Many Texans create organizations that give back to their communities, whether through education, healthcare, the arts, or faith-based initiatives. But while the passion for service may come naturally, the legal process of starting a nonprofit can be challenging. Without a clear understanding of the steps, founders risk delays, costly mistakes, or compliance issues down the road.
This guide outlines the key legal steps for establishing a nonprofit in Texas. With the proper preparation—and the right legal support—you can focus on your mission while ensuring your organization has a solid legal foundation.
Step 1 – Define Your Mission and Purpose
Before you begin the paperwork, you’ll need to articulate your mission clearly. Why does your nonprofit exist? Who will it serve? What problem will it solve?
A strong mission statement isn’t just a guiding principle; it’s also required for many of the filings you’ll complete with the state of Texas and the IRS. A well-written mission statement will help you stay focused while demonstrating to potential donors and regulators that your organization has a legitimate, charitable purpose.
Step 2 – Choose a Legal Structure
In Texas, most nonprofits form as nonprofit corporations under the Texas Business Organizations Code. Incorporation offers liability protection for board members and officers, adds credibility with donors, and creates a formal framework for operations.
Other structures—such as unincorporated associations or trusts—are available, but nonprofit corporations are the most common because they align with IRS requirements for tax-exempt status.
Step 3 – File a Certificate of Formation with the State
To formally establish your nonprofit, you must file a Certificate of Formation (Form 202) with the Texas Secretary of State. This document includes:
- Your nonprofit’s name
- The registered agent for service of process
- Your stated purpose
- The initial board of directors
You’ll also need to pay a filing fee. Once approved, your organization is officially recognized as a Texas nonprofit corporation.
Step 4 – Draft Bylaws and Governance Policies
Bylaws act as your nonprofit’s operating manual. They define how board meetings are conducted, how officers are elected, how decisions are made, and how conflicts of interest are handled.
Strong bylaws and governance policies are essential for IRS approval of tax-exempt status. They also give your board a clear framework for operating responsibly and transparently.
Step 5 – Apply for Federal and State Tax Exemptions
Forming a nonprofit corporation in Texas does not automatically make your organization tax-exempt. To obtain federal recognition, you’ll need to apply for 501(c)(3) status with the IRS using Form 1023 (or Form 1023-EZ for smaller organizations).
Once the IRS approves your application, you can also apply for state exemptions through the Texas Comptroller’s Office, which may relieve your organization from paying franchise or sales tax.
Step 6 – Register for Charitable Solicitation and Compliance
If your nonprofit will be soliciting donations, you must comply with the laws governing fundraising in Texas. The Texas Attorney General oversees charitable organizations, and certain nonprofits are required to register or file periodic reports.
Additionally, your nonprofit must remain compliant by filing an annual IRS Form 990 and maintaining transparent financial and governance records. Noncompliance can jeopardize your tax-exempt status, so it’s critical to track deadlines and reporting requirements carefully.
Step 7 – Build a Strong Foundation for Success
After the legal filings are complete, focus on creating structures that will sustain your nonprofit:
- Open a bank account using your nonprofit’s EIN.
- Recruit and train a committed board of directors.
- Establish sound accounting practices and maintain accurate record-keeping.
- Adopt policies that encourage transparency and ethical operations.
The more effort you put into building a strong foundation, the better positioned your nonprofit will be to serve its mission for years to come.
How an Attorney Can Help
Starting a nonprofit involves more than filling out forms—it requires careful attention to both state and federal requirements. Mistakes at the beginning can lead to delays, denials of tax-exempt status, or compliance issues that put your mission at risk.
At Hubbs Law, we guide nonprofit founders through every stage of the process. From drafting bylaws to completing IRS applications to advising on board governance, our goal is to help you avoid pitfalls and focus on what matters most: serving your community. With our experience in Texas nonprofit law, you’ll have the clarity and confidence to move forward.
Legal Representation for Nonprofits in Texas
Starting a nonprofit in Texas is both rewarding and complex. From defining your mission to applying for 501(c)(3) status and maintaining compliance, each step builds the foundation for a successful organization.
If you’re ready to turn your vision into action, trust Hubbs Law to handle the legal details so you can concentrate on making a difference. Contact us today to schedule a consultation and take the first step toward launching your nonprofit.