How to Start a Nonprofit in Minnesota

1. Name Your Organization

   Your organization’s name establishes its brand and is also important for incorporating with the state. The legal name of your nonprofit corporation may not conflict with any other organization registered in the state. Make sure the name is available and meets state requirements.

   Name Search:	Minnesota Secretary of State Name search
   Suffix:	Optional. A corporate name need not contain the word "corporation," "incorporated," "company," or "limited," or an abbreviation of one of these words.  § 317A.115 Minnesota Statutes

2. Recruit Incorporators and Initial Directors

   The incorporator is the person who signs the Articles of Incorporation for your nonprofit. You will need at least one, but can have more than one. Directors make up the governing body of your nonprofit corporation and are stakeholders in your organization’s purpose and success. You’ll want to identify three, unrelated individuals to meet IRS requirements. You will also want to be aware of any age or residency requirements.

   Minnesota director requirements:	Number: minimum 3 Qualifications: Natural persons. Majority must be adults. No residency requirement. No membership requirement. Term: 1 year unless otherwise provided for in the articles or bylaws. A term of a director, other than an ex officio director, may not exceed ten years. Quorum: majority Committee: One or more natural persons, need not be directors.
   Minnesota officer requirements:	One or more natural persons exercising the functions of the offices of president and treasurer, however designated. Two or more offices may be held by the same individual. This person may sign instruments in only one capacity when the signatures of two officers are required.

3. Appoint a Registered Agent

   A registered agent is responsible for receiving legal notices on behalf of your organization. The appointed registered agent must be physically located in the state and maintain an office that is open during regular business hours. As a nationwide registered agent, our service is designed to receive your legal documents and provide secure access to those documents through your online account. Our local Minnesota registered agent office is located in Owatonna, MN. We offer registered agent service independently or as part of our nonprofit formation packages.

4. Prepare and File Articles of Incorporation

   Your nonprofit’s articles of incorporation officially mark the creation of your organization. They document where and when the organization was formed and capture other information necessary to verify its existence. While requirements for language vary from state-to-state, there are some basic provisions that the IRS will look for when you apply for 501(c)(3) exemption. It is important to customize the articles for your organization and make sure you meet the state and IRS requirements. Meeting these requirements from the start will help avoid having to make amendments later or risk getting your 501(c)(3) application rejected. Some states will also require you to publish your articles of incorporation, so be mindful of any deadlines and publishing instructions.

   Agency:	Minnesota Secretary of State
   Form:	Articles of Incorporation – Original Filing
   Filing Method:	Mail, in-person, or online
   Agency Fee:	$70 by mail. $90 online or expedited in-person.
   Turnaround:	~5-7 business days by mail. ~24hrs online.
   Law:	2012 Minnesota Statutes Chapter 317A
   Notes:	Keep the original signed copy in your records. Submit a copy to the state. The Minnesota Secretary of State will endorse on the original the word "Filed" and the month, day, year, and time of filing, record the document in the office of the secretary of state, and return the document to the person who delivered it for filing.

5. File Initial Report

   After filing articles of incorporation, you must file an initial report.

   Not required

   
   
   

6. Obtain an Employer Identification Number (EIN)

   This unique, nine-digit number is assigned by the IRS to identify your nonprofit. All types of nonprofits will apply for an EIN, not only those that hire employees. You will use your EIN to open a bank account, apply for 501(c)(3) status, and submit 990 returns to the IRS.

   Agency:	Internal Revenue Service (IRS)
   Form:	IRS Form SS-4
   Instructions:	Applying for an EIN without a SSN/TIN: Online applications are not accepted if an individual does not have a SSN/TIN. Form SS-4 must be completed, signed, and faxed to the IRS, leaving the SSN/TIN field blank or adding the terminology "foreign" to that line item. To follow up on the application, call the IRS and ensure they received the application.  Depending on the agent you speak with, you may be able to obtain the EIN over the phone. The IRS may then fax the EIN documentation back to you.
   Filing Method:	Mail, phone, fax, or online.
   IRS fee:	$0
   Turnaround:	Immediately online or by phone. 4 business days by fax. 4-5 weeks by mail.
   Notes:	The IRS website is only available during certain hours. Print your EIN before closing your session. For additional guidance, see IRS Pub 1635: Understanding Your EIN.

