Start a Minnesota nonprofit for FREE^*

A nonprofit is an entity or association created to promote and maintain the well-being and greater good of a community, in which profits (or surplus) are directed towards the business and mission rather than divided among the owners and shareholders. Nonprofits are often tax exempt. There are several different types of nonprofits, each with its own purpose, structure, regulations and limitations, and tax implications.

Starting your nonprofit in Minnesota doesn’t have to be a complicated process. Here are a few simple steps:

1. Doing research. Is your nonprofit serving a mission in the community? And do you have the means to maintain it?
2. Making your case. Write your mission statement, think about a name, select your directors carefully.
3. Filing. Rocket Lawyer can help you with this step!

Although they’re used interchangeably, a 501(c)(3) and a nonprofit are not the same thing. 

A nonprofit is an organization that meets the requirements of its state law. While most people think of nonprofits as charitable organizations, states recognize many types of nonprofits, including many that do not perform charitable activities. Insurance companies, industry-specific professional societies, homeowners' associations, and social clubs are just a few examples of nonprofits that are not necessarily 501(c)(3) organizations. 

A 501(c)(3) organization, on the other hand, is an additional application on a federal level. It’s a nonprofit organization that is exempt from most state and federal income tax because it applied for recognition as exempt from tax under section 501(c)(3) of the Internal Revenue Code. A 501(c)(3) organization must operate for exempt purposes. The exempt purpose must be charitable, scientific, educational, religious, literary, public safety, amateur sports competition, or the prevention of cruelty to children or animals.

In addition to 501(c)(3), the IRS recognizes 26 other types of nonprofit organizations. The most familiar type is charitable organizations. Others include:

• 501(c)(4) Civic League, Social Welfare Organization, or Local Employee Association.
• 501(c)(5) Labor, Agricultural and Horticultural.
• 501(c)(6) Trade or Professional Association.
• 501(c)(7) Social or Recreational Club.
• 501(c)(8) Fraternal Societies.
• 501(c)(9) Employee Beneficiary Association.
• 501(c)(12) Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like Organizations.
• 501(c)(14) State Chartered Credit Union and Mutual Reserve Fund.
• 501(c)(19) Veterans Organizations.
• 501(c)(29) CO-OP Health Insurance Issuers.

Creating a not-for-profit organization in Minnesota requires filing Articles of Incorporation. Articles are similar to those for any corporation, with a few additions specific to nonprofits. If you intend to apply for federal tax-exempt status, you must include a qualifying purpose. The IRS also requires specific language outlining the requirements you will follow for exemption.

Fees for registering a nonprofit can differ from county to county and even specific times of the year. Some fees may also be dependent on how much the nonprofit is expected to earn or has earned in previous years. 

There are a few fees that you may be charged when you register a Minnesota nonprofit. They include the following:

Minnesota state filing fees and processing times: 

• State fee: $90.
  • Fee to expedite your filing: $60.
• State processing time: 7 business days.
  • Expedited state processing time: 5 business days.
• Rocket Lawyer state filing fee: $0 $99.99.
  • First filing FREE* for RocketLegal+ members.
  • Get additional filings HALF OFF with RocketLegal+.

501C IRS filing fees and processing times

• IRS exemption-status fee: $275 for shorter applications or $600 for applications requiring more detailed information (including LLCs, organizations with higher income or value, foreign organizations, churches, schools, some healthcare organizations and some research organizations).
• IRS processing time: typically 6-12 months.
  • Simple applications may be processed more quickly.
• Rocket Lawyer IRS filing fee: $599 $1,199.
  • RocketLegal+ members get HALF OFF.

The Business Services team at Rocket Lawyer are pros when it comes to the requirements for registering a nonprofit and the steps and processes required to file in Minnesota. They can help you gather and file the necessary information quickly and at an affordable price. Rocket Legal+ members get their first business registration filing for free, paying only the state filing fees, and also get access to professional services for up to half off, including registered agent services, tax prep and filing, trademark registration, and more.

If your nonprofit does not have a physical address in Minnesota (P.O. boxes are not acceptable substitutions), you may be required to have a registered agent. Registered agents accept official and legal correspondence on behalf of your organization. While you are setting up your nonprofit, why not set up Rocket Lawyer as your registered agent at the same time? Better yet, if you have a Rocket Legal+ membership, you can save on your business registration and your registered agent services with the membership that pays for itself.

Businesses can save up to $2,500 per year with a Rocket Legal+™ membership. This calculation is based on total savings on an initial business registration and registered agent, trademark, and business tax filing services for Rocket Legal+ members (a total cost of $924.97) compared to Rocket Legal members (a total cost of $1,949.96). This is in addition to savings on the average cost of 5 hours for document preparation by a non-Rocket Lawyer network attorney at the average attorney hourly rate in the U.S. of $300 (an estimated cost of $1,500 when purchased without any form of Rocket Lawyer membership) compared to unlimited use of customizable business documents for both Rocket Legal+ and Rocket Legal members at no extra cost.

Yes. One resource for finding grants and loans for Minnesota nonprofits includes the Minnesota Council on Foundations. This association of grant makers offers resources for finding grants and writing a strong grant proposal.

Grants may be for a general purpose, or they can help meet the operating expenses of your organization. If a grant is awarded for a specific project, you should take steps to restrict the funds to that project.

A mission statement clarifies your goals and explains how you plan to meet them. As a guideline, describe what, where, when, and how your nonprofit's purpose will be met, as well as who is going to help your nonprofit meet it. It may take a few tries to narrow your ambitions down into a workable plan.

Although you're creating a nonprofit because you want to give back to your community, you still have to meet certain requirements to protect yourself and to ensure that you achieve your organization's goals. When you create a mission statement, you can explain your organization's purpose. Consider what problem or issue your organization wants to address, then focus your statement on including the efforts and values that will guide your nonprofit to these goals.

After you have your not-for-profit organization up and running, you must take steps to retain your nonprofit status. Both the state of Minnesota and the federal government have rules governing what nonprofit organizations must do and what they cannot do. Here are some guidelines you must follow:

• File an annual report with the Attorney General's office each year by the fifteenth day of the seventh month after your fiscal year ends.
• File your annual renewal with the Secretary of State each year by Dec. 31.
• Maintain a board of directors consisting of at least three people.
• Keep accurate records books. These should include your Articles of Incorporation, bylaws, tax-exempt filings, meeting minutes and financial transactions. All records should be easily available for inspection.
• Do not make loans, issue shares or distribute dividends to your directors, members or any other individuals.
• If you have income over $1,000 from unrelated commercial activities, pay taxes on that income.
• Make sure unrelated commercial activities do not make up too many of your organization's activities.
• File the appropriate Return of Organization Exempt From Income Tax with the IRS (Form 990, 990EZ or 990N), based on your annual gross receipts, or total assets as of the end of the year.
• Do not engage in political campaigning or try to influence legislation.

• Minnesota Council of Nonprofits: Find information on planning and starting a nonprofit at this site. The Council also offers training sessions, networking lunches and more, all geared toward helping nonprofits reach their goals.
• Minnesota Secretary of State: The Minnesota Secretary of State provides links to additional information about nonprofits. You can also file your nonprofit online.

If you are planning to operate in another state, you may need to register a nonprofit in that state. Rocket Lawyer can help you determine which states you should register in.

Other states may have their own rules for foreign nonprofits that originate in Minnesota or domestic nonprofits that also operate in Minnesota. Talk to an attorney to understand the legal and tax requirements for the state(s) in which you plan to operate.