In this guide, we’ll help you learn how to start a nonprofit corporation in Michigan. A nonprofit corporation is a legal entity with a purpose other than making a profit. Some possible purposes of a nonprofit corporation include:
Nonprofit corporations in Michigan are led by a board of directors. The first decision you’ll need to make is who will be on your nonprofit’s board. To meet federal and state requirements for tax exemption, choose at least three people to serve as directors in the beginning. There is an exception, and that is if your nonprofit is a private corporation that provides dental services to an underserved population. In that case, Michigan only requires you to have one director.
Your Michigan nonprofit corporation’s name is its first impression. You may want to choose a name that is memorable and describes what your nonprofit does. At the end of your name, be sure to include “Incorporated,” “Corporation,” “Company,” or “Limited.”
Bear in mind, you can’t have a name that someone has already registered. You can see which names are available on the Michigan Department of Licensing and Regulatory Affairs website.
Another important consideration is whether the matching website name, called a domain name, is available. If it is, you may want to register it before someone else does. Claim your domain name today using ZenBusiness’s domain name service.
To stay in compliance, every nonprofit must have an entity available to accept its legal correspondence during regular business hours. This individual or business is called a registered agent and must have a physical address in Michigan. The registered agent is also responsible for keeping the contact information for the nonprofit on file and forwarding any correspondence to the right person.
Given all these requirements, trying to be your own registered agent can be stressful and time-consuming. Many nonprofit founders decide to skip the hassle and partner with a service company that can fulfill these obligations for them. Choose ZenBusiness’s registered agent providers so you never have to worry about missing an important delivery.
Next, file your Articles of Incorporation for a nonprofit with Michigan’s Department of Licensing and Regulatory Affairs. This is the step that will officially create your nonprofit corporation as a legal entity.
On your Articles of Incorporation form, fill in your nonprofit’s details, including:
Submit your completed form, along with your filing fee. You can expedite the process for turnaround times of 24 hours, same day, two hours, and one hour. You can go online at the Corporations Division or pay via mail with a check sent to:
Michigan Department of Licensing and Regulatory Affairs
Corporations, Securities & Commercial Licensing Bureau Corporations Division
P.O. Box 30054
Lansing, MI 48909
Every nonprofit corporation needs rules. Bylaws are the internal written rules that guide your business. They define its standard policies and procedures. In the event of a conflict of interest, they establish the process for achieving a resolution. Keep them close at hand in a binder for reference.
The first organizational meeting is a key step in how to start a nonprofit corporation in Michigan. Your notes, or meeting minutes, should record the tax-exempt purpose of your organization. At this meeting, you’ll appoint your directors. You’ll also need to select at least three officers: a president, a treasurer, and a secretary. Finally, you’ll ratify your bylaws.
A nonprofit must keep books and records showing that it complies with tax laws. These records include your bylaws, meeting minutes, EIN confirmation letter, and 501(c)(3) determination letter. Consider how best to organize and store your nonprofit corporation’s paperwork. For some nonprofits, organizing documents into physical binders may suffice. More complex organizations’ needs may be easier to manage electronically, through a software program or cloud service.
The Internal Revenue Service requires your nonprofit corporation to have a unique tax identification number, called an Employer Identification Number, or EIN. You can get this from the IRS website or let ZenBusiness help you get your EIN.
To keep your nonprofit compliant, you may need to obtain local, state, and federal licenses or permits. For example, if you plan to raise money through bingo, raffles, or other charitable games, you must get a license for Michigan charitable gaming. Figuring out which licenses and permits you need can be challenging because each location and industry can have different requirements. Get a complete license report from ZenBusiness to make sure you’re covered.
Exempt status means that an organization doesn’t owe corporate income tax. Charitable, nonprofit organizations are exempt under part of the US tax code called 501(c)(3). To apply for exemption under 501(c)(3), complete an IRS Form 1023 or 1023-EZ. After the IRS approves your tax-exempt status, the state of Michigan will automatically consider your organization exempt.
Before you begin raising public funds for your nonprofit, you should register it with the Attorney General’s Charitable Trust Division. Call (517) 373-1152 and request an Initial Charitable Trust/Charitable Solicitation Questionnaire.
One of the last steps for starting a nonprofit corporation in Michigan is obtaining insurance. If your nonprofit will have employees rather than just volunteers, then you need unemployment insurance and workers’ compensation insurance. Depending on your industry, other kinds of insurance may be necessary to protect your business from loss and liability. We suggest that you consult an insurance professional to determine your nonprofit’s insurance needs.
At ZenBusiness, we are proud to support small businesses through a variety of different tools and services. Whether you need a registered agent service or are looking to register a domain, our goal is to help you stay on the road to success. Check out our services, and contact us today to see how we can help you grow your company.
Yes, a nonprofit corporation in Michigan can pay its founder a salary, as long as they are active in the organization’s operations, like an employee would be.There is no set maximum salary, but it must be no more than “reasonable” compensation for the services the founder performs for the organization.
There is a $25 filing fee for normal processing time, which takes up to 10 business days. Documents are returned in about a month. Expedited service, including same-day processing, is available at an additional cost ranging from $50 to $1,000.
It’s not unusual for a nonprofit to have net earnings from fundraising activity. The big difference between a nonprofit and a for-profit company is in how these funds are used. To keep your nonprofit status, any net gains must be put back into the organization. For example, they may be used to pay for employees’ salaries and other operating expenses.
Businesses that serve the community, including those with charitable, humanitarian, educational, or religious missions, may be eligible to register as a nonprofit. To qualify, the business’s earnings can’t be used for personal gain. Can nonprofits sell products? Yes, nonprofits can sell merchandise. Any net proceeds are used to fund the organization and its mission.
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