7. Store Nonprofit Records

   As you launch your nonprofit, you will receive a number of official documents. Organizing these documents in one place will save you headaches down the road. You will soon have numerous items to keep in your records including your EIN letter, bylaws, meeting minutes, 501(c)(3) determination letter, and more.

   
   
   

   A great way to maintain necessary documentation is Records Manager, our software for storing records securely, tracking directors and officers, and getting notified of meetings.

8. Establish Initial Governing Documents and Policies

   Your bylaws are the governing document for your nonprofit. They serve as your organization’s operating manual and should be consistent with your articles of incorporation and the law. When your Board of Directors meets for the first time, you’ll review and ratify the bylaws and they will be a roadmap for governance from there.

   At the same time, you’ll also want to create and adopt a conflict of interest policy. A conflict of interest is when someone in a key position in your nonprofit has competing interests and is making choices that could benefit themselves to the harm of the organization. Personal interests should be set aside and organizational interests prioritized. If a conflict of interest does arise, it should be disclosed immediately.

   Your application to the IRS for 501(c)(3) exemption will require that both the bylaws and the conflict of interest policy are approved and adopted. Once they’ve been adopted, safely store them in your Nonprofit Records Kit.

9. Hold Organizational Meeting of the Board of Directors

   The initial organizational meeting of your Board of Directors will be incredibly productive. At this meeting you will approve the bylaws, adopt the conflict of interest policy, elect directors, appoint officers, and approve resolutions such as opening the organization’s bank account. Important decisions are being made so be sure to record them in the meeting minutes.

10. Get Minnesota State Tax Identification Numbers/Accounts

    Not all nonprofits will need to obtain a Minnesota Tax ID and register. Minnesota offers a consolidated state tax registration application.

    Guidance:	Minnesota Tax ID Requirements
    Submit to:	Minnesota Department of Revenue http://www.revenue.state.mn.us/
    Form:	Form ABR: Minnesota Revenue Application for Business Registration
    Instructions:	Minnesota Application for Business Registration - Instruction Booklet
    Filing Method:	Mail, fax, phone, or online
    Fee:	$0

11. Apply for 501(c)

    Applying for 501(c) tax exemption can feel like the most daunting step in bringing your nonprofit dream into reality, but obtaining tax exemption comes with many benefits. You will be able to apply for grants and grow your fundraising success in addition to being exempt from IRS income tax. 501(c) is the chapter of the Internal Revenue Code that regulates nonprofit organizations. Like others, you may be most familiar with 501(c)(3) nonprofits, including charities and foundations. 501(c)(3) nonprofits apply using Form 1023 or Form 1023-EZ. Review the criteria for each application and make sure you meet the eligibility requirements set out by the IRS. Other types of nonprofits, including 501(c)(4)s and 501(c)(6)s, apply using Form 1024. After reviewing and approving your application, the IRS will return a Determination Letter officially recognizing your exemption.

    Completing the federal application for tax exemption is significantly easier with the assistance and support of a professional. Find someone with the expertise to ensure the correct application is being used and is completed accurately. A well-prepared application takes time, over 100 hours by IRS estimates, so put yourself on the path to success by finding a specialist to walk alongside you in the journey - from start to tax-exempt finish!

    Agency:	Internal Revenue Service (IRS)
    Form:	IRS Form 1023, IRS Form 1023-EZ, or IRS Form 1024
    Instructions:	IRS Instructions for Form 1023, IRS Instructions for Form 1023-EZ, or IRS Instructions for Form 1024.  Also see guidance IRS Pub 557: Tax-Exempt Status for Your Organization.
    Filing Method:	Mail
    Agency Fee:	$275 for organizations filing Form 1023-EZ and $600 for organizations filing Form 1023.
    Turnaround:	1023-EZ average: <1 month. 1023 average: 3-6 months.

