What is a Michigan Nonprofit Corporation? |
A Michigan Nonprofit Corporation is sometimes called a Michigan Not-For-Profit Corporation.
A Michigan Nonprofit Corporation is an organization that is legally registered with the Michigan Secretary of State.
While the federal government must approve the tax-exempt status of a Michigan Nonprofit Corporation,
a Michigan Nonprofit Corporation is not initially registered with any US government agency.
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A Michigan Nonprofit Corporation is sometimes called a Michigan Not-For-Profit Corporation.
A Michigan Nonprofit Corporation is an organization that is legally registered with the Michigan Secretary of State.
While the federal government must approve the tax-exempt status of a Michigan Nonprofit Corporation,
a Michigan Nonprofit Corporation is not initially registered with any US government agency.
A Michigan Nonprofit Corporation is an organization that works to serve some kind of public interest
rather than to provide financial benefit to any particular individuals or entities.
Many Michigan Nonprofit Corporations have much in common with Michigan For-profit Corporations.
This includes the liability protection that comes with a legally registered Michigan Nonprofit Corporation.
A lot of Michigan Nonprofit Corporations hire managers and employees just like a Michigan For-profit Corporation does.
The application process for a Michigan Nonprofit Corporation is very similar to that of
a Michigan For-Profit Corporation.
Contrary to popular belief, Michigan Nonprofit Corporations can and do make money.
In a Michigan Nonprofit Corporation, any profits must legally go directly back into the Michigan Nonprofit Corporation.
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Do I need a lawyer to Form a Michigan Nonprofit Corporation? |
The short answer is no. The state of Michigan does not legally require a lawyer to form a Michigan Nonprofit Corporation.
However, if there is anything about forming a Michigan Nonprofit Corporation that you're not sure about you
should seek the advice of a competent Michigan lawyer, a Michigan accountant, or both BEFORE you Incorporate.
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The short answer is no. The state of Michigan does not legally require a lawyer to form a Michigan Nonprofit Corporation.
However, if there is anything about forming a Michigan Nonprofit Corporation that you're not sure about you
should seek the advice of a competent Michigan lawyer, a Michigan accountant, or both BEFORE you Incorporate.
Once you have made the decision to Form a Michigan Nonprofit Corporation, a lawyer can file your documents and act as a middle man for a few hundred
dollars an hour; or you can use an online service provider like All Business Documents to perform these services and save money that you
can use in your new Michigan Nonprofit Corporation.
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What are the most common types of Michigan Nonprofit Corporations? |
The most common types of Michigan Nonprofit Corporations are:
- Michigan Public-benefit Nonprofit Corporations
- Michigan Religious Corporations
- Michigan Mutual-benefit Nonprofit Corporations
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A Michigan Nonprofit Corporation is formed to provide some kind of public or community benefit.
Unlike the other types of Michigan Corporations and LLCs, a Michigan Nonprofit Corporation may be eligible
for certain benefits, including tax exemptions on both the state and federal levels.
Depending on the nature of the organization, some Michigan Nonprofit Corporations may not be eligible for tax exempt status.
A Michigan Nonprofit Corporation may also be eligible for public and private grants.
A Michigan Nonprofit Corporation is formed in a similar way as that of forming a Michigan For-profit Corporation.
Michigan Nonprofits must file Articles of Incorporation in the same way that Michigan For-profit Corporations do.
A Michigan Nonprofit Corporation comes with the same liability protection as the other types of Michigan Corporations.
The main difference between a Michigan Nonprofit Corporation and a Michigan For-profit Corporation is how
the profits of the Michigan Corporation are distributed,
In a Michigan For-profit Corporation profits can be distributed to shareholders.
Michigan Nonprofits are legally required to use the income to further a goal that benefits the community or some part of the public.
