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.
You can read more about the steps to form a nonprofit in Texas below. If you have any questions, please contact our Waco nonprofit lawyers online or call 254-752-9688.
Key Takeaways
What Waco Nonprofit Founders Should Know Before Filing
Starting a nonprofit in Texas takes more than good intentions. Waco nonprofit lawyers help local founders move from an idea to a properly formed, tax-exempt organization without costly missteps along the way.
- Choosing an available name, defining an eligible purpose, and filing a certificate of formation with the Texas Secretary of State are the first legal steps to forming a nonprofit.
- Texas nonprofits must be organized for a specific purpose, such as a charitable, religious, or civic cause, not simply “any lawful purpose.”
- Federal tax-exempt status requires filing Form 1023 with the IRS, a process that typically takes three to six months for approval.
- Zimmerman Law Firm helps Central Texas founders navigate formation and tax-exempt filings so paperwork errors do not delay or jeopardize their nonprofit’s status.
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 our experienced business formation lawyers.
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.
Additionally, the 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.
Missteps can jeopardize the business’s tax-exempt status, so consulting a nonprofit lawyer along the way can be beneficial.
Turning Your Vision For Your Community Into Reality Doesn’t Have To Be Complicated
Starting a nonprofit means you’re ready to make a real difference, and that’s worth protecting. We know the paperwork and legal requirements can feel like a lot on top of everything else you’re juggling. Let us handle the legal details so you can stay focused on the mission that brought you here.
Schedule A Free ConsultationStep 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.
FAQ
More Nonprofit Formation Questions From Waco Founders
Beyond the basics of filing paperwork, our Waco nonprofit attorneys hear these questions often from founders getting a new organization off the ground.
-
Texas law does not require a lawyer to form a nonprofit, but the process involves choosing an eligible purpose, drafting compliant bylaws, and filing correctly with the Secretary of State. Waco nonprofit lawyers help you avoid mistakes that delay your certificate of formation or put your future tax-exempt status at risk.
-
Texas requires a nonprofit corporation to have at least three directors, along with a president and a secretary who cannot be the same person. Many organizations appoint additional directors to bring in more expertise, and a nonprofit attorney can help you structure a board that satisfies both state and IRS requirements.
-
Filing your certificate of formation with the Texas Secretary of State is usually the quick part. Earning federal tax-exempt status takes longer, since the IRS typically takes three to six months to review a Form 1023 application, so most founders should plan for several months between formation and full tax-exempt recognition.
-
A Texas nonprofit generally must file an annual information return with the IRS, such as a Form 990, to keep its tax-exempt status in good standing. State-level obligations can also apply, so many nonprofits check in with a nonprofit lawyer each year to confirm every filing is current.
-
Costs vary based on filing fees, legal help, and how complex your nonprofit’s structure is, but you should budget for the state filing fee for your certificate of formation plus the IRS fee for your Form 1023 application. A Waco nonprofit attorney can give you a clearer estimate based on your organization’s goals.
Contact a Waco Nonprofit Lawyer Today
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 nonprofit 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 nonprofit organizations.
Our nonprofit 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 254-752-9688.
Where You Can Find Our Waco, TX Office