How To Start A Nonprofit In Texas
To start a nonprofit corporation in Texas, begin by filing the Texas nonprofit certificate of formation (Form 202) with the Texas Secretary of State. You can submit your nonprofit’s certificate of formation online, by fax, by mail, or in person. The state charges a $25 filing fee, plus a 2.7% convenience fee to pay with a credit card. Once filed with the state, your certificate of formation officially creates your Texas nonprofit corporation, but truly preparing a nonprofit to pursue its mission involves several additional steps.
Starting a Texas Nonprofit Guide:
- Choose your TX nonprofit filing option
- File the TX nonprofit certificate of formation
- Get a Federal EIN from the IRS
- Adopt your nonprofit’s bylaws
- Seek federal and/or state tax exemptions
- Apply for any required state business licenses
- Open a bank account for your TX nonprofit
- Submit the annual/periodic report
Texas Nonprofit Filing Options
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Download the Texas nonprofit certificate of formation. Fill out the form and submit to the state.
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Texas Certificate of Formation - Nonprofit Corporations
To incorporate a Texas nonprofit, you must complete and file Form 202, the Texas Certificate of Formation – Nonprofit Corporations, with the Texas Secretary of State. See the document below and click on any number to see what information is required in the corresponding section.
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.
Provide your Texas registered agent’s name and Texas street address. Your nonprofit’s registered agent must be an individual Texas resident or a business entity authorized to perform registered agent services in Texas. When you hire Northwest to serve as your registered agent, 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 at all.
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 tax-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 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.
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. (Hint: Most nonprofits check option A.)
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.
How Much Does It Cost to Incorporate a Texas Nonprofit?
The Texas Secretary of State charges $25 to incorporate Texas nonprofits, plus a 2.7% convenience fee if you file online and pay with a credit card. You can also pay an additional $25 expedite fee to get your mailed filing processed around 2 business days. There is no expedite fee for online filings.
How Long Does It Take to Start a Texas Nonprofit?
Texas nonprofit filing times vary depending on your filing method. Online filings usually get approved within 5 business days. If you file using a paper form, you can expect a response in around 5-7 business days unless you pay the additional $25 expedite fee for 2-day service.
Does a Texas Nonprofit Need a Registered Agent?
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 service of process (legal notices) 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.
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.
Hire Northwest, and these problems disappear. 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 service of process for your nonprofit, we’ll scan it and send to you on the day we receive it. We’ll scan and send your business mail as well—up to 5 scans a year, free. Or sign up for our premium Texas mail forwarding service for just $40 a month.
Get a Federal Employer Identification Number (EIN)
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, by fax, or by mail. Or you can skip this step by adding our convenient EIN service for an additional fee when you hire Northwest.
Hold Your Organization Meeting & Adopt Bylaws
What Is an Organization Meeting?
The organization meeting is your Texas nonprofit’s first official meeting after successfully incorporating with the state. If your nonprofit is director-managed (also called a “directorship”), this is a board meeting called by your nonprofit’s organizers or by a majority of your nonprofit’s board of directors, and it can happen in or out of the state. If your nonprofit is member-managed, however, the organization meeting gets called by your nonprofit’s organizer.
There are a few staple features of any productive organization meeting, including the adoption of your nonprofit’s bylaws and a conflict of interest policy. There are no strict rules for when this meeting should occur, but it should definitely happen before your nonprofit seeks 501(c)(3) federal tax-exempt status from the IRS. The IRS will only deal with a fully-formed nonprofit.
Does a Texas Nonprofit Need Bylaws?
Yes, the state of Texas requires nonprofits to adopt bylaws (and for good reason). Texas nonprofit bylaws are the rules your nonprofit writes and adopts to manage itself, and without bylaws your directors and officers won’t be able to steer the organization along a consistent, cohesive path. Your organization needs to know, for instance, the scope and limitations of each officer’s responsibilities, who gets to vote on resolutions, and the qualifications someone needs to become a director. Your nonprofit simply can’t function without clear, upfront answers to questions like these.
It isn’t easy to write effective bylaws, but Northwest can help. When you hire us to form your nonprofit, or when you sign up for our registered agent service, you can use our adaptable template for writing bylaws and numerous other free nonprofit forms to help guide you.
Apply for Federal and/or State Tax Exemptions
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.
501(c) Federal Tax-Exempt Status
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. If or when your nonprofit qualifies for federal tax-exempt status, you’ll
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. Learn more at Northwest’s free Guide to 501(c)(3) Tax-Exempt Status.
State Tax Exemptions
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.
Apply for Required State Business Licenses
Does a Texas nonprofit need a business license?
Texas doesn’t require nonprofits to get a general, statewide business license, but if you’re selling tangible goods or services, you’ll need to apply for a Texas Sales Tax Permit. To get the permit, file a Texas Sales Tax Permit Application with the Texas Comptroller’s office.
Should my Texas nonprofit register as a charity?
Most Texas charities are automatically exempt from registering with the Office of the Texas Attorney General, but there are a few exceptions. If your charity solicits contributions for law enforcement or veterans groups, for instance, 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. The registration fee, in both cases, is $50.
Charities that raise money for law enforcement must renew their registrations with the Texas Attorney General by May 15th each year. Charities that money for veterans groups must renew their registrations with the Texas Secretary of State by January 15th each year. The renewal fee is $50 in both cases.
Open a Bank Account for Your Texas Nonprofit
To open a bank account for your Texas nonprofit, you will need to bring the following items with you to the bank:
- A copy of your Texas nonprofit’s articles of incorporation
- A copy of your nonprofit’s bylaws
- Your Texas nonprofit’s EIN
It’s wise to call your ahead of time to check its requirements. Some banks may require you to bring a resolution authorizing you to open a bank account in your nonprofit’s name (particularly if your nonprofit has several directors and/or officers).
Submit Your Nonprofit's Annual/Periodic Report
State Franchise Tax
Texas charges every corporation, including nonprofits, a franchise tax unless the organization obtains an exemption from the Texas Comptroller of Public Accounts. If your organization is currently seeking such an exemption, know that you’ll still need to pay the state’s franchise tax until the state recognizes your organization’s exempt status. You can register for your nonprofit’s state tax accounts at the Texas Comptroller’s website.
Public Information Report
If your Texas nonprofit is required to pay the state’s franchise tax, you’ll file an annual public information report with the Texas Comptroller updating or confirming your nonprofit’s information as it appears on the state’s records. This includes information about your nonprofit’s registered agent, directors, officers, and the address of your principal place of business (among other details). There is no filing fee. The annual report is due each year by May 15th.
However, if your Texas nonprofit is exempt from paying the state’s franchise tax, it will file a periodic report with the Texas Secretary of State in place of the annual report described above. Like the annual information report, a periodic report updates your nonprofit’s information on the state’s records, but you’ll only file when the Texas Secretary of State requests the report (at most every four years). There is a $5 filing fee.