Starting a Nonprofit Corporation in 5 Steps
Merry Christmas and Happy Holidays from your attorneys at Fausone Bohn, LLP! During the holiday season, we often see an increase in charitable giving. This year that may be needed more than ever. With the giving-feeling radiating in the air, Attorney Brandon Grysko wants to give you a better gift: How to Start a Nonprofit in 5 Steps!
1. Pick A Name
The first step to forming a Michigan Nonprofit Corporation is quite simple. What you need to do is pick a name for your corporation and make sure the name is not taken by an existing entity. You can do this by going online to the Michigan Department of Licensing & Regulatory Affairs (LARA) website.
2. Incorporate your Nonprofit
Once you find your desired name, next step to take is incorporating your corporation. Complete this step by visiting Mich.Gov!
Be aware, the organizing documents and articles you will file have certain requirements in order to meet IRS guidelines for a 501(c)(3) corporation. Your articles of incorporation must also provide that upon dissolution of the organization, none of its net earnings can go for a private benefit. All earnings must go to a charitable, tax-exempt, 501(c)(3)-type purpose.
If you feel you are not well-versed in this area to conduct the necessary research to determine your eligibility, we advise that you speak with an experienced attorney that specifically handles cases with the IRS.
3. Establish Bylaws
Bylaws are internal governing documents that establish the core details of an organization. Details in this document can include when and where meetings take place, establishing a board of directors, officers of the corporation, things of that nature. Think of your bylaws as a roadmap for how the nonprofit is going to run.
4. Obtain your EIN
Also known as an Employer Identification Number or TIN (Taxpayer Identification Number). Even if your nonprofit does not have employees, or does not plan on hiring employees, you will still need an EIN for your corporation to apply for tax-exempt status.
5. File Form 1023 with IRS
Once you have determined your nonprofit corporation’s name, incorporated your corporation, established bylaws, and obtained your EIN, the next step is to file Form 1023 – Application for Recognition of Tax-Exempt Status – with the IRS.
You may be asked to provide financial records or projected financial records, what the specific activities of your corporation are, who will participate in the activities, or whether you charge fees for those activities, just to name a few.
Form 1023 is essentially the last safety measure in place to prevent illegitimate corporations from receiving tax-exempt status, needless to say, this process will be very thorough. But the entire process of establishing a Michigan Nonprofit Corporation may take up to 60 days if you are lucky, or much longer like 9 months to a year.
Charitable Organizations | Fausone Bohn, LLP
This holiday season, when you are thinking about your charitable intentions or starting a charitable organization, think of the law firm of Fausone Bohn and how our attorneys can help you effectively set up your nonprofit corporation the right way the first time, so you do not have to suffer the headaches of dealing with the IRS down the road. If you would like to discuss forming a nonprofit corporation, contact Attorney Brandon Grysko by email or by phone at 248-380-0000.