How to Start a Nonprofit in Texas
To incorporate a nonprofit in Texas, file a nonprofit Certificate of Formation with the Texas Secretary of State. This filing officially creates your corporation, but it is really just one step toward achieving your nonprofit’s goals. The complete steps to starting a Texas nonprofit corporation are as follows:
1. Name your nonprofit
2. Organize your team
3. Get a Texas registered agent
4. File the nonprofit Certificate of Formation with the Texas Secretary of State
5. Get a Federal EIN Tax ID from the IRS
6. Hold your first official meeting and adopt bylaws
7. Apply for federal and/or state tax exemptions, if applicable
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Texas nonprofit Certificate of Formation free download. When you’re done filling out the form, submit it to your state.
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How To File The Texas Nonprofit Certificate Of FormationTo form a Texas nonprofit, file the nonprofit Certificate of Formation using the following steps:
How Much Does It Cost To Incorporate A Texas Nonprofit?
Texas charges $25 to file the nonprofit Certificate of Formation, plus a 2.7% convenience fee if you file online and pay by credit card. You can pay an additional $25 expedite fee to get your mailed filing processed in 24 hours (there is no expedite fee for online filings).
Hire Northwest to incorporate your nonprofit, and the total cost, which includes a full year of registered agent service, is $255 for 1 day online filing.Get Started
How Much Does A Texas Nonprofit Cost Each Year?
Nonprofits can apply for an exemption from the Texas annual franchise tax, but your nonprofit is responsible for filing and paying the TX Annual Franchise Tax Report to the Texas Comptroller until your application is approved.
If you do get approved for an exemption from the annual franchise tax, your nonprofit will pay $5 to file a periodic report every four years with the TX Secretary of State.Get Started
Will My Texas Nonprofit Be Tax-Exempt?
Texas nonprofits pay federal and state taxes unless they apply separately for exemptions from the IRS and the Texas Comptroller of Public Accounts. Unlike some states, however, Texas does not require nonprofits to obtain federal tax-exempt status to apply for state tax exemptions.
To apply for federal tax-exempt status, you will submit an Application for Recognition of Exemption to the IRS, pay either a $275 or $600 application fee (depending on the size and nature of your nonprofit), and wait around six months or more while the IRS examines your nonprofit’s history, finances, structure, and purpose. The IRS recognizes more than two dozen types of tax-exempt organizations in Section 501(c) of the Internal Revenue Code, but most nonprofits apply to get recognized as a 501(c)(3) organization. To qualify as a 501(c)(3) charitable organization, your nonprofit’s Certificate of Formation must include specific language required by the IRS limiting your nonprofit’s activities exclusively to the pursuit of one or more tax-exempt purposes.
If your Texas nonprofit manages to get federal tax-exempt status from the IRS, you’ll likely qualify for the Texas sales tax and franchise tax exemptions, but you still need to apply for them. Among organizations with 501(c)(3) status, charities file form AP-205 (the Texas Application for Exemption-Charitable Organizations), educational organizations file form AP-207, and religious organizations file form AP-209. Visit Northwest’s Texas tax exemptions page to learn more.
Is A Texas Nonprofit Registered Agent Required?
Yes, Texas requires nonprofits to appoint and maintain a Texas registered agent to remain in good standing with the state. A registered agent is the person or business authorized to receive services of process (legal notices and other official state mail) on your nonprofit’s behalf. You can take on the job yourself, appoint someone you know, or hire a commercial registered agent service like Northwest.
It’s tempting to save a little money and take on the job yourself, but we advise against it. Your nonprofit’s registered agent must list a Texas street address on your Certificate of Formation and actually be available at that address during normal business hours. This means that if you serve as your own registered agent the address you list on your Certificate of Formation—your residential or office address—goes into the public record. And you’ll have to somehow manage and grow your nonprofit without being able to travel or even hold lengthy meetings.
Northwest can help. When you hire Northwest to serve as your registered agent, you can list our Texas address on your Certificate of Formation, and you can leave the endless waiting to us. That buys you more privacy and more time, of course, but it also opens you up to the experience of working with a company that, unlike our competition, is devoted entirely to providing registered agent services. If or when we receive a legal notice for your nonprofit, we’ll scan it and send to you on the day it arrives.Get Started
Do I Have To Register My Nonprofit As A Charity In Texas?