The most common types of Michigan Nonprofit Corporations are:
- Michigan Public-benefit Nonprofit Corporations
Organized for the general public benefit, rather than for the interest of its members or shareholders
Formed primarily for social, educational, recreational or charitable purposes
Examples are food banks and youth sports organizations
- Michigan Religious Corporation
Organized to promote religious purposes
Subject to less complicated filing and reporting requirements than other types of Corporations
May be exempt from regulations governing non-religious groups performing the same services
- Michigan Mutual-benefit Nonprofit Corporation
Serves its members in ways other than just distributing profits to them
Cannot obtain IRS tax-exempt status as a charitable organization
Pays the same taxes as For-profit Corporations
Examples are homeowners associations or a public utility companies
While most federal tax exempt organizations are Nonprofit Corporations, registering a Michigan Nonprofit Corporation
does not automatically qualify the Michigan Nonprofit for tax exempt status at the federal level.
The IRS recognizes various types of tax exempt Nonprofit Corporations.
To receive federal tax exempt status a Michigan Nonprofit Corporation must file forms with the Internal Revenue Service.
The forms can get very complex depending on the nature of the Nonprofit.
Also, a Michigan Nonprofit Corporation cannot legally use its resources for propaganda or to further a political cause
or to support a candidate for public office.
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Who owns a Michigan Nonprofit Corporation? |
No one person or group of people can own a Michigan Nonprofit Corporation.
Once it is incorporated, the Michigan Nonprofit Corporation is a separate legal entity from its founders, directors, officers, and
employees.
The Michigan Nonprofit Corporation itself owns assets of the business and is entitled to receive all revenues from its operation.
Any equity in a Michigan Nonprofit Corporation belongs to the organization itself, not to the founders, board of directors or staff.
In addition, a Michigan Nonprofit Corporation cannot be sold to another individual, corporation or organization.
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Can a Michigan Nonprofit Corporation make money? |
Contrary to popular belief a Michigan Noprofit Corporation may actually make a profit.
Many Michigan Nonprofit Corporations derive much of their funding from tax-exempt donations.
Sometimes a Michigan Nonprofit Corporation can receive more in donations that the costs to actually run the organization.
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Contrary to popular belief a Michigan Noprofit Corporation may actually make a profit.
Many Michigan Nonprofit Corporations derive much of their funding from tax-exempt donations.
Sometimes a Michigan Nonprofit Corporation can receive more in donations that the costs to actually run the organization.
A Michigan For-Profit Corporation may distribute any excess assets to its owners or shareholders.
There is no distribution of assets in a Michigan Nonprofit Corporation.
In a Michigan Nonprofit Corporation all of the money earned by or donated to the Michigan Nonprofit organization
is used in pursuing the organization's objectives as stated in its Articles of Incorporation.
Any excess capital after the close of the Michigan Nonprofit Corporation's fiscal year must be kept in the Michigan Nonprofit's accounts.
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Are all Michigan Nonprofit Corporations Tax Exempt? |
You do not form a Michigan Tax Exempt Corporation – you form a Michigan Nonprofit Corporation and then apply to the IRS for Tax Exempt status.
The IRS requires that certain language is included in the Articles of Incorporation before it will grant tax exempt status to any Michigan Nonprofit Corporaton.
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You do not form a Michigan Tax Exempt Corporation – you form a Michigan Nonprofit Corporation and then apply to the IRS for Tax Exempt status.
The IRS requires that certain language is included in the Articles of Incorporation before it will grant tax exempt status to any Michigan Nonprofit Corporaton.
After a Michigan Nonprofit Corporation filing has been approved by the Michigan Secretary of State the organization must meet
certain requirements and submit an application for Tax Exempt status with the IRS.
Tax Exempt status means that a Michigan Nonprofit Corporation
- Does not pay income taxes to the federal government.
- Does not pay corporate income taxes to the Michigan state government.
- Donors may be able to take a charitable tax deduction for contributions to the Michigan Nonprofit.
- Can qualify for lower USPS postage rates.
Most organizations filing for Tax Exemption must file Form 1023 with the IRS.
It can take six months or more for the IRS to approve a Form 1023 application for tax exempt status.
Smaller Michigan Nonprofits - those that have yearly gross receipts less than $50,000 and total assets less than $250,000 - may be able
to file IRS Form 1023-EZ online.
Form 1023-EZ speeds up the process considerably.
