How to Form a Texas Nonprofit Corporation

Most nonprofits are 501(c)(3) corporations, meaning they're formed for religious, charitable, scientific, literary, or educational purposes and are eligible for federal and state tax exemptions. To create a 501(c)(3) tax-exempt organization, first you need to form a Virginia nonstock corporation. Then you must apply for tax-exempt status from the IRS and the State of Texas.

While the requirements for forming nonprofits vary, you can generally follow the steps below to create your Texas nonprofit. If you'd like a helping hand with the registration process, you can use our online nonprofit formation service to set up your nonprofit.

1. Choose a Name for Your Texas Nonprofit Corporation

When you pick a name for your nonprofit, you must follow Texas's laws for nonprofit corporation names. For more information on business name availability, reservations, and certificates, see the name filings FAQ webpage on the Texas Secretary of State (SOS) website.

Your Nonprofit Name Must Be Distinguishable

Under Texas law, the name of your nonprofit corporation can't be the same as or too similar to an existing business's name on record with the SOS. (Tex. Bus. Org. Code § 5.053 (2025).)

You can check whether the proposed name for your nonprofit is available by searching the following:

• SOSDirect for businesses, assumed names, and trademarks that have been registered with the SOS, and
• the taxable entity database on the Texas Comptroller of Public Accounts (CPA) website.

You can also call or email the SOS's Corporations Division to ask for a preliminary determination of name availability.

Reserve Your Nonprofit's Name

You can reserve an available name for your nonprofit for a renewable period of 120 days. You're not required to reserve a name. This step is optional. (Tex. Bus. Org. Code §§ 5.101 and following (2025).)

You can reserve your nonprofit name by filing an Application for Reservation or Renewal of Reservation of an Entity Name (Form 501) with the SOS. You can file the application online using the SOSDirect. You can also mail a completed paper copy to the SOS. As of 2025, the filing fee to reserve a name for your nonprofit is $40.

Register Your Nonprofit's Assumed Business Name (DBA)

When your nonprofit does business, you don't have to use your nonprofit's legal name registered on its formation paperwork. Instead, you can use a different name for your business—sometimes called an "assumed name" or a "DBA," (short for doing business as), "trade name," or "fictitious name."

If your nonprofit uses an assumed name in Texas, you must file an Assumed Name Certificate (Form 503) with the SOS. You can register your assumed name by mail or through SOSDirect. The certificate is effective for 10 years. As of 2025, the fee to register an assumed name in Texas is $25.

(Tex. Bus. & Com. Code §§ 71.101 and following (2025).)

2. Appoint the Initial Directors for Your Nonprofit Corporation

In Texas, nonprofit corporations are governed by either a board of directors or its members. If your nonprofit doesn't have members, then your nonprofit must have a board of directors. Texas law requires a minimum of three directors. The IRS also prefers that organizations seeking tax-exempt status have at least three directors. You should try to appoint an odd number of directors to prevent voting ties.

For the most part, your corporation's certificate of formation or bylaws can outline specifics for directors, such as:

• the number of directors (it can be a set number or a range)
• the rights, duties, and powers of directors
• the term of directors
• the qualifications for directors
• the election, designation, and appointment of directors, and
• the meetings of the board of directors.

(Tex. Bus. Org. Code §§ 22.201 and following (2025).)

3. Prepare and File Your Nonprofit's Certificate of Formation

You create your Texas nonprofit by filing a Certificate of Formation Nonprofit Corporation (Form 202) with the SOS. Your certificate of formation must include the following information:

• the name of your nonprofit
• the type of entity being formed (in your case, a nonprofit corporation)
• the purpose for which the nonprofit is being formed
• if your nonprofit will not exist perpetually, the duration of your nonprofit
• the name and street address of your nonprofit's initial registered agent
• your nonprofit's initial mailing address
• the name and address of your nonprofit's organizer (the person filing the certificate)
• a statement as to whether your nonprofit will have members
• a statement as to whether your nonprofit will managed by its members
• if your nonprofit will not be managed by its members, the number of directors your nonprofit will have and the names and addresses of the initial directors, and
• any special dissolution procedures.

(Tex. Bus. Org. Code §§ 3.005 and 3.009 (2025).)

Include IRS-Specific Nonprofit Language in Your Certificate

To receive tax-exempt status from the IRS, you'll need to have certain specific language in your certificate, including:

• a statement of purpose that meets IRS requirements
• statements that your nonprofit will not engage in activities unrelated to its exempt purposes or in prohibited political or legislative activity, and
• a dissolution clause dedicating the corporation's assets to another 501(c)(3) organization or to the government upon dissolution.

The SOS has a certificate of formation form on its website you can fill out to create your nonprofit corporation. Include the required statement of purpose under Article 5. Following Article 5, the form provides additional space where you can include the dissolution clause and prohibited activities statement required by the IRS.

For more guidance, the IRS has published suggested language for corporations to use in their articles of incorporation. You can also find sample language for these clauses approved by the IRS in the Instructions for IRS Form 1023-EZ, (see Part II).

How to File Your Nonprofit's Certificate of Formation With the SOS

You can use the certificate of formation form the SOS provides for your nonprofit. You can find the certificate along with other relevant forms on the SOS's business and nonprofit forms page. The form includes instructions to help you fill out your certificate. Complete and mail your certificate to the SOS following the instructions provided.

You can also file your articles online via SOSDirect. You must create an account to use SOSDirect.

As of 2025, the filing fee for a Texas nonprofit corporation is $25.

