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
- Certain language the state and/or IRS will require in order to grant tax-exempt
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
- Conflict of Interest form
- Information about any organization from which you are involved in fundraising or
- 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
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