Starting a 501(c)(3) Nonprofit in Minnesota is Easy
To start a 501(c)(3) tax-exempt nonprofit organization in Minnesota, you must first start a nonprofit in Minnesota according to the rules of the state and then apply for 501(c)(3) status with the IRS.
Learn more about 501(c)(3) eligibility in our What is a 501(c)(3) guide.
Step 1: Name Your Minnesota Nonprofit
Choosing a name for your organization is the first and most important step in starting your nonprofit corporation. Be sure to choose a name that complies with Minnesota naming requirements and is easily searchable by potential members and donors.
To learn more, read our How to Name a Nonprofit in Minnesota guide.
1. Follow the naming guidelines:
The name you pick for your organization must be written using English letters or characters. In addition, your nonprofit’s name cannot imply that it was not organized under the Minnesota Statutes governing corporations.
Read the Minnesota Statutes for the complete rules on naming a Minnesota-based organization.
2. Is the name available in Minnesota? Make sure the name you want isn't already taken by doing a name search on the State of Minnesota's Website.
3. Is the URL available? We recommend that you check to see if your business name is available as a web domain. Even if you don't plan to make a business website today, you may want to buy the URL in order to prevent others from acquiring it.
Step 2: Choose a Registered Agent in Minnesota
Your nonprofit is required to nominate a Minnesota registered agent for your organization.
What is a Registered Agent? A registered agent is an individual or business entity responsible for receiving important legal documents on behalf of your business. Think of your registered agent as your business' point of contact with the state.
Who can be a Registered Agent? A registered agent must be a resident of Minnesota or a corporation, such as a registered agent service, authorized to transact business in Minnesota. You may elect an individual within the company including yourself.
Need help choosing a registered agent? Check out our complete guide on How to Choose a Registered Agent for your Minnesota Nonprofit.
Step 3: Select your Directors & Officers
The directors of an organization come together to form a board of directors. This board of directors is responsible for overseeing the operations of the nonprofit.
The president, secretary, and other members of nonprofit who have individual responsibilities and authorities are known as officers.
The organization structure of your nonprofit in Minnesota MUST include:
- At least 3 directors not related to each other
- A president
- A secretary
- A treasurer
To learn more about electing a Minnesota nonprofit board of directors, read our full guide.
Step 4: Adopt Bylaws & Conflict of Interest Policy
To be eligible to apply for 501(c)(3) status, your nonprofit is required to have the following two documents:
- Conflict of interest policy.
What are Bylaws? Bylaws are the rules outlining the operating procedures of the nonprofit.
What is a Conflict of Interest Policy? A Conflict of Interest Policy is the collection of rules put in place to ensure that any decisions made by the board of directors or the officers benefit the nonprofit and not individual members.
NOTE: The bylaws and conflict of interest policy must be adopted by the nonprofit during its first organizational meeting where the directors and officers are officially appointed.
Step 5: File the Minnesota Articles of Incorporation
To register your nonprofit, you will need to file the Articles of Incorporation with the State of Minnesota. Since your nonprofit will file for 501(c)(3) status with the IRS, you cannot use the articles of incorporation form listed on the Secretary of State’s website. Then you can use this template when drafting your Articles of Incorporation.
Use the template as a guideline to create your own Articles of Incorporation with the sections required by both the Minnesota Secretary of State and the IRS.
To ensure that your nonprofit is eligible to apply for 501c3, in the articles of incorporation you must explicitly state the following:
In order to qualify for 501(c)(3) status, the organization’s purpose must explicitly be limited to one or more of the following:
Charitable, Religious, Scientific, Educational, Literary, Fostering national/international amateur sports competition, Preventing cruelty to animals/children, testing for public safety
You must explicitly state what the assets of the organization will be used for, and what will happen to the assets if the organization is dissolved.
To be eligible for 501(c)(3) status, the assets of your organization must only ever be used for purposes approved under section 501(c)(3).
Section 5 of this sample IRS document provides an example of these provisions required for 501(c)(3) eligibility.
OPTION 1: File Online With the Minnesota Secretary of State
- OR -
OPTION 2: File by Mail or In Person
State Filing Cost: $90 online and in person; $70 by mail
Minnesota Secretary of State - Business Services
Retirement Systems of Minnesota Building
60 Empire Drive, Suite 100
St Paul, MN 55103
Step 6: Get an EIN
What is an EIN? The Employer Identification Number (EIN), or Federal Tax Identification Number, is used to identify a business entity such as your nonprofit corporation. It is essentially a social security number for your organization.
