How To Start A Nonprofit In Texas (2024 Guide)

Before starting a nonprofit, you must decide on the kind of nonprofit you want to form. To choose the right nonprofit type, obtain a list of nonprofit types, such as 501(c)(3) or 501(c)(6), for example. Look over the description for each to find the one that best fits your nonprofit’s purpose, organizer, activities, tax-exempt needs and even service location. We’ve created an extensive list of types of nonprofits to help you in your search. Alternatively, check out our article on 501(c)(3) vs 501(c)(4).

Once you’ve narrowed down your choices, compare each type to select the best fit for your organization’s fundraising, structure and activity needs. For example, some nonprofit types can only be organized by an act of Congress and others can only serve local communities. Some can be involved in political activities while others cannot.

Featured Partners

Advertisement

1

ZenBusiness

4.5

Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. All ratings are determined solely by our editorial team.

Pricing

$0 + State Fees

Service Time

Varies By State & Package

1

ZenBusiness

4.5

Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. All ratings are determined solely by our editorial team.

Learn More

On ZenBusiness' Website

2

LegalZoom

4.5

Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. All ratings are determined solely by our editorial team.

Pricing

$0 + State Fees

Service Time

Varies By State & Package

2

LegalZoom

4.5

Our ratings take into account a product's cost, features, ease of use, customer service and other category-specific attributes. All ratings are determined solely by our editorial team.

Learn More

On LegalZoom's Website

3

Northwest Registered Agent

3.7

Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.

Pricing

$39 + State Fees

Service Time

Varies By State & Package

3

Northwest Registered Agent

3.7

Our ratings are calculated based on fees, rates, rewards and other category-specific attributes. All ratings are determined solely by our editorial team.

Learn More

On Northwest Registered Agent's Website

To start a nonprofit in Texas, choose your organization’s name, your incorporator and directors. Then, hire or appoint a registered agent, file your articles of incorporation, create your bylaws with your board of directors, obtain an EIN and a business license and, finally, file for state and federal tax exemptions. In the following section, we walk you through this process.

Here’s how to start a nonprofit in Texas in nine steps:

1. Choose a Name

When choosing a name for your nonprofit, look at your organization’s mission, then choose a name to encompass that mission while providing for expansion opportunities. For example, if you aim to feed hungry children in your community, you might choose a name that identifies your mission of feeding the hungry without restricting it to children in your community. In doing so, you can later expand to feed other vulnerable populations if you so choose.

Next, make sure your name is not already in use in your state. To do so, simply access the Texas Secretary of State website and do a search for your desired name. If your chosen name does not appear as “in use,” you may use the name. You may benefit from doing one last search for your name before incorporating your nonprofit to ensure it is still available.

2. Choose Incorporators and Directors

Your directors will help you develop and maintain a healthy nonprofit. You will also need an incorporator. An incorporator is the person who signs your articles of incorporation and must be at least 18 years of age. A director serves on your nonprofit’s board to guide its development, mission and ethical business practices. You are required to have at least three unrelated directors. The president and secretary must be two different people.

Choose directors who can offer unique guidance based on their past experience and credentials. For example, you might recruit someone who can help expertly guide the organization’s finances and another to guide fundraising efforts. Directors should also be available to attend board meetings, enforce the nonprofit’s mission and policies, and otherwise carry out the board’s fiduciary duties.

3. Hire or Appoint a Registered Agent

A registered agent is someone who is consistently available in your nonprofit’s office during business hours and throughout the year to receive key paperwork for your nonprofit. Most nonprofits need to appoint a registered agent, however, it is not required to appoint a registered agent for your nonprofit in Texas if it is unincorporated, but it is recommended.

While some organizations opt to appoint the president or other internal manager as the registered agent, this can pose some problems. Namely, you must be in the business during all business hours. This means no stepping out and no time off. The registered agent must also be willing to receive potentially embarrassing documents, such as notifications you are being sued, in front of donors who may be in your business at the time of delivery.

To avoid these concerns, you can affordably hire a registered agent to handle your paperwork for you and offer timely notification of important paperwork your business receives. Check out our 7 Best Texas Registered Agent Services buyers guide to find the best fit for your needs. In it, we provide the pros and cons of each top registered agent in Texas, their prices and the standout services they offer.

4. File Texas Nonprofit Certificate of Formation

With a name, directors, an incorporator and a registered agent, you can now file your articles of incorporation. When you do, your organization comes into existence. To do so, fill out Form 202 and mail, fax or submit it electronically with a $25 processing fee. When mailing it, it is a good idea to pay for expedited processing. If you do, you cut your time to formation down by a month. You can also expedite processing by submitting it electronically through SOSDirect.

