Nonprofits are governed by the Texas Business Organizations Code.

501(c)(3) and Other Types of Nonprofits

Texas recognizes several types of non-profits, including educational. charitable, scientific, religious, healthcare and veterans organizations. None are automatically tax-exempt. To achieve this status, non-profits must file Form 1023, an Application for Recognition of Exemption, with the IRS. Only your corporation’s assets or property are vulnerable to your nonprofit’s lawsuits or creditor claims. The personal property of trustees, officers and managers is not at risk.

Considerations for Starting a Nonprofit

1. File a Certificate of Formation, which is similar to Articles of Incorporation, with the Secretary of State, using Form 202.
2. If your nonprofit was initially incorporated in a state other than Texas, file a Nonprofit Corporation Application for Registration using Form 302.
3. File a Consent of Registered Agent to Appointment, using Form 401-A.
4. If you want to reserve a business name, file a Name Reservation, using Form 501.
5. If your nonprofit was initially incorporated in a state other than Texas, file a Name Registration, using Form 502.
6. If your nonprofit will use an assumed name, file Assumed Name Form 503.
7. File a nonprofit periodic report, or informational report, if requested, using Form 802.

Tax-Exemption and Other Benefits

Federal Tax Exemption:
To obtain status as a 501(c)(3) corporation with exemption from federal income taxes, file Form 1023, Application for Recognition of Exemption with the IRS.
To retain your tax-exempt status, file Form 990-N, Form 990-EZ or Form 990 with the IRS, depending on your non-profit’s annual gross income.

State Tax Exemption:
Meet the requirements of Texas Comptroller of Public Accounts to obtain tax-exempt status.
The Secretary of State’s Form 202 meets minimum state law requirements for tax-exempt status.

Register for Charitable Solicitation / Fundraising

Under Texas law, most charities or non-profit organizations are not required to register. However, many states require registration prior to soliciting funds or hiring solicitors. Registration in Texas is required in the following situations:

1. Registration with the Texas Secretary of State – Statutory Documents Section is required for telephone solicitors and for public safety organizations, promoters, and publications.
2. Registration with the Texas Attorney General is required for organizations that solicit for law enforcement, public safety or veterans causes.

What Federal and Texas State Fees will be incurred to Form a Texas Nonprofit

Apart from professional fees, the following basic costs should be noted:

1. The State of Texas charges a $25 filing fee for non-profit Certificates of Formation.
2. It costs $5 to file a Consent of Registered Agent to Appointment,.
3. It costs $5 to file a Nonprofit Periodic Report.
4. The IRS charges an $850 application fee to nonprofits with annual revenues exceeding $10,000. If you expect that your nonprofit’s revenues will be less than that, the fee is only $400.

If you need help setting up your Nonprofit corporation, please contact a Nonprofit attorney with the Perliski Law Group at (214) 446-3934 or use the Contact form on this page.