In most cases, no. But if your charity raises money for law enforcement or veterans groups, you will need to register as a Texas charity. Charities that raise money for law enforcement register with the Texas Attorney General. Charities that raise money for veterans groups register with the Texas Secretary of State.
In both cases, the registration and annual renewal fees are $50. Veterans charities renew each year by January 15th, and law enforcement charities renew each year by May 15th.
Do I Need A Federal Tax ID Number (EIN) For A Texas nonprofit?
A Federal Employer Identification Number (a FEIN or EIN) is a must for any new nonprofit wanting to open a bank account, hire employees, navigate its finances, or apply for federal and state tax exemptions. After your nonprofit’s Certificate of Formation gets approved by the Texas Secretary of State, you can apply for an EIN at the IRS website or by phone. Or you can skip this step by adding our convenient EIN service for an additional fee when you hire Northwest.
Does A Texas Nonprofit Need A Business License?
Texas doesn’t have a statewide business license, but some regulatory agencies require licenses for specific business activities. You should contact your county and city governments to determine what licenses, if any, are required to operate your Texas nonprofit.
Can I Register An Out Of State Nonprofit In Texas?
To expand your out of state (or “foreign”) nonprofit’s operations to Texas, file the Application for Registration for a Nonprofit Corporation or Cooperative Association with the Texas Secretary of State. To learn more, click here or select “Expanding to Texas” and then “Register a Foreign Nonprofit” on the menu above.
Texas Nonprofit Certificate of Formation Requirements
Entity Name and Type
Identify your corporation as a nonprofit and include your corporation’s name as your Certificate’s first article. Your nonprofit’s name must be distinguishable from domestic or foreign entities operating in Texas, as well as any names already reserved or registered with the state, but you don’t need to include words or abbreviations like “Corporation,” “Incorporated,” or “Inc.” in the name. You can do a taxable entity search at the Texas Comptroller of Public Accounts’ website.
Registered Agent and Registered Office
Your nonprofit’s registered agent must be an individual Texas resident or a business entity authorized to perform registered agent services in Texas (such as Northwest). Provide your registered agent’s name and Texas street address. When you hire Northwest, our name and Texas office address go here.
If your nonprofit will be managed by directors, include the names and addresses (PO boxes are fine) of at least three individuals who make up your nonprofit’s initial board of directors, or indicate that your nonprofit will be managed by its members instead.
Identify if your nonprofit will or will not have members. A member is a person who can vote to elect your nonprofit’s directors. Texas nonprofits may have voting members, nonvoting members, or no members.
Describe your nonprofit’s purpose. If you intend to seek 501(c)(3) federal tax-exempt status for your nonprofit, make sure your statement of purpose includes the specific language required by the IRS linking your nonprofit’s activities with one more approved exempt purposes.
You may also include any additional provisions, such as a period of duration if your nonprofit intends to operate for a limited period of time. Nonprofits intending to seek 501(c)(3) tax-exempt status should include the language required by the IRS disallowing the enrichment of its members and permanently dedicating its assets (even if it closes down) to one or more tax-exempt purposes recognized by the IRS.
Your nonprofit’s organizer (called an incorporator in most states) is simply the person who completes, signs, and submits your Certificate of Formation. An organizer doesn’t need to be part of your organization. When you hire Northwest to form your nonprofit, we’ll be your organizer.
Effectiveness of Filing
If you want your Texas nonprofit to officially form when the Secretary of State files your Certificate of Formation, indicate that by checking “A” on the form. Texas also allows nonprofit corporations to delay their start dates up to 90 days after filing (option “B”) or after the occurrence of a specific event up to 90 days after filing, with the event indicated by selecting option “C” and writing a description of the event in the space provided.
Your nonprofit’s organizer should sign and date the form. By signing, the organizer affirms that your nonprofit’s registered agent has consented to the appointment. Hire Northwest to form your nonprofit, and this part is easy. We’ll be your organizer and your registered agent, and we’ll complete and file your Certificate of Formation for you.