a few things to consider. Name of the nonprofit, initial directors, drafting bylaws, get a Registered 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 Minnesota 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 Minnesota 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 1 year 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 Minnesota Registered Agent

The third step is to get a Minnesota Registered Agent for your nonprofit corporation. The Registered 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 Minnesota.

Step 4: Write Minnesota 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 Minnesota state law. It is similar to an LLC operating agreement in Minnesota for the LLC owners.

Step 5: File the Minnesota Articles of Incorporation

This is the most important step. File your Articles of Incorporation with the Minnesota Secretary of State. You can do it through three ways, online, by mail and in-person. All the formation forms, such as the Minnesota LLC Articles of Organization form, the Minnesota Articles of Incorporation form for corporations, forms for LLPs, and all others can be found on the Minnesota 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 $155 for filing online and in-person, and $135 for filing by mail to the Minnesota Secretary of State — Business Services, Retirement Systems of Minnesota Building, 60 Empire Drive, Suite 100, St Paul, MN 55103 or upload it online (if available).

Step 6: Obtain Tax ID for Your Minnesota 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 Minnesota

The next step is to get the business licenses you need to run your nonprofit organization in Minnesota. 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 Minnesota, you must apply for the tax exemption to Minnesota Department of Revenue. 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 ST3-Certificate of Exemption to apply for the state tax exemption. Read Minnesota classification of taxes to learn more about the Minnesota tax structure.

Step 10: Get Insurance for Your Minnesota 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 Minnesota Department of Commerce, Insurance Division for more information.

After Forming Your Minnesota 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 Minnesota. 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 Minnesota

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

  • Veterans Airlift Command
  • Can Do Canines
  • Mission Haiti Inc.
  • Washburn Center for Children
  • Interfaith Outreach & Community Partners
  • CAIR-Minnesota
  • Loft
  • Midwest Animal Rescue & Services