    

12. Report Beneficial Ownership Information to FinCEN

    As of January 1, 2024, millions of entities in the US need to report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN) as part of the Corporate Transparency Act (CTA). Nonprofits without 501(c) tax exemption formed before that date must submit BOI by December 31, 2024, while those formed after must submit it within 30 days of formation. Once 501(c) tax exemption is granted, the organization may claim an exemption from BOI reporting requirements via an update filing to FinCEN. Our BOI Reporting Service includes up to four initial, updated, and corrected reports per year, ensuring the data you report to FinCEN is updated.

13. Apply for State Tax Exemption(s)

    With your IRS Determination Letter in hand, make sure you familiarize yourself with your state’s requirements for recognizing your nonprofit’s tax-exempt status. This is an area where requirements vary state-by-state. Many states issue their own tax-exempt certificate that can be used for sales and use tax purposes, but it may require application and periodic renewal.

    To file to obtain exemption from state income tax:

    Not required

    
    
    

    Upon obtaining your IRS Determination Letter, your organization is automatically exempt from Minnesota corporate income taxes. No application or notification is necessary.

    More information: Minnesota Department of Revenue

    To file to obtain Sales Tax Exemption:

    Agency:	Minnesota Department of Revenue
    Form:	Form ST16: Application for Exempt Status
    Agency Fee:	$0

14. Register for Charitable Solicitation (Fundraising)

    This is another area where laws differ from state to state, but most states require any nonprofit soliciting donations to register to do so on an annual basis. This means registering in the state prior to soliciting any resident of that state. Registering in your home state is essential, but you may also need to register other states depending on the scope of your organization.

    Minnesota Charitable Organization Registration

    Agency:	Minnesota Attorney General - Charities Division
    Law:	Minnesota Statutes Annotated §309.50 - § 309.75. A Guide to Minnesota's Charities Laws
    Foreign Qualification is Prerequisite:	No
    Registered Agent (Special Agency) Required?	No

    One-Time Exemption Registration

    More Details

    Exemption Eligible Organizations:	Organizations that did not receive and do not plan to receive total contributions in excess of $25,000 from the public in or out of the State of Minnesota during any accounting year and the organization’s functions and activities are performed wholly by volunteers and the organization does not employ a professional fundraiser (the direct cost of prizes given to the public in connection with charitable gambling may be excluded in determining the total amount of contributions) Religious societies or organizations that are exempt from filing a federal annual informational return pursuant to Internal Revenue Code, section 6033(a)(3)(A)(i) and (iii) and Internal Revenue Code, section 6033(a)(3)(C)(i) Educational institutions which are under the general supervision of the commissioner of education, the Board of Trustees of the Minnesota State Colleges and Universities, or the University of Minnesota or any educational institution that is accredited by the University of Minnesota or the North Central Association of Colleges and Secondary Schools, or by any other national or regional accrediting association Fraternal, patriotic, social, educational, alumni, professional, trade, or learned society organizations which limit the solicitation of contributions to persons who have the right to vote as a member (the term “member” does not include those persons who are granted membership upon making a contribution as the result of a solicitation) Organizations soliciting solely for a named person and all of the contributions received are transferred to the named person with no restrictions on the person’s expenditure of the contributions and with no deductions whatsoever Private foundations, as defined in section 509(a) of the Internal Revenue Code of 1954, which did not solicit contributions from more than 100 persons during their last accounting year An auctioneer licensed and bonded under chapter 330 who is conducting a live auction who has no access to the proceeds of the auction is not subject to the registration and reporting requirements of this chapter, and is not considered a professional fundraiser for the purposes of subdivision 2
    Form:	Charitable Organization - Exemption Form
    Filing Method:	Email to charity.registration@ag.state.mn.us.
    Agency Fee:	$0
    Law:	Minn. Stat. § 309.515
    Notes:	Charities that are exempt under the $25,000 or less in contribution clause or membership organization clause are not eligible for exemption if they employ a professional fund-raiser to solicit or assist in the solicitation of contributions. Exemptions do not expire as long as the organization continues to qualify under the exemption criteria.