Form 1023-EZ applications are normally processed within 90 days.
Once a Michigan Nonprofit Corporation has approval from the IRS for Tax Exemption from US federal income tax that Michigan Nonprofit is
automatically exempt from Michigan Corporation income taxes.
A Michigan Nonprofit Corporation which has been granted Exemption from federal income tax is also entitled to Sales and Use tax exemption in the state of Michigan.
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What is a 501(c)(3) Nonprofit Corporation? |
501(c) refers to a section of IRS code which deals with tax exempt organizations including, but not limited to,
Nonprofit Corporations.
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501(c) refers to a section of IRS code which deals with tax exempt organizations including, but not limited to,
Nonprofit Corporations.
The most common type of tax-exempt organization falls under section 501(c)(3) of the IRS code.
This section of the IRS code allows a Michigan Nonprofit organization to be exempt from federal income tax if its activities include any of the
following purposes:
- Charitable
- Religious
- Educational
- Scientific
- Literary
- Testing for public safety
- Fostering amateur sports competition
- Preventing cruelty to children or animals
There are other types of 501(c) tax exempt organizations defined in the IRS code - 29 of them - but 501(c)(3) tax exempt organizations
are by far the most common in the state of Michigan and the US.
One advantage to qualifying to be a 501(c)(3) tax exempt organization is that most foundations will only make grants
to 501(c)(3) Nonprofits.
Tax exemption does not excuse a Michigan Nonprofit organization from maintaining proper records and filing any required annual or special-purpose tax
returns if they are required.
Failure to file required returns such as Form 990 (Return of Organization Exempt From Income Tax) may result in fines.
One prohibition for 501(c)(3) organizations is that they are prohibited from conducting political campaign activities to intervene
in elections to public office.
There are, however, provisions which may allow some 501(c)(3) organizations to legally lobby to influence legislation.
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What information does a Nonprofit need before it can apply for 501(c)(3) Tax Exempt Status? |
BEFORE a Nonprofit applies with the IRS for 501(c)(3) Tax Exempt status you need the following information:
- Articles of Incorporation approved by the Michigan Secretary of State
- Bylaws
- Federal Employer Identification Number (EIN)
- Statement of purpose that meets IRS requirements
- Statement that your Nonprofit Corporation will not engage in prohibited political or legislative activity
- A Plan of Dissolution describing the distribution of assets upon dissolution
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BEFORE you apply with the IRS for 501(c)(3) Tax Exempt status it will need the following:
- Articles of Incorporation approved by the Michigan Secretary of State
- Bylaws
- Federal Employer Identification Number (EIN)
- Statement of purpose that meets IRS requirements
- Statement that your Nonprofit Corporation will not engage in prohibited political or legislative activities
- A Plan of Dissolution describing the distribution of assets upon dissolution
There is also very specific language which needs to be included in your Articles of Incorporation which are filed with the Michigan
Secretary of State if you want to get 501(c)(3) Tax Exempt Status.
When a Nonprofit Corporation dissolves all remaining assets must be distributed to other active Nonprofits.
None of the remaining assets can be distributed to any directors, memebers or staff.
If you want to apply for 501(c)(3) Tax Exempt Status we will make sure your Articles of Incorporation include everyting that the IRS needs
before we submit them to the state.
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What happens when a Michigan Nonprofit Corporation wants to shut down? |
When a Michigan Nonprofit Corporation wants to cease operations, any assets of the Michigan Nonprofit Corporation
must be distributed to other Nonprofits which were formed for similar purposes as the Michigan Nonprofit Corporation which is
closing.
Under no circumstances can a Michigan Nonprofit Corporation distribute any remaining assets to its founders, directors or
employees.
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How can I Form a Michigan Nonprofit Corporation Online? |
If you are ready to Form a Michigan Nonprofit Corporation simply choose which Michigan
Nonprofit options that you want in the upper right corner of this screen then click the Next Step button.
You will be directed to a screen on which you can enter your specific a Michigan Nonprofit information and finalize your order.
If you have any questions regarding our Michigan Nonprofit services you can call uis toll free at 855-771-2477.
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