FAQs

What is a nonprofit organization in Minnesota?
A nonprofit organization in Minnesota is a type of organization that is recognized by the state, either as a corporation or a charitable trust, and operates for a purpose other than to generate profit or gain for its members or founders.
What are the steps for forming a nonprofit in Minnesota?
The steps for forming a nonprofit in Minnesota include deciding on a mission and purpose, choosing a name and structure, drafting bylaws and articles of incorporation, filing for tax exemption, and registering with the Minnesota Attorney General’s office.
Is there a filing fee to register a nonprofit in Minnesota?
Yes, there is a filing fee to register a nonprofit in Minnesota. The exact fee will depend on the structure of the organization, but it typically ranges from $50 to $110.
What documents are required to register a nonprofit in Minnesota?
The documents required to register a nonprofit in Minnesota are the articles of incorporation, the bylaws, and the application for tax exemption.
What type of tax exemption is available for a nonprofit in Minnesota?
Nonprofits in Minnesota may qualify for several types of tax exemptions, including federal, state, and local exemptions.
How do I apply for a federal tax exemption for my nonprofit in Minnesota?
To apply for a federal tax exemption for your nonprofit in Minnesota, you must fill out an IRS form 1023 and submit it to the IRS.
How long does it take to get approved for a federal tax exemption for my nonprofit in Minnesota?
It typically takes about three months for the IRS to process and approve an application for a federal tax exemption for a nonprofit in Minnesota.
Does my nonprofit in Minnesota need to file an annual report?
Yes, nonprofits in Minnesota are required to file an annual report with the Minnesota Secretary of State.
What is the deadline for filing an annual report for my nonprofit in Minnesota?
The deadline for filing an annual report for a nonprofit in Minnesota is typically four months after the end of the organization’s fiscal year.
Who is responsible for filing the annual report for my nonprofit in Minnesota?
The board of directors of the nonprofit is responsible for filing the annual report.
How do I change the name of my nonprofit in Minnesota?
To change the name of your nonprofit in Minnesota, you will need to submit a name change application to the Minnesota Secretary of State.
How do I change the officers of my nonprofit in Minnesota?
To change the officers of your nonprofit in Minnesota, you will need to submit a new officer list to the Minnesota Secretary of State.
How do I change the address of my nonprofit in Minnesota?
To change the address of your nonprofit in Minnesota, you will need to submit a new address form to the Minnesota Secretary of State.
How do I change the purpose of my nonprofit in Minnesota?
To change the purpose of your nonprofit in Minnesota, you will need to submit an amended articles of incorporation to the Minnesota Secretary of State.
How do I dissolve my nonprofit in Minnesota?
To dissolve your nonprofit in Minnesota, you will need to submit a certificate of dissolution to the Minnesota Secretary of State.
What is the Minnesota Board of Charity Registration and what does it do?
The Minnesota Board of Charity Registration is a state board that oversees nonprofit organizations in Minnesota, and is responsible for registering charities, approving changes to articles of incorporation, and enforcing state laws related to nonprofit organizations.
What is the Minnesota Attorney General’s Office and what does it do?
The Minnesota Attorney General’s Office is the state’s legal representative and is responsible for protecting the public and enforcing state laws. The Minnesota Attorney General’s Office is also responsible for approving changes to articles of incorporation and enforcing state laws related to charitable organizations.
What is Minnesota Statute 317A and what does it do?
Minnesota Statute 317A is a state law that governs the formation, operation, and dissolution of nonprofit organizations in Minnesota. It outlines the procedures for filing documents and outlines the rights and responsibilities of nonprofit organizations.
What is Minnesota Statute 317A.555 and what does it do?
Minnesota Statute 317A.555 is a state law that outlines the responsibilities of nonprofit organizations in Minnesota, including the requirement to file annual reports and comply with the laws governing charitable organizations.
Are there any restrictions on how a nonprofit in Minnesota can spend its funds?
Yes, there are restrictions on how a nonprofit in Minnesota can spend its funds. Nonprofits in Minnesota must use their funds for the purposes for which they were established and must comply with state laws governing charitable organizations.
What are the laws governing how a nonprofit in Minnesota can solicit donations?
The laws governing how a nonprofit in Minnesota can solicit donations include the Minnesota Charitable Solicitations Act, which requires nonprofits to register with the Minnesota Attorney General’s Office before soliciting donations.
Are there any restrictions on how much money a nonprofit in Minnesota can hold in reserve?
Yes, there are restrictions on how much money a nonprofit in Minnesota can hold in reserve. Nonprofits in Minnesota must ensure that the excess funds they hold in reserve are used for the purposes for which they were established.
Are there any restrictions on how a nonprofit in Minnesota can use its endowment?
Yes, there are restrictions on how a nonprofit in Minnesota can use its endowment. Nonprofits in Minnesota must use their endowment funds in accordance with state laws and their own policies and procedures.
Are there any restrictions on how a nonprofit in Minnesota can invest its funds?
Yes, there are restrictions on how a nonprofit in Minnesota can invest its funds. Nonprofits in Minnesota must ensure that their investments are made in accordance with state laws and their own policies and procedures.
Are there any requirements for nonprofits in Minnesota to have a board of directors?
Yes, there are requirements for nonprofits in Minnesota to have a board of directors. Nonprofits in Minnesota must maintain a board of directors with at least five members, and the board must meet at least annually to review the organization’s finances and operations.
Are there any restrictions on how a nonprofit in Minnesota can pay its officers, directors, and employees?
Yes, there are restrictions on how a nonprofit in Minnesota can pay its officers, directors, and employees. Nonprofits in Minnesota must ensure that their compensation practices are fair and comply with state laws and their own policies and procedures.
Are there any restrictions on how a nonprofit in Minnesota can advertise or market its services?
Yes, there are restrictions on how a nonprofit in Minnesota can advertise or market its services. Nonprofits must ensure that their advertising and marketing practices comply with state and federal laws, as well as the organization’s own policies and procedures.
Are there any reporting requirements for nonprofits in Minnesota?
Yes, there are reporting requirements for nonprofits in Minnesota. Nonprofits must file an annual report and other documents with the Minnesota Secretary of State, and they may also be required to file annual financial statements with the IRS.
What are the steps to start a nonprofit in Minnesota?
The steps to start a nonprofit in Minnesota include
What paperwork is required to start a nonprofit in Minnesota?
In Minnesota, you must submit the Articles of Incorporation to the Secretary of State, along with the applicable filing fee. You may also need to file for 501(c)(3) tax-exempt status with the IRS, and create organizational documents such as a budget, policies, and procedures.
How much does it cost to start a nonprofit in Minnesota?
The costs involved to start a nonprofit in Minnesota depend on the type of organization and the services you need to register, such as filing fees for the Secretary of State and filing for 501(c)(3) tax-exempt status with the IRS.
Are nonprofit organizations exempt from taxes in Minnesota?
Yes, nonprofit organizations in Minnesota that are registered with the Secretary of State and approved for 501(c)(3) tax-exempt status by the IRS are exempt from state and federal taxes.
What are the benefits of starting a nonprofit in Minnesota?
The benefits of starting a nonprofit in Minnesota include the ability to receive tax-deductible donations, access to grants and other funding sources, and the ability to provide meaningful services to the community.