5. Meet With Your Board of Directors To Write Your Nonprofit Bylaws

Your bylaws outline how your organization will be run and they prepare you to file for tax-exempt 501(c)(3) status. You’ve already prepared some content that can be used in your bylaws. They should include your nonprofit’s name, who your board of directors are and how board meetings are run. It should also contain a conflict of interest clause that delineates the ethical practices your nonprofit will follow to avoid ethical conflicts among directors.

To write your bylaws, first gather together your board so everyone can be involved in, and so in agreement with, the process. You could use a bylaws template to begin writing. For example, Northwest Registered Agent offers a Texas-specific bylaws template. However, given the importance of this step, it is best to have your bylaws at least reviewed by a nonprofit lawyer before finalizing them.

6. Obtain an Employer Identification Number (EIN)

An EIN is an Employer Identification Number. It is an identifying number for your entity, just as a Social Security number identifies a person. Likewise, an EIN is needed to perform essential tasks for your nonprofit, such as opening a bank account, obtaining and maintaining your tax-exempt status and hiring employees. Complete this step by filling out Form SS-4 from the IRS website. Carefully read the instructions before filling out this form.

Once you’ve filled out the form, you can submit it by mail, fax or online. See the graphic below for mailing information. You should submit it four to five weeks before you need your number. See below for information on where to file your Form SS-4. Many registered agents, such as Rocket Lawyer, offer access to licensed business lawyers. So, if you’ve hired a registered agent, check with them to find legal resources for your bylaws.

Where to File or Fax

If you have a principal place of business, office or agency, or legal residence in the case of an individual located in:	File or fax to:
One of the 50 states or the District of Columbia	Internal Revenue Service Attn: EIN Operation Cincinnati, OH 45999 Fax: 855-641-6935
If you have no legal residence, principal office, or principal agency in any state or the District of Columbia (international/U.S. possessions)	Internal Revenue Service Attn: EIN International Operation Cincinnati, OH 45999 Fax: 855-215-1627 (within the U.S.) Fax: 304-707-9471 (out of the U.S.)

See MoreSee Less

7. Obtain a Business License

A general business license is not required in Texas. If your nonprofit is going to sell goods or services to raise money for your mission, you need to apply for a tax license in Texas. To do so, you will need your EIN, a Social Security number for your directors and officers, and your North American Industry Classification System (NAICS) code.

Your NAICS code classifies your business. These codes already exist. You simply have to select the one that best fits your organization. You can enter a keyword that describes your mission on the United States Census Bureau NAICS page to find out your NAICS number.

Your file number looks similar to RT666666. It is usually found on the upper-left corner of your tax report. You can find your file number by contacting 800-442-3453, which is an automated system. If you do not have the information they request to obtain your number, using the automated system, ask for a duplicate tax report with this number on it.

Once you have this information, you can apply for a tax license. Learn more about how to get a business license in Texas.

8. File for Federal Tax Exempt Status

Filing for federal tax-exempt status differs depending on your nonprofit type. We will use the example of starting a 501(c)(3) to walk you through this step. To file for 501(c)(3) status, you must fill out either Form 1023-EZ or Form 1023. Generally, organizations that have gross receipts of less than $50,000 for each of the last three years of operation can fill out a Form 1023-EZ (with a $275 filing fee) while others must fill out Form 1023 (with a $600 filing fee).

To submit these forms, you must visit the Pay.gov website. Form 1023-EZ, for example, can only be filled out, paid for and submitted electronically on Pay.gov here. Form 1023 can be filled out, paid for and submitted on Pay.gov here. Follow the instructions to prepare to fill out the form. To move to the form, scroll to the bottom of the page and click “Continue to the Form.”

9. File for Texas Tax Exemptions

All 501(c)(3) nonprofits must apply for state tax exemption in Texas. This entails applying for franchise and sales tax exemptions. Once you’ve received your exemption certificate, you can give it to a seller when purchasing taxable items for your nonprofit to be exempt from taxes. If the seller will not accept your certificate, ask the seller to provide a completed Assignment of Right to Refund, which you can use to request a tax refund from the Comptroller.

To apply for franchise and sales tax exemptions, complete Form AP-204, Texas Application for Exemption – Federal and All Others. You can download this form from the Comptroller website here. When you apply, you must also include a copy of your IRS-issued exemption determination letter from step eight. Submit your application via the contact information below.

Mail: Texas Comptroller of Public Accounts
Exempt Organizations Section
P.O. Box 13528
Austin, Texas 78711

Fax: 512-475-5862

Email: exempt.orgs@cpa.texas.gov

Bottom Line

Setting up a nonprofit in Texas is a process with several steps. Some steps can be easily completed by your team and some require a whole-team approach. Still, some steps require legal expertise, including when you create and finalize your bylaws. So, be sure to lean on the expertise of your board of directors and consider seeking legal counsel to successfully complete these steps while protecting your nonprofit and its directors.