Person in background with nonprofit label

How to Form a Nonprofit in Texas

Deborah Hubbs
March 9, 2022

There are many people who want to make a difference in their communities, but don't know how to do it. One way you can get involved is by starting your own nonprofit organization. Doing so can be an exciting and rewarding journey! But the red tape involved with establishing a nonprofit can be intimidating to many. Fortunately, there are some simple steps you can follow to ensure your nonprofit is set up for years of success.

In this article, we will walk you through the process of forming a nonprofit in Texas, including what steps you need to take and what paperwork needs to be filed with the state.

1. Create a Mission Statement and Objectives

Before you do anything else, it's important to create a mission statement and objectives for your nonprofit. This will help guide everything that you do in the future and make sure that your organization stays on track.

2. Assemble a Board of Directors

Before your organization becomes an official nonprofit, you will need to assemble a Board of Directors. This is the group that will be in charge of making decisions and overseeing what you do. The Texas Business Organization Code requires a nonprofit who is formed in the State of Texas to have three directors. You will also have to choose two officers, a president and a secretary who can also hold the office of director.

You will also need to find someone willing to serve as a Registered Agent. This individual must reside in Texas (they must have a physical address in Texas) and agree to receive any official correspondence on behalf of the nonprofit.

3. Formalize Bylaws and Policies

Now that you have a board of directors, it's important to put together bylaws and policies for your nonprofit. Bylaws are required by the Texas Business Organization Code. While they do not have to be filed with the Texas Secretary of State, it will be important for you to have them and for your board of directors to approve them. This will help ensure that everything is run in an orderly fashion and that everyone knows their role within the organization.

4. File a Certificate of Formation

Next, a Certificate of Formation must be filed with the State of Texas, which will need to include information such as the organization’s name, and it’s stated purpose (among other important clauses).

It is important to note that incorporation is not a requirement for nonprofit organizations. However, all nonprofits, whether incorporated or not, must comply with the law. Incorporated nonprofits are subject to the Texas Business Organizations Code and unincorporated entities are subject to the Uniform Unincorporated Nonprofit Association Act.

5. Get Tax-Exempt Status

Once you receive the filed Certificate of Formation from the Secretary of State, it is important to get your nonprofit recognized as a tax-exempt organization by the Internal Revenue Service (IRS). The form used to apply for tax-exempt status with the IRS will differ based on the type of organization you are forming (e.g. 501(c)(3), 501(c)(4), 501(a)). Once it has been accepted, make sure that you keep all of its documentation in compliance with IRS regulations.

After the nonprofit is recognized as tax-exempt, you must provide the IRS letter to the Texas comptroller to ensure that the organization is exempt from franchise tax in the State of Texas.

At Hubbs Law, our experienced legal counsel can help you navigate these laws and ensure you utilize the best legal structure for your organization’s goals.

Hubbs Law Group Can Help You Navigate the Nonprofit Formation Process

When you’re ready to form a nonprofit in Texas, contact our firm for a consultation. At Hubbs Law Group, we guide our nonprofit clients every step of the way, so you can rest assured knowing that your organization is compliant with all laws and regulations.