Why do I need an EIN? An EIN is required for the following:
- To open a business bank account for the company
- For Federal and State tax purposes
- To hire employees for the company
How do I get an EIN? An EIN is obtained from the IRS (free of charge) by the business owner after forming the company. This can be done online or by mail. Check out our EIN Lookup guide for more information.
Step 7: Apply for 501(c)(3) Status
Before a nonprofit can apply for 501(c)(3) status it must,
- Elect at least 3 directors not related to each other
- File the Articles of Incorporation with the required provisions (As covered in Step 5)
- Adopt the bylaws and conflict of interest policy
- Have an EIN number
Once these four conditions have been met your nonprofit can apply for 501(c)(3) tax-exempt status by filing Form-1023 online.
If your application is approved, the IRS will send you a determination letter stating that your organization is exempt from federal taxes under section 501(c)(3).
FAQ: Starting Your Nonprofit
When should an organization apply for federal tax exemption?
Form 1023 must be filed within 27 months from the end of the first month your organization was created.
How long will it take for the IRS to process Form 1023/1023-EZ?
Soon after sending your application you should receive an acknowledgment of receipt of your application.
If your application is simple and complete, IRS will send your determination letter within 180 days for Form 1023
If you have not heard from them by that time you can call (877) 829-5500 to inquire about your application.
Important Steps After Forming a Nonprofit
1. Opening a business bank account:
- Separates your personal assets from your company's assets, which is necessary for personal asset protection.
- Makes accounting and tax filing easier.
To open a bank account for your nonprofit corporation you will typically need the following:
- The EIN for the nonprofit
- A copy of the nonprofit’s bylaws
- A copy of the Artciles of Incorporation
Read our Best Small Business Banks review to find the right bank for your nonprofit’s needs.
2. Getting a business credit card:
- Helps you separate personal and business expenses.
- Builds your company's credit history, which can be useful to raise capital later on.
3. Hiring a business accountant:
- Prevents your business from overpaying on taxes while helping you avoid penalties, fines, and other costly tax errors
- Makes bookkeeping and payroll easier, leaving you with more time to focus on your growing business
- Helps effectively manage your business funding and discover areas of unforeseen loss or extra profit
For more business accounting tools, read our guide to the best business accounting software.
Business insurance helps you manage risks and focus on growing your business.
The most common types of business insurance are:
- General Liability Insurance: A broad insurance policy that protects your business from lawsuits. Most small businesses get general liability insurance.
- Professional Liability Insurance: A business insurance for professional service providers (consultants, accountants, etc.) that covers against claims of malpractice and other business errors.
- Workers' Compensation Insurance: A type of insurance that provides coverage for employees’ job-related illnesses, injuries, or deaths.
Build a Business Website
Creating a website is a big step in legitimizing your business. As a nonprofit, your website will be the primary way to share your organization’s mission and story to supporters. Your website should be a great resource for anyone interested in your nonprofit’s upcoming events, goals, and news to help advance your cause.
Some may fear that creating a business website is out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Properly Sign Legal Documents
Improperly signing a document as yourself and not as a representative of the business can leave you open to personal liability.
When signing legal documents on behalf of your nonprofit, you could follow this formula to avoid problems:
- Formal name of your organization
- Your signature
- Your name
- Your position in the business as its authorized representative
See the image below for an example:
This ensures that you are signing on behalf of your nonprofit and not as yourself.
State of Minnesota Quick Links
- IRS - Information for Charities & Nonprofits
- IRS - Required Provisions for Organizing Documents
- IRS - 990 Series for Tax-Exempt Organizations
- IRS - Applying for Tax-Exempt Status
- IRS - 501(c)(3) Compliance Guide
- Small Business Administration - License and Permits
- Minnesota Statutes - Nonprofit Corporations
- Minnesota Secretary of State’s Online Business Portal
- Minnesota Secretary of State - Start a Business
- ABR - Minnesota Revenue Application for Business Registration
- Minnesota Department of Revenue - Nonprofit Organizations Industry Guide
- Minnesota e-License Portal
- Minnesota Gambling Control Board
- Minnesota Attorney General - Charitable Organization Registration
- Minnesota Unemployment Insurance
- Minnesota New Hire Reporting Center