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NONPROFIT FORMATION IN TEXAS

Forming A Nonprofit
Step 1: Check the Availability of Your Entity’s Name.
Step 2: Prepare the Certificate of Formation for a Nonprofit Corporation.  

  • A nonprofit corporation is created by filing a certificate of formation with the Texas SOS in accordance with the Texas Business Organizations Code ("BOC"). 

  • "Nonprofit corporation" means a corporation no part of the income of which is distributable to members, directors, or officers.

  • Get the form from the "Nonprofit Organizations" page on the SOS website.

Step 3: File the Certificate of Formation Nonprofit Corporation Application with the SOS. 

  • Submit the application online at SOSDirect. Online submissions could take 10-12 business days for processing. 

  • Mail the application to P.O. Box 13697, Austin, Texas 78711-3697. Mailed submissions could take up to 70-72 days for processing.

  • Deliver the application to the James Earl Rudder Office Building, 1019 Brazos, Austin, Texas 78701.

  • There is a $25 filing fee, which is the client’s responsibility to pay.

Step 4: Prepare your Entity’s Bylaws. 

  • A nonprofit's bylaws provide the rules and procedures for running the organization.  

  • A copy of the bylaws will be required to be submitted when filing for tax exemption with the IRS. 

  • Learn more from our blog post "Bylaws for Beginners" by guest writer Julie Morris.

Step 5: Meeting of Initial Directors to Adopt Bylaws and Transact Business. 

  • The board is the governing body of a nonprofit and board members focus on the high-level strategy, oversight, and accountability of the organization. 

  • To learn more about boards, visit Kindful. 

  • Meeting minutes will be required to indicate that your bylaws were adopted.

Step 6: Apply for a Federal Employer Identification Number (EIN). 

  • Visit the IRS website to learn how to apply for an EIN.

  • It is free and you should get your EIN as soon as your online application is submitted.

Step 7: Complete the IRS Form 1023-EZ Eligibility Worksheet.  

  • IRS Form 1023 is the Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.

  • Form 1023-EZ is the streamlined version of Form 1023 and any organization may file Form 1023.  

  • Only certain organizations are eligible to file Form 1023-EZ.

  • Before applying, complete the IRS Form 1023-EZ Eligibility Worksheet (begins on page 13) to determine which form to use. 

Step 8: Prepare and File the Federal Tax-Exemption Application.

  • Access the IRS Form 1023 or 1023-EZ at Pay.gov. 

  • There is a $275 filing fee for the 1023-EZ, which is the client’s responsibility to pay.

  • There is a $600 filing fee for the 1023, which is the client’s responsibility to pay. 

Step 9: Apply for Sales, Franchise, and Hotel Tax-Exemption from Texas Comptroller. 

  • Various types of organizations may be exempt from sales tax on purchases necessary to the organization's exempt function, or from hotel occupancy tax or franchise tax. 

  • The exemptions vary by tax, depending upon the type of organization.  

  • Visit the Texas Comptroller online to obtain the appropriate application form. 

Step 10: Apply for Property Tax-Exemptions from the Local Tax Appraisal District.

  • Organizations engaged primarily in charitable activities may be eligible for a local option property tax exemption. 

  • The availability of the exemption is at the option of local taxing authorities so contact your local tax appraisal district to learn more.

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