How to form a Non-profit Organization in Texas

Get your Website

  • First thing's first: you need to secure a domain name for a website. Ok, this isn't absolutely necessary, but if you want a website you can purchase a domain name at GoDaddy. It costs about $9 per year, plus web hosting fees from your internet service provider. I set up virtual hosting for my domain, but if you have no interest in such things then it's best to leave it to the professionals.

File Documents with the Secretary of State
  • To get an idea of how much it will cost you to incorporate, take a look at this listing of all fees for filing documents with the Corporations Section. You will find that it is downright cheap to establish a non-profit corporation in Texas. You will also find that for an extra $25 per document, you can get "expedited processing" -- which means that they'll process your filing within a day. Unless you're in a hurry, there's no need for this -- their normal turnaround time is pretty reasonable.
  • If you anticipate that it may be awhile before you file your articles of incorporation, you may want to reserve the name of your organization while the documents are in preparation. This costs $40, and will ensure that nobody else can use that name for a period of 120 days. This isn't necessary, but if you are paranoid that your name might be taken then it's worth the money for peace of mind. You'll need to fill out this form and submit two copies to the Corporations Section of the Office of the Secretary of State.
  • Now you're ready to start preparing your articles of incorporation. The basic requirements are reasonably simple, and the answers to many common questions can be found in the Corporation Section's FAQ. For more detailed information, I highly recommend the Filing Guide for Business Organizations & Nonprofit Associations published by the Secretary of State.
  • If you want your non-profit organization to be tax-exempt, now is the time to think about it. There are specific requirements that the articles of incorporation must satisfy for a corporation to be exempt under the IRS tax code [501(c)(3)]. The best source for this information is IRS Publication 557 called "Tax-Exempt Status for Your Organization". It contains sample articles of incorporation from which you can borrow language directly.
  • My articles of incorporation satisfy the bare minimum requirements in Texas, and contain the specific language that allowed my organization to get tax-exempt [501(c)(3)] status. You can take a look at my articles if you like. Once you have prepared your articles, submit two copies to the Corporations Section along with the $25 filing fee.

Deal with the IRS
  • Once your articles have been filed and approved by the Secretary of State, the next thing you'll want to do is apply for an Employer Identification Number through the IRS. You need to do this whether or not the organization plans to have employees, because it establishes an official identity for the organization. You will not, for example, be able to establish a bank account in the organization's name without an EIN. If you're in a hurry, you can get an EIN over the phone and mail your form to the IRS afterwards.
  • If you've designed your non-profit organization to be tax-exempt, the next step will be to apply for recognition of that exemption by the IRS. If the organization has annual gross receipts less than $5000, then you are not required to file this form, but you may want to do so anyway to ensure donors that their contributions will be tax-deductible, or to avoid state franchise taxes. The application needs to be accompanied by a fee of either $150 or $500 depending on the amount of income the organization is expected to gross during the first four years.

I hope that you have found this summary of my experience to be useful. If so, please contact me and let me know what sort of non-profit organization you are establishing. Also, please visit the website of my organization, see what I'm doing, and consider making a donation. Good luck!

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