4. Prepare Bylaws for Your Texas Nonprofit Corporation

The body responsible for managing your nonprofit must adopt initial bylaws for your nonprofit corporation. If your nonprofit is managed by members, then the members will adopt the bylaws. If your nonprofit is managed by directors, then the board of directors will adopt your nonprofit's bylaws. (Tex. Bus. Org. Code § 22.102 (2025).)

Your bylaws contain the rules and procedures your corporation will follow for:

• holding meetings
• electing officers and directors
• adopting, amending, and repealing the bylaws, and
• taking care of other corporate formalities.

You can draft the bylaws yourself. You can use free and inexpensive samples online (including our nonprofit bylaws form) to help you. You can also recruit an experienced business lawyer to draft the bylaws for your nonprofit.

You don't need to file your bylaws with the state—this document is your internal operating manual.

For more information on this nonprofit formation document, see our article about articles of incorporation, bylaws, and organizational minutes.

5. Hold a Meeting of Your Board of Directors

After incorporating your nonprofit, you should hold a board meeting. Your first board meeting is usually referred to as an "organization meeting" because you're organizing the nonprofit.

If the nonprofit will be managed by directors, then the board will hold this meeting at the call of a majority of the directors. If the nonprofit will be managed by its members, then the members will hold this meeting at the call of the organizer. (Tex. Bus. Org. Code § 22.104 (2025).)

The board or members should take such actions as:

• electing the directors (if none have yet been appointed)
• approving the bylaws
• appointing officers
• setting an accounting period and tax year, and
• approving initial corporation transactions, such as opening a corporate bank account.

After the meeting is completed, create meeting minutes that accurately record the actions taken by the board. You should set up a corporate records binder for your nonprofit to hold important documents such as your articles of incorporation, bylaws, and meeting minutes.

6. Apply for an EIN From the IRS

Your nonprofit corporation must obtain a federal employer identification number (EIN). You'll need an EIN to complete your application for federal tax exemption (discussed below).

You can obtain an EIN by completing an online EIN application on the IRS website. There's no filing fee.

7. Obtain the Necessary Business Licenses

Depending on its business activities and location, your nonprofit could need to obtain local and state business licenses or permits. Like most states, Texas doesn't require a general business license to operate in the state.

Most cities and counties also don't require a general license. But you should still check with local officials and your city website to determine your local requirements. In addition, your nonprofit might need to apply for certain tax, professional, occupational, or other regulatory licenses.

You can read our article on how to get a small business license in Texas for more details about licensing and permitting requirements in the state. You can find more information and resources via the Business Permit Office of the Texas Economic Development and Tourism Office.

8. Obtain Your Federal and State Tax Exemptions

After legally forming your nonprofit corporation, you can obtain your federal and Texas state tax exemptions. Here are the steps you must take to obtain your tax-exempt status.

Some nonprofits decide to reach out to a business or tax attorney at this stage. While you can form a nonprofit on your own, you might also find it useful to consult with a legal or tax professional. A business lawyer can help you complete the necessary steps to form and manage your nonprofit.

File Your Form 1023 Federal Tax Exemption Application

To obtain federal tax-exempt status from the IRS, you'll need to complete and file IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. This long and detailed form asks for a lot of information about your organization, including its history, finances, organizational structure, governance policies, operations, activities, and more.

Smaller nonprofits might be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. This application is a much simpler, shorter form that's filed online. Only smaller nonprofits—those with projected annual gross receipts of less than $50,000 and total assets of less than $250,000—are eligible to use the streamlined 1023-EZ application.

See the IRS website for more information on the Form 1023 and Form 1023-EZ filing requirements.

Texas State Tax Exemptions

Texas nonprofits should generally consider four types of taxes and their level of exemption from each.

Texas franchise tax. Your nonprofit must apply to the CPA for an exemption from the state's franchise tax. If you've already obtained your 501(c)(3) tax-exempt status from the IRS, complete and file Form AP-204 with the CPA. You'll need to attach your IRS 501(c)(3) determination letter to the application.

Sales and use tax. 501(c)(3) nonprofits are exempt from paying sales tax on purchases necessary to the nonprofit's exempt purpose. Your nonprofit can obtain an exemption from sales tax the same way it applied for an exemption from the state's franchise tax. For many nonprofits, you'll simply file Form AP-204 with the CPA. When making tax-exempt purchases, your nonprofit must provide the seller with a completed sales tax exemption certificate (Form 01-339).

Hotel tax. A nonprofit's employees and representatives are exempt from paying the state hotel tax when traveling on official business for the nonprofit. But the nonprofit will still be responsible for paying local hotel taxes. Your nonprofit can apply for the hotel tax exemption by filing Form AP-204 (the same form used for franchise and sales tax exemption) with the CPA. You'll need to supply the hotel with a hotel occupancy tax exemption (Form 12-302) and proof of exemption.

Property tax. Check with your local tax appraisal district if you think your nonprofit is eligible for a property tax exemption. You can read more about possible exemptions on the CPA's property tax exemption webpage.

See the CPA's page on guidelines to Texas tax exemptions for more information on these tax exemptions.

Texas Fundraising Registration Requirements

In general, Texas doesn't require nonprofits to register to solicit contributions in the state. So you likely don't have to worry about registration requirements if you fundraise in Texas. Registration is required for some nonprofits such as certain organizations related to law-enforcement or public safety, as well as veterans organizations.

If your nonprofit plans to solicit or receive donations in other states, then you might have nonprofit filing and reporting obligations in those states as well. For more information about fundraising registration requirements in all 50 states, see Nonprofit Fundraising Registration Digital Guide, by Ronald J. Barrett and Stephen Fishman (Nolo).