If you’re looking to make a difference in your community and have a specific cause you’re passionate about, forming a nonprofit corporation in Texas may be the way to go.
A nonprofit corporation is a legal entity that is designed to operate for the purpose of serving a specific public or charitable purpose, rather than for profit.
In Texas, the process for establishing a nonprofit corporation is relatively straightforward, but there are some key steps you should be aware of.
A nonprofit lawyer can help you navigate the complex process of establishing a nonprofit and securing tax-exempt status from the Internal Revenue Service (IRS).
They can also help you maintain tax-exempt status, which often involves meeting a host of filing and operational requirements.
Rather than having to research and attempt to fulfill these obligations on your own while trying to run the nonprofit, an attorney can help perform these tasks for you.
This frees up your time to do what you need to do to run the organization and make a difference in your community.
The Zimmerman Law Firm, P.C., helps entrepreneurs legally establish nonprofit organizations throughout Texas. We understand that you have many tasks to accomplish when setting up your business.
Our job is to take care of legal matters, so you can participate in the good work you and your team aim to do. We appreciate the opportunity to help others enrich the lives of fellow Texans.
Below, the business formation attorneys at The Zimmerman Law Firm go over the steps to form a nonprofit in Texas. If you have any questions, please contact us online or call (254) 271-2540.
How Do I Create a Nonprofit in Texas?
Establishing a nonprofit can be a rewarding way to effect positive change in your community. Entrepreneurs should take care when forming their businesses to ensure they follow the proper steps.
Missteps or errors, even minor mistakes, can delay the process or lead to adverse consequences for the nonprofit and its tax-exempt status.
The below guide provides a general framework for how to create a nonprofit in Texas. For specific advice on your unique situation, we encourage you to talk to an experienced nonprofit attorney.
Step 1: Choose a Name for Your Nonprofit Corporation
Before you can start the process of forming a nonprofit corporation in Texas, you need to choose a name for your organization. Your name should be unique and not already in use by another organization in Texas.
Further, the business name cannot state or imply that the nonprofit does something unlawful or forbidden by the laws of Texas.
Step 2: Determine the Purpose of the Nonprofit
When forming most types of businesses, the purpose can be quite broad (typically, “any lawful purpose”) and does not need to meet many requirements so long as the purpose is not to engage in illegal activity.
In Texas, nonprofits must be formed for specific types of purposes, such as:
- Serving a charitable, religious, or civic purpose;
- Running a professional or trade association or labor union;
- Engaging in raising and breeding livestock; and
- Running a nonprofit cooperative association.
It is very important that you and your team take care to identify the purpose of the nonprofit and ensure that its operations move toward that goal. Being clear about the unmet needs that your nonprofit will help to fulfill sets a strong foundation for the nonprofit.
Create a specific plan for how to monitor this progress, and course-correct if need be as the business grows. Missteps can jeopardize the business’s tax-exempt status, so consulting a nonprofit attorney along the way can be beneficial.
Step 3: File a Certificate of Formation
To form a nonprofit corporation in Texas, you need to file a certificate of formation with the Texas Secretary of State.
The certificate of formation should include the name of your organization, the purpose of your organization, and the names and addresses of your initial board of directors.
You’ll also need to include a statement indicating that your organization is formed for charitable purposes and that it will not engage in any activities that are not allowed for tax-exempt organizations under federal law.
Step 4: Apply for Tax-Exempt Status
To receive tax-exempt status from the IRS, you’ll need to file Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.
This form requires detailed information about your organization, including its purpose, activities, and financial information.
The time it takes the IRS to review and process an Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code can vary, but on average it takes between three to six months.
Once your application is approved, you’ll be granted tax-exempt status and your donors will be able to deduct their contributions to your organization on their tax returns.
After you obtain tax-exempt status, you must follow certain requirements to maintain it throughout the lifecycle of the nonprofit. It is important to pay close attention to these deadlines and requirements so you do not subject yourself or your business to liability.
Contact a Nonprofit Lawyer at The Zimmerman Law Firm, P.C. for Help
Forming a nonprofit and obtaining tax-exempt status from the IRS can be a complex and time-consuming process.
Our experienced attorneys have the necessary, specialized knowledge to guide you through the process of forming a non-profit organization.
At The Zimmerman Law Firm, it is our privilege to be able to support our Central Texas community by helping Central Texans pursue their dreams of creating non-profit organizations.
Our attorneys can help you navigate this process and ensure that your documentation is accurate and complete to avoid any potential delays or issues and set you up for long-term success.
If you’re ready to start your own nonprofit, contact The Zimmerman Law Firm online today or call (254) 271-2540.