How to Start a Nonprofit in Michigan

Michigan has 46,419 active 501(c)(3) organizations, 3,261 of them approved in the last twelve months, up from 2,823 the year before. 78.6% report no revenue on file or under $50,000. Education organizations are the largest group, just ahead of religion-related and human services groups. Incorporating costs $20, but the Michigan rules that matter come later: an annual report that ends the corporation if it is missed, and Attorney General registration before the first ask.

The federal half of this is identical in every state and is set out on the state hub: incorporate, adopt bylaws, get an EIN, apply to the IRS on Form 1023 or 1023-EZ. This page covers what Michigan adds, what each step costs, and the two or three things that catch people out here specifically.

What it costs in Michigan

The state filings come to $20 in cash. A $20 annual report follows every year from the year after incorporation, and registering with the Attorney General to solicit is free. On top of that sits the IRS user fee, which is set each year by revenue procedure and shown on Pay.gov when you file, so no figure for it is printed here. Every amount above was read from the issuing agency’s own fee schedule or form, and each one is linked in the sources at the foot of this page. Fees change: check before you budget.

The order to do it in

Sequence matters more than speed. The IRS application asks for documents the state has to create first, and the state charity regulator wants the organization to exist before it registers.

• Decide whether you need a corporation at all. Fiscal sponsorship gives a project the same tax treatment with no incorporation, no IRS application and no annual return. For a project under a few thousand dollars a year it is usually the better answer.
• File the formation document with the Michigan Department of Licensing and Regulatory Affairs (LARA), Corporations Division, with the IRS purpose and dissolution language in it. Our articles template carries both.
• Adopt bylaws and appoint the board before the IRS application, which asks about governance. The bylaws template and the board guide cover what that means in practice.
• Get an EIN. Free, online, immediate, and needed for the bank account. Do not pay anyone for it: the EIN guide explains why people do.
• Apply to the IRS on Form 1023-EZ if you qualify, which most new organizations do, or the long Form 1023 if you project gross receipts over $50,000 or hold assets over $250,000.
• Handle the state exemptions and registrations in the section below, once the determination letter arrives.

What catches people out in Michigan

A missed $20 report can dissolve the corporation. The annual report is due by 1 October each year from the year after incorporation. If it is not filed, with its fee, within two years of the due date, the corporation dissolves automatically by operation of law. Reinstating means filing up to five missed reports plus a $5 penalty for each. LARA’s guidance adds that a dissolved charitable purpose corporation must notify the Attorney General within 60 days and get the Attorney General’s written approval before disposing of any assets. Put 1 October in the board calendar.

Register with the Attorney General before you ask, not after. Michigan requires an organization to register if it solicits or receives contributions in the state, and incorporating does not do it for you. Registration is free. The exemption is narrower than many expect: it covers organizations that raise money exclusively through volunteers and receive under $25,000 a year, and you confirm it on Form CTS-03. Registration expires seven months after the end of your fiscal year, so renew at least 30 days before. Once contributions and net fundraising income, less government grants, pass $325,000, the renewal needs CPA-reviewed financial statements, and at $575,000 audited ones.

Sales by a nonprofit have a cliff at $25,000. Michigan exempts a nonprofit’s first $10,000 of retail sales only if its total retail sales for the calendar year are under $25,000. Reach $25,000 and every sale that year is taxable, including the first $10,000. Separately, property bought for fundraising is exempt only up to $5,000 per item.

What Michigan’s nonprofit sector looks like

From the IRS Business Master File, which lists every organization whose exemption has not been revoked.

The size column is the one worth sitting with before you file. 78.6% of Michigan’s charities have no revenue figure on file or report under $50,000, against 77.4% nationally. The typical outcome of starting a nonprofit here is a very small organization, which is not an argument against doing it, but it is an argument for choosing the cheap route first and for being honest in the projections on the IRS form. What the whole thing costs, federal and state together, is set out in what it costs to start a nonprofit.

A realistic timeline

Written as weeks rather than as a list, because the waiting is the part people plan badly. Nothing here assumes you pay anyone to do it for you.

1. Week one. Agree the purpose, the name and a first board of at least three directors, which Michigan requires, and check the name with LARA.
2. Week one or two. File the Articles of Incorporation on Form CSCL/CD-502 for $20, online or by mail, with the IRS purpose and dissolution clauses included.
3. Same week. Apply for the EIN online. Free and immediate.
4. Month one. Adopt bylaws, hold the first board meeting and open the bank account. Name a Michigan resident agent with a street address.
5. Before the first ask. Register with the Attorney General on Form CTS-01, or confirm an exemption on Form CTS-03.
6. Month one or two. File Form 1023-EZ if you qualify, or the long Form 1023.
7. When the determination letter arrives. Start using Form 3372 for tax-free purchases.
8. Every 1 October from next year. File the $20 annual report.

The long pole is the IRS, not Michigan. The state end of this is measured in days and costs $20. Everything after the determination letter is either free or a form with a copy of that letter stapled to it.

What kind of charities Michigan has

The Business Master File classifies each organization by activity. The six commonest categories in Michigan account for 23,020 organizations between them:

• Education: 4,858 organizations
• Religion related: 4,644 organizations
• Human services: 4,626 organizations
• Arts, culture and humanities: 3,280 organizations
• Recreation and sports: 2,997 organizations
• Philanthropy and grantmaking: 2,615 organizations

That mix is worth checking against what you are planning. The largest category in every state is religion related, which is a reporting artifact as much as a fact, since churches are exempt automatically and many register anyway. The categories underneath it are the real map of what gets funded locally, and an organization entering a crowded category needs a sharper answer to the question of why it should exist separately than one entering a thin one.

Approvals in Michigan are rising

The file carries a determination date for every organization, so the last two years can be compared directly. Michigan had 3,261 approvals in the last twelve months against 2,823 in the twelve before that, a change of +15.5%. Nationally the last twelve months produced 119,025.

Read that as competitive context rather than as a verdict. More approvals means more organizations chasing the same local funders, and it also means the process is working normally for people like you. What it does not tell you is how many of them are still operating in three years, which the file cannot say, because it keeps listing an organization until its exemption is actually revoked.

After approval

The annual obligations start immediately and they run on two calendars. Federally, a return is due every year from the first full tax year, and three consecutive misses means automatic revocation with no appeal: which return applies is covered in which Form 990 you file. In Michigan, the filings in the table above renew on their own cycle. If the organization eventually sells anything or lets space, selling products and renting out space cover the tax treatment, and if it does not work out, closing properly is its own process.

Method and sources

Every fee and form on this page was read from the issuing agency’s own page or form on 19 October 2026, listed in the sources below. Nothing here is copied from another guide. The IRS user fee is not stated because the form instructions point to a revenue procedure and to Pay.gov rather than printing an amount.

The counts are from the IRS Exempt Organizations Business Master File, filtered to subsection 03, with determinations through August 2026. Three limits carry over from that file: it includes organizations that are dormant but not yet auto revoked, the ruling date is when the IRS decided rather than when anyone applied, and revenue is blank for most small organizations, which is why the size row reads “no revenue on file or under $50,000” rather than giving a median. State is the organization’s own mailing address. This page is general information and not legal advice.

This is reference information, not legal or tax advice. Rules vary by state and change over time. For a decision that carries real consequences, check the current text at irs.gov or your state registry, and talk to a nonprofit attorney or CPA.