Michigan Nonprofit Startup Guide
from Harbor Compliance
Congratulations! You've just come up with an idea to start a nonprofit which will make Michigan and the world a better place. However, you're not sure where to start or what you should do first. We've got you covered.
While MNA does not offer direct services for nonprofit start-ups, we do offer a variety of resources to help you get your nonprofit up and running.
The name you choose for the Michigan nonprofit must comply with Michigan naming requirements and should also be easily searched by potential donors and members.
A resident agent in Michigan is also known as a Michigan registered agent. These individuals are required by law for every nonprofit organization in the state of Michigan.
Michigan nonprofits are required to have two documents to be eligible to apply for 501(3)(c) status. The documents required are:
The bylaws are the rules used by the members and directors to oversee the nonprofit.
4b. A Conflict of Interest Policy:
This is a collection of rules put in place to ensure that all decisions made benefit the nonprofit’s purpose and not the organizational members’ personal agenda.
Nonprofits in Michigan are not required by state law to file bylaws with the Secretary of State.
However, every nonprofit organization in Michigan must keep a copy of the corporation’s bylaws at the principal place of business.
5a. Charitable organizations – 501(c)(3):
Charitable organizations are also referred to as true nonprofits and seek to attain IRS tax exemption status. These are the most popular types of organizations, with approximately 1.5 million registered charitable nonprofits in the United States.
5b. Private charitable foundations:
These foundations are privately owned nonprofits and are established to assist global concerns such as medical research, education, environmental issues, and more. Additionally, private charitable foundations have a single wealthy benefactor in most cases and grant money to smaller nonprofits.
5c. Social advocacy groups – 501(c)(4):
These groups have a primary focus on influencing and promoting political or social change. Like other types of nonprofits, they also further a specific cause through fundraising and education.
The nonprofit Articles of Incorporation documents where and when the organization was created and contains pertinent information to verify the nonprofit’s existence.
Additionally, when vetting the 501(c)(3) tax exemption application, the Internal Revenue Service will keep an eye out for a few introductory provisions. So you must meet both the state of Michigan’s requirements as well as the IRS requirements to avoid delays or the application being declined.
The Articles of Incorporation must be filed with the Michigan Department of Licensing and Regulatory Affairs – corporations division.
To file the Articles of Incorporation in Michigan, you need Form CSCL/CD-502. You may file the Articles of Incorporation with the Michigan Secretary of State online or in-person.
The EIN is an employee identification number, also referred to as a federal tax identification number. The EIN is used to identify a nonprofit and is compulsory in the state of Michigan. Think of it as your nonprofit’s social security number.
To apply for your EIN number, complete the IRS Form SS–4. Submit the form online or via mail.
To qualify for federal tax-exempt status from the IRS, Form 1023 must be completed and filed with the Internal Revenue Service. Form 1023 is the Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. It requires information regarding your organization’s history, structure, finances, operations, governance policies, activities, and more.
Small nonprofits in Michigan are legible to file Form 1023-EZ, which is a Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. It’s a short form that can be found online.
Further information on completing and submitting the forms may be found on the IRS website.
Once nonprofits in Michigan have received their federal tax exemption, they are automatically exempt from Michigan state income tax.
Additionally, federal tax-exempt nonprofits in Michigan are also automatically exempt from Michigan sales and use tax. Refer to the Michigan Department of Treasury for more information on state tax exemptions for nonprofits.
The exemption can be claimed with each seller or vendor by submitting a completed certificate of exemption or Form 3372 along with a copy of the IRS 501(c)(3) determination letter.
from Harbor Compliance
from The NEW Center
from Nonprofit Network
For technical questions related to starting a 501(c)(3), including required paperwork and filings:
For a CPA, attorney, consultant or other experts along the way, check out MNA’s Business Marketplace, a directory of MNA members who specialize in serving nonprofits.