Also Read

Why Minnesota Nonprofit Corporation is So Important

Minnesota Nonprofit Corporation plays a unique and invaluable role in the state by bringing people together to work towards common goals and improve the quality of life for all residents. One of the key strengths of nonprofit corporations is their ability to mobilize resources, both human and financial, to address pressing social problems in innovative and effective ways. Minnesota Nonprofit Corporation is no exception, as it harnesses the power of collective action to create lasting change and positive outcomes for the community.

Nonprofit organizations like Minnesota Nonprofit Corporation are also instrumental in advocating for social justice and promoting equity. They serve as a voice for marginalized communities, working to address systemic inequalities and create opportunities for all individuals to thrive. Through various programs and initiatives, Minnesota Nonprofit Corporation is able to empower individuals, families, and communities to overcome obstacles and achieve their full potential.

Furthermore, Minnesota Nonprofit Corporation is indispensable in filling gaps left by government agencies and other institutions. Nonprofit organizations often step in to provide essential services and support to those in need when traditional avenues fail to meet the demand. Minnesota Nonprofit Corporation’s ability to adapt and respond to changing needs makes it a crucial partner in addressing critical issues and ensuring that all members of the community have access to the resources they require to succeed.

Beyond its tangible benefits, Minnesota Nonprofit Corporation provides a platform for individuals to engage in meaningful and fulfilling work. Volunteer opportunities allow community members to contribute their time and skills to important causes, fostering a sense of connection and purpose. By bringing people together in service of a common goal, Minnesota Nonprofit Corporation builds social cohesion and strengthens the bonds that tie communities together.

Finally, Minnesota Nonprofit Corporation serves as a beacon of hope and inspiration in challenging times. As communities grapple with complex issues and uncertainties, nonprofit organizations offer a ray of light and optimism. Through their efforts, Minnesota Nonprofit Corporation and other nonprofit organizations demonstrate the power of compassion, empathy, and solidarity in effecting real change and improving the lives of others.

In conclusion, the work of Minnesota Nonprofit Corporation is critically important in addressing the needs of communities and individuals in Minnesota. Through its dedication, innovation, and commitment to social change, Minnesota Nonprofit Corporation plays a central role in creating a more equitable and inclusive society. The impact of nonprofit organizations like Minnesota Nonprofit Corporation cannot be overstated, and their continued support and collaboration are vital to building a brighter future for all.

Conclusion

Starting a nonprofit corporation in Minnesota 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 Minnesota, 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 Minnesota, you must follow the steps mentioned above in the article.

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