Online Texas Nonprofit FAQ

How do I form a nonprofit in Texas?

In Texas, you create a nonprofit by filing a "certificate of formation" with the Secretary of State's office and paying a filing fee. You'll also need corporate bylaws signed by the board of directors, though this document doesn't need to be filed with the Secretary of State. Your bylaws explicitly state the rights and responsibilities of the directors and govern how your nonprofit will be run.

After your articles of incorporation have been filed and you sign corporate bylaws, your nonprofit is official, but you will still need to obtain the licenses and permits that all new businesses must have to operate. These may include a business license (sometimes also referred to as a "tax registration certificate"), a federal employer identification number (EIN), a sellers' permit, or a zoning permit. Forming a nonprofit may not exempt you from any of these requirements that apply to all businesses.

For more information, see the Licenses & Permits for Your Business area of Nolo's website.

To begin creating your Texas nonprofit, visit the Online Nonprofit page on the Nolo website.

What types of nonprofits can I form in Texas?

The state of Texas recognizes only one type of nonprofit corporation. Your group can also operate as an unincorporated nonprofit association, which you do not form with the state. For more information, check out the Secretary of State's page on nonprofit organizations.

Are all nonprofits exempt from taxes?

After forming your nonprofit with the state, you have the option to apply for tax-exempt status with the IRS. Or, you can have a nonprofit without tax exemption, meaning the organization will be responsible for corporate, sales, property, and other taxes. Tax exemption is available to different types of nonprofits, including:

501(c)(3): Most nonprofits fall under this category, including organizations formed for the following purposes: religious, educational, scientific, literary, testing for public safety, amateur sports, and prevention of cruelty to children or animals.

501(c)(4): This includes social welfare groups such as civic leagues, social welfare organizations, homeowners associations, and local associations of employees. 501(c)(4)s can engage in lobbying and some political activity.

501(c)(6): Organizations such as business leagues, chambers of commerce, and professional associations fall under this category.

501(c)(7): Social and recreational clubs, such as country clubs and sororities, fall under this category. A 501(c)(7) is not organized for a charitable purpose, but to provide activities and other services to a particular group.

Our formation services are limited to nonprofits that will qualify for 501(c)(3) tax status and public benefit and religious nonprofits that may not apply for tax exemption. To form other types of nonprofits, or if you are unsure which type of nonprofit you will form, consider talking to a lawyer.

How much will it cost to form my Texas nonprofit?

The price of Nolo's Online Texas Nonprofit formation service varies depending on your needs.

Nolo's Basic Service. The price starts as low as $49.00 for Nolo's Basic Service, which includes preparation and filing of the articles of incorporation, minutes of first meeting of board of directors, and standard filing, which will take two to three weeks.

Nolo's Standard Service. Includes Nolo's Basic Service plus a filled-out Application for Employer Identification Number (EIN), Nolo's eBook Every Nonprofit's Tax Guide, and a coupon code for 75% off of any nonprofit book in Nolo's store, for $149.00.

Nolo's Express Premiere Service. Includes Nolo's Standard Service plus Priority Rush Filing, a personalized corporate records book that is foil-stamped with your company name, 20 personalized membership certificates, and a personalized corporate seal, for $299.00. With Priority Rush Filing, your nonprofit will be formed within two to three business days, and you'll receive your final corporate documents one to two business days later. Your nonprofit corporate records kit will be sent to you directly from the manufacturer.

Note that filing fees charged by the state are not included in our package prices. The Secretary of State charges $25.68 in state fees (includes a name check and a certified copy of the articles of incorporation). This filing fee will be added to your total when you check out.

To compare Nolo's Texas nonprofit packages, see our package and pricing details. Please note that coupon codes are not applicable to corporate packages.

How long will it take to form my Texas nonprofit?

With the Priority Rush Filing that comes with Nolo's Express Premiere Service, your nonprofit will be formed within two to three business days, and you'll receive your final corporate documents one to two business days later. Your corporate records kit will be sent to you directly from the manufacturer.

With the Standard and Basic Service, your nonprofit will be formed, and you will receive your final nonprofit documents, within two to three weeks.

Will I have to pay taxes on my Texas nonprofit?

Tax exemption. Forming a nonprofit does not automatically exempt you from taxes. You must file additional paperwork with the Internal Revenue Service (IRS) and Texas Comptroller of Public Accounts to obtain tax-exempt status. Until you are approved, your nonprofit must pay federal and state taxes.

Federal tax exemption. To obtain federal tax-exempt status from the IRS, you will 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 finances, organizational structure, governance policies, operations, activities, and more.

Smaller nonprofits may be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. This is a much simpler, shorter form. 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.

State tax exemption. Once you have your federal tax exemption, you can obtain your Texas state tax exemption. This may include exemptions from income, property, sales, and other state taxes. The website for Texas's tax agency, the Texas Comptroller will have the form you need to file to obtain your state tax exemption, Form AP-204, Texas Application for Exemption.

Do I need a lawyer to form a nonprofit in Texas?

You can form your own nonprofit online by using Nolo's Online Nonprofit service. We will walk you through the information needed to form a nonprofit and provide you with resources to learn about nonprofit law. If you have a complex question, you may want to consult a nonprofit lawyer or tax expert. Click here for more information about how an attorney can help you form a nonprofit and your options for obtaining legal services.

