Most nonprofits are also 501(c)(3) organizations. These organizations are created for educational, literary, scientific, charitable, or religious reasons, and they may be eligible for tax exemptions. However, in order to obtain 501(c)(3) status in Michigan, you first need to create a nonprofit organization under Michigan law and then apply to the IRS for tax-exempt status. This is a complex process that may be challenging to people who are unfamiliar with the law in this area. At the Neumann Law Group, our Grand Rapids and Traverse City business lawyers can help you resolve any of the issues that may arise.Issues Related to Nonprofit Organizations
Nonprofit corporations in Michigan are governed by the Michigan Nonprofit Corporation Act. The goals of a nonprofit may involve charity, education, or religion. Members of the corporation are not allowed to receive the profits of the corporation. In order to create a nonprofit, you will need to follow certain steps.
A nonprofit organization needs to have at least three directors. The initial board determines the purposes and goals for the organization. In addition to selecting the board of directors, you will also need to draft and file articles of incorporation. The information that must be set forth in the articles includes the name of the nonprofit, its purpose, and its mailing address or registered office, as well as the names and addresses of all of the incorporators and its duration. You will need to specify whether it is a directorship or a membership organization.
You will also need additional language so that you can get 501(c)(3) status. This language includes a statement of purpose that complies, statements that the nonprofit will not be involved in prohibited legislative or political activity, and a provision that addresses the dedication of your property to another 501(c)(3) once you dissolve the nonprofit. Bylaws, which need not be filed, should meet legal requirements and address how you will hold meetings, elect officers and directors, and deal with other formalities of doing business as a nonprofit.
You will also need to comply with IRS regulations for tax-exempt status and apply for a recognition of exemption. The Michigan Department of Treasury does not have an application process in order to become exempt from Michigan Sales and Use Tax. Instead, if you are an organization that is exempted from federal income tax under the Internal Revenue Code, or the Michigan Department of Treasury has sent you an exemption letter, you may take a sales and use tax exemption.
When an organization has a charitable purpose, it may need to file with the Michigan Attorney General's Charitable Trust section. It may also need to register under the Charitable Organizations and Solicitations Act if it receives or asks for contributions within the state. The law also requires bonding and licensing for professional fundraisers before a charitable organization plans or carries out a solicitation campaign.Seek Guidance From a Traverse City or Grand Rapids Lawyer
If you are trying to create or build a nonprofit organization, it is important to consult an experienced business lawyer about the potential issues. The Neumann Law Group represents clients in Ann Arbor, Flint, Lansing, Kalamazoo, Detroit, Wyoming, Saginaw, Muskegon, Midland, Holland, Warren, and Petoskey, as well as throughout the Upper Peninsula. Contact the Neumann Law Group at 800-525-NEUMANN or via our online form to set up an appointment. We also represent clients who are seeking a brewery attorney or assistance in forming other types of businesses.