    Initial Registration

    More Details

    Form:	Charitable Organization Initial Registration & Annual Report Form
    Instructions:	File initial registration or exemption.  See Initial Registration Instructions and Information for Charitable Organizations and Trusts.
    Filing Method:	Email to charity.registration@ag.state.mn.us.
    Agency Fee:	$25
    Turnaround:	2-3 weeks
    Original Ink:	Not required
    Notarization Required?:	Not required
    Notes:	Before signing, the board must adopt a resolution approving and certifying the contents of the application. Two officers must sign the application. Signatures need not be notarized. Some Minnesota counties and municipalities may require charities that solicit in-person to register prior to fundraising.
    Before you Apply:	All Applicants: Check the available exemptions to see if your charity is eligible for exemption from the full registration requirement. Look through the list of required attachments and make sure that you have each required document in hand before starting the registration application.
    How to Apply:	Domestic Applicants: File entity formation documents with the Minnesota Secretary of State. Submit a Charitable Organization Initial Registration form and all required attachments to the Minnesota Attorney General - Charities Section. Foreign Applicants: Determine whether or not your charity will need to foreign qualify based on your activity in Minnesota. If not required, skip to number 3. File foreign qualification documents with the Minnesota Secretary of State. Submit a Charitable Organization Initial Registration form and all required attachments to the Minnesota Attorney General - Charities Section.
    Required Attachments:	IRS form 990 Articles of incorporation IRS determination letter List of officers and directors Professional fundraising contracts A list of officer and director compensation List of banks where funds are deposited

    Registration Renewal

    More Details

    Form:	Charitable Organization Initial Registration & Annual Report Form
    Filing Method:	Email to charity.registration@ag.state.mn.us.
    Agency Fee:	$25
    Due:	Annually by the 15th day of the 7th month following the close of the charity's fiscal year. If your fiscal calendar ends on December 31, then the renewal is due by July 15.
    Due Date Extension:	Due dates can be extended for 4 months beyond the original due date by submitting a request for extension through the online portal.
    Original Ink:	Not required
    Notarization Required?:	Not required
    Penalties:	There is a $50 late fee.
    Notes:	Note the list attachments required, including a financial statement and IRS Form 990. Larger organiztaions may need to attach an audited financial statement.
    Required Attachments:	IRS form 990 Audited financials (if applicable) List of officers and directors A list of officer and director compensation List of banks where funds are deposited

    Contract Filing

    More Details

    Filing Method:	Email to charity.registration@ag.state.mn.us.
    Agency Fee:	$0
    Due:	Within 7 days of entering into the contract with a Professional Fundraiser

    Reinstatement

    Not required

    
    
    

    Formal reinstatement is not required. Charities who wish to renew a lapsed registration should submit a renewal filing and include financials for each year not registered. They must pay the renewal fee and $50 late fee. 

    Change of Fiscal Year

    More Details

    Agency Fee:	$0
    Notes:	Fiscal year can be changed during the standard renewal process.

    Cancelation

    More Details

    Filing Method:	Email to charity.registration@ag.state.mn.us.
    Agency Fee:	$0
    Notes:	To close out your registration, send a letter indicating that your organization wishes to cancel its registration. No final report or renewal is required.

    To fundraise nationally or online, please see our Fundraising Compliance Guide. Our services manage your initial, renewal, and exemption filings in every state.

15. Obtain Other Business Licenses & Permits

    Running your nonprofit corporation legally also means securing all applicable licenses and permits. The range of local, state, and federal requirements is wide. Access resources like the Small Business Administration Business License & Permit look-up tool and search by your business type and locality.

Frequently Asked Questions

You’ve made it! You turned your passion into a legitimate nonprofit corporation exempt under IRS 501(c) and are benefiting your community. That solid foundation on which you built your organization requires ongoing maintenance. Investing in maintaining compliance with all of the government agencies is an ongoing responsibility and commitment needed to ensure your vision continues long into the future. Check out our compliance guide to learn more!

Once you have registered your nonprofit per the steps listed above, you will need to maintain compliance with all of the government agencies. Staying current with the IRS and state requirements is an ongoing responsibility. Continue reading our Minnesota nonprofit compliance guide to learn more!

Continue reading "Minnesota Nonprofit Compliance"

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