Use the guide below to form a 501(c)(3) nonprofit in Minnesota. Keep in mind that the process requires forming a nonprofit corporation and getting tax-exempt status with the IRS.
Since the overall process is extremely complex, we highly recommend consulting with an attorney or using a service like Harbor Compliance for personalized top-to-bottom nonprofit formation and obtaining IRS 501(c)(3) status.
To be able to file a name with the state in Step 5 it’s going to have to comply to a set of simple rules – be unique/unlike any other registered name, not indicate something other than what is stated in your mission statement, and don’t worry about corporate identifiers like “corporation,” or “incorporated,” or the abbreviations.
Conduct a Business Entity Search through the state and read through the Minnesota Statutes which have all the fine details. If needed you can file a Request for Reservation of Name ($30 filing fee) form to reserve the name for 1 year. And if there’s a conflict, you might be able to file a Consent to Use of Name form ($55).
A Registered Agent performs “service of process”, or in other words they’re responsible for receiving and helping process important documents like state filings, legal notices, tax forms, etc. on behalf of your nonprofit. The agent can be an individual resident or a domestic/foreign business entity registered with the state. A physical street address is also required, of a registered office.
You can hire an outside professional service and expect to pay up to $160/year, or get a qualified agent free when incorporating a nonprofit through services like Harbor Compliance (see details). They handle this along with much more depending on your startup package.
Chances are you’re unfamiliar with the formal nature of nonprofit corporations. That’s okay, choosing to govern by a board of directors has a fair amount of upsides vs. being “member or volunteer-run”. The first being that you’ve got to assemble a team! Now incorporators are the individuals who execute the Articles of Incorporation in Step 5 – sign & file. As long as they’re 18 you’re good to go.
Bookmark the Guide for Charity Board Members page from the MNA because it has more of the finer details in terms of board responsibilities. To be frank, working with an attorney or incorporation provider really comes in handy during this foundational step as well because there are definitely corporate formalities to learn.
Without your own bylaws, your nonprofit would be subject to the default rules and statutes concerning these subjects which may not be suitable at all. Common nonprofit bylaws include:
In this step you actually form the nonprofit corporation in the eyes of the law and public record. That being the case, make absolutely sure all your ducks are in a row before paying the fee and going live.
Filing Fee: $70
What we’re referring to here is a physical, often very nice looking book, folder or binder where copies of critical pieces of paperwork are kept and managed. And yes, that’s along with the many modern ways of tracking and compiling information on your nonprofit. They’re somewhat of a corporate formality, but extremely common and highly-advised.
You can pick one up at pretty much any office supply store or online through Amazon of course, but we’re huge fans of savvy-sleek Corporate Kits which include gorgeous records books, binders, blank certificates and more which you can brand for as little as $99.
Whereas filing in Step 5 establishes your nonprofit in law, your first meeting marks the beginning of your official journey. According to the MN council of Nonprofits,
“At the first meeting of the board, the initial board members must approve the drafted bylaws and adopt its principles. The new organization will also vote on new board members and officers as it is called for in its bylaws. Once these activities are accomplished, the board should begin forming the mission and start the process of obtaining tax-exempt status.“
Make sure that you prepare the minutes of the meeting; your attending board of directors will need to sign the document. If needed, check out a great Corporate Minutes Template which you can customize.
An EIN, or Employer Identification Number, is a 9-digit number required by all business and nonprofit entities under law in order to effectively track their financial activity. Think of it as a social security number for your nonprofit, but it will also make it possible to legally hire paid employees if needed and open up a bank account in Step 10.
Almost every transaction your nonprofit engages in will require an EIN. That said, you can get one quickly and free of charge by applying online through the IRS Website.
Now’s the point to ensure your nonprofit is 100% compliant in terms of not only licenses/permits, but state and federal taxes. You should be able to apply for tax exempt status now that the corporation is established.
Two other great sources of information, networking, and financial services are the Minneapolis district office of the Small Business Administration and the Sec. of State’s Start a Business page because nonprofits and the small business community work together in countless ways.
As a nonprofit you’re looking for financial utility and solutions that are geared for your needs – low fees, waved expenses, great online banking options, good interest rates (if your nonprofit maintains higher account balances) and other valuable services.
Take some time to shop around at local, state and national banks/credit unions until you find the best option. Also, if you haven’t already, consider appointing a Chief Financial Officer (CFO) who’s knowledgeable and can help. If needed, check out this brief breakdown of Nonprofit Accounts to gain a better understanding and be sure to keep your nonprofit account 100% separate from all others.
If you’d like help forming a 501(c)(3) Nonprofit In Minnesota, we highly recommend looking into Harbor Compliance for personalized top-to-bottom nonprofit formation and obtaining IRS 501(c)(3) status.