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Step-by-Step Guide to Forming a 501(c)(3) Nonprofit in Texas

Updated: Apr 26

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 online 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.

Disclaimer of Professional Advice

The information provided by Osornio Torres Industries LLC DBA Jelly Nonprofit Consulting is not intended to constitute professional legal, tax, and/or accounting advice. The information provided should not be used as a substitute for professional advice. You should always consult your own attorney, and/or accountant, and/or other applicable professional for advice before making important professional decisions. Your reliance on the information provided is solely at your own risk. The information provided is subject to change at any time without notice.

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