If you are forming a nonprofit other than a public benefit, 501(c)(3), or religious nonprofit, consult with an attorney. Forming other types of nonprofits, such as mutual benefit organizations, 501(c)(4) civic leagues, 501(c)(6) chambers of commerce or business leagues, or 501(c)(7) social or recreational clubs, are outside the scope of our service.

Does Texas require that nonprofits have bylaws?

Texas's Secretary of State does not require you to file written bylaws with its office, but our service provides customized nonprofit bylaws that help ensure that courts will respect the directors' personal liability protection and help to avert misunderstandings among the directors and officers over the nonprofit's finances, management, policies, and more. Every nonprofit needs bylaws to outline the organizational structure, establish the powers of the directors, officers, and members (if applicable), and lay out the procedures for holding meetings, electing directors and appointing officers.

For more information, check out Nolo's article on Nonprofit Bylaws.

How do I create bylaws for my nonprofit?

Your organization's board of directors will draft and approve the bylaws. Nonprofits often draft bylaws before or shortly after filing formation documents with the state. However, you can create bylaws any time after formation.

Unlike other organizational documents, like the certificate of formation, you do not file bylaws with the state. You must keep them with your nonprofit's records, and ensure they are accessible to board members.

Nolo offers an online form you can use to create customized bylaws for your nonprofit. Our bylaws include the essential terms to help your board of directors run your organization, including the board structure, meeting and voting procedures, officer descriptions, member rights and responsibilities (if applicable), a conflict of interest policy, and more.

Does forming a nonprofit mean I don't need Texas business licenses or permits?

Forming a nonprofit does not take the place of obtaining a business license, tax registration certificate, and other required business permits. A nonprofit merely creates an ownership setup that limits the owners' personal liability. Even if the nonprofit's sales are nontaxable, the organization needs a seller's permit to sell goods or merchandise in the state. For more information on required licenses and permits, see the Licenses & Permits for Your Business area of Nolo's website.

Do I need to register my nonprofit before fundraising or soliciting donations?

Texas does not require nonprofits to register with the state before soliciting contributions from state residents. You may have to register your nonprofit in other states before you engage in any out-of-state solicitations.

How can a Texas nonprofit be ended after it has been formed?

Your nonprofit will exist—and may incur taxes and fees, whether or not you are actively operating it—until you take legal steps to dissolve it. Depending on the structure of your nonprofit and your bylaws, you will need a majority or unanimous vote of the nonprofit's members or directors to approve the dissolution.

After you have formally decided to dissolve, you must file Form 652, Certificate of Termination with the Texas Secretary of State. For specifics, read the Frequently Asked Questions on the Secretary of State's website.

Unlike for-profit corporations, nonprofits have restrictions on how they can distribute any remaining assets. After paying off any debts, a 501(c)(3) organization must distribute its remaining assets to one or more other 501(c)(3) organizations. For more information about closing a nonprofit, read the article How to Dissolve a Nonprofit Corporation in Texas.

How long do I have to work on my nonprofit order?

You have as long as you like to work on your nonprofit formation without purchasing it. Every time you work on your nonprofit order on Nolo.com, your answers are automatically saved. You may access your work-in-progress nonprofit by signing in to your Nolo account at store.nolo.com/products/customer/account/login, clicking on My Account, and clicking on Texas Nonprofit.

What happens after I pay?

Your certificate of formation will be generated and sent to the Secretary of State. With the Priority Rush Filing that comes with the Express Premiere Service, your nonprofit will be formed within two to three business days (depending upon the Secretary of State's processing times) and you'll receive your final nonprofit documents one to two business days later. With the Standard and Basic Service, your nonprofit will be formed and you will receive your nonprofit documents within two to three weeks.

If you ordered Nolo's Express Premiere Service, your nonprofit corporate records binder and company seal will be sent to you independently, directly from the manufacturer.

When you receive your final nonprofit documents, you will receive instructions on a few more steps you need to take, which include holding an initial meeting of your directors, sending a statement of information to the Secretary of State, and completing membership certificates (if you are forming a membership nonprofit).

After completing your purchase, you may no longer go back and change your answers because your order is being processed. You may, however, view your answers by signing in to your Nolo account at https://store.nolo.com/products/customer/account, clicking on My Account, and clicking on Texas Nonprofit.

Once we send your documents to the Secretary of State, we cannot refund your state filing fees and other third-party costs, such as courier and delivery services, should you decide to cancel your order. If you have a question after submitting your order, you may contact our filings specialists by going to www.nolo.com/customer-support/filing-support.

What if I want to change the information I gave you for my new nonprofit?

You can take as much time as you like to work on your nonprofit answer choices. Every time you add or edit an answer, your work is automatically saved.

After completing your purchase, you may no longer go back and change your answers because your order is being processed. You may, however, view your answers by signing in to your Nolo account at https://store.nolo.com/products/customer/account, clicking on My Account, and clicking on Texas nonprofit.

I am a veteran. Do I have to pay the state filing fee if I use Nolo's nonprofit formation service?

Yes, at this time, you cannot use Nolo's service to file for free. To get a fee waiver, you will have to request and receive a Veteran Verification Letter