How to Form a 501c3 Nonprofit Corporation in Texas

If you wish to form a 501c3 Nonprofit Corporation in Texas, the first step is to form a basic Nonprofit Corporation at the state level. The process for this is much the same as the process for filing a For-Profit Corporation: by filing Nonprofit (instead of For-Profit) Articles of Incorporation with the Secretary of State of Texas, thus filing your business as a legal entity within that state.

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Once your Nonprofit Corporation has been placed on file with the Secretary of State, you are ready to apply for 501c3 status with the IRS. Until you have obtained 501c3 status, you will not be allowed to accept tax-deductable donations or take advantage of those benefits specifically provided to 501c3 Nonprofit Corporation.

Register your 501c3 Nonprofit Corporation in Texas

When you register a For-Profit Corporation, the state will accept a general purpose statement, such as “any and all lawful purpose,” for your purpose statement. However, while Texas will allow you to form a nonprofit corporation for any lawful purpose, if you intend to apply for 501c3 status, the IRS will require that your purpose statement in these Articles includes a more detailed description of your purpose for registering, one that specifies a scientific, charitable, educational, literary, or religious purpose that falls firmly into the IRS requirements for a 501c3 Corporation. When you file a Nonprofit Corporation with Click and Inc, we make sure to include this IRS-required language right from the very beginning of the process.

Your Nonprofit Articles will include, at minimum, the following:

  • Business name as you wish it to be legally filed (you may include a corporate designator if you wish)
  • Specific purpose statement
  • Registered Agent’s name and address
  • A statement that your corporation will be managed by either the members or by a board of directors
  • If managed by a board of directors, the names and address of those directors, which must number at least three
  • Signatures
  • Certain language the state and/or IRS will require in order to grant tax-exempt status

Once placed on file by the Secretary of State, your organization becomes a legal entity and is authorized to do business in the state of Texas. If you intend to form a 501c3 Nonprofit Corporation, you are now able to begin the tax-exempt status application process with the IRS.

Applying for 501c3 Tax-Exempt Status from the IRS

There is a significant amount of information about your business the IRS will need in order to grant you tax-exempt status. Some of the information you can expect to provide is as follows:

  • Form 1023
  • Articles of Incorporation, including specific 501c3 language
  • Three years of donation estimates
  • Detailed description of your business activities
  • Three years of expense estimates
  • Bylaws
  • Conflict of Interest form
  • Information about any organization from which you are involved in fundraising or donations
  • Depending on the amount of compensation they are to receive, a list of any independent contractors or officers
  • Copies of any leases or contracts with any of the above persons

This is by no means a comprehensive list of the information the IRS will require. Depending on your intended business activity, you may be required to provide further information or documentation.

Further Responsibilities of a Texas Nonprofit Corporation

Nonprofit corporations in Texas are subject to a state franchise tax; if your nonprofit becomes tax-exempt, you must apply with the Exempt Organizations Section of the Texas Comptroller of Public Accounts to have the state franchise tax waived.

If any of the above information changes, you are required to file an amendment so that the state has current information for your business at all times. If you fail to do so, the state may not be able to reach you with important due date notifications or correspondence, which may affect the status of your company.

You will be required to obtain an Employee Identification Number, also known as an EIN. The EIN is obtained through the IRS. It is best to check with the IRS or a legal advisor to determine what other IRS requirements are present for a 501c3 Corporation.

Each business is different—keep in mind that you may be required to open any number of Business Licenses at the state, county, or town level. Learn more about our Business License Services to help streamline the process.

Other Types of Businesses in Texas

For information on other types of businesses in Texas, please explore the links below.