Use the guide below to form a 501(c)(3) nonprofit in Texas. Keep in mind that the process requires forming a nonprofit corporation and getting tax-exempt status with the IRS.
Since the overall process is extremely complex, we highly recommend consulting with an attorney or using a service like Harbor Compliance for personalized top-to-bottom nonprofit formation and obtaining IRS 501(c)(3) status.
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:
Quick Note: Before you commit 100% to a name, you may also want to check that there’s a decent URL available for your organization. Use GoDaddy to search your options. If there’s a quality domain name for purchase, we advise buying it right away. Even if launching a website isn’t on your radar right now, you might as well nail down a domain name that’ll make you easy to find!
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 Harbor Compliance (see details).
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!
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:
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!
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:
Filing Fee: $25
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.
Now it’s time to conduct your organizational nonprofit meeting! The meeting agenda should look something like this:
Don’t forget to record “minutes” of the meeting and have it signed by all attending directors, too. Here’s a corporate minutes template to help you get the ball rolling.
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!
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.
Now’s the time to ensure your nonprofit is 100% compliant in terms of federal/state licenses, permits and taxes. You should also be able to apply for federal tax-exempt status now that the corporation is formed!
Here are some resources for all the tasks we’ve just mentioned:
You also might want to bookmark the Dallas/Fort Worth (or some other nearby) district office of the Small Business Administration, as well as the Sec. of State’s SOSDirect site. Both of these will provide tons of valuable information.
When you form a nonprofit, it’s very important to keep all personal and business assets/accounts completely separate. This requires opening a bank account designated for your organization’s finances.
Where will you start building the financial persona of your nonprofit? What bank is offering the best overall services to nonprofit clients, relative to location and other conveniences?
Read through this short breakdown of our favorite business checking accounts to start brushing up if this is totally unfamiliar territory. Where you choose to bank is a critical decision, so it should be discussed at length during your initial meeting.
If you’d like help forming a 501(c)(3) nonprofit in Texas, we highly recommend looking into Harbor Compliance for personalized top-to-bottom nonprofit formation and obtaining IRS 501(c)(3) status.