Step 1) Verify & Secure Name
The first step is to secure a brand name. The name you choose should be unlike any registered business entity in Texas.
Here's a few resources:
Step 2) Appoint A Registered Agent
A registered agent is responsible for receiving and helping process all official documents on your nonprofit’s behalf like state filings, legal notices, important tax forms, etc. They must be a citizen of Texas or a registered business entity in the state (with a street address).
That said, you can hire a third-party service and pay up to $160 a year, or get a qualified registered agent free of charge when you incorporate with IncFile.
Step 3) Select Incorporators & Directors
Incorporators are the individuals responsible for executing the Certificate of Formation (Step 5) with the state, which declares the basics of your entity for the public record. Texas only requires one incorporator.
If your nonprofit is run by directors (instead of members), you’ll need to appoint at least 3 directors who will oversee the nonprofit until your initial meeting (Step 7) when official directors can be voted in.
This part can be somewhat complex, which is why it’s a good idea to either work with a nonprofit lawyer or a professional nonprofit formation service. They'll help you understand the ins and outs of choosing initial directors and so much more!
Step 4) Draft Nonprofit Bylaws
In order to become an incorporated nonprofit business entity, your brand will need official bylaws. These will not only govern the way your organization runs, but also provides a path where it’s headed! Make sure to include:
- How exactly the nonprofit is governed – by board (directors) or membership.
- How meetings are held, voting procedures, electing officers or directors.
- Keeping and managing records.
- Adding/amending bylaws and handling disputes.
Keep in mind that any changes to your bylaws will need to be reported.
To get started, check out a savvy bylaws template so you can get an idea of how they’re structured, and begin customizing the default corporate form to suit your nonprofit!
Step 5) File Certificate Of Formation
Once you and your team decide it’s time to form your nonprofit corporation, file your Certificate of Formation with the state by mail, fax, or in-person. The basic information it should include is:
- Your organization's name, type, duration of existence, and statement of purpose (provisions for nonprofit vs corp)
- Complete names & addresses of registered agent, incorporators and directors
- Any specific provisions/bylaws set forth as part of the internal operations of your organization
- A stipulation of apportioning assets to any 501(c)(3) upon termination of your organization
Filing Fee: $25
Step 6) Start A Corporate Records Book
Where will you keep all of your nonprofit's critical paperwork in case you need to demonstrate that it's being run in a legal way?
We advise having a physical records book where you'll keep copies of your Texas registration documents, major transactions, licenses and permits, minutes of meetings, important contracts, etc. You can find them at nearby office supply stores, grab one online through Amazon, or get a sleek corporate kit through a provider like IncFile.
Step 7) Conduct Initial Meeting
Now it’s time to conduct your organizational nonprofit meeting! The meeting agenda should look something like this:
- Take attendance and show you have a quorum (minimum number needed)
- Appoint temporary officers, chairmen, secretary, etc.
- Adoption of the bylaws established in Step 4
- Where to set up a bank account, file state reports, etc.
These are the basics, but depending on the nature of your nonprofit (and how many members/directors are at the meeting) there could be a lot more to discuss. This is a huge step in the right direction though, so make time to celebrate!
Step 8) Get An EIN
An EIN is a 9-digit federal “Employer Identification Number.” It’s used to track your business activity to ensure compliance, and is necessary to set up an official bank account and legally hire employees.
While in the past it was a bit of a pain, these days you can get an EIN quick, free and easy by submitting an application directly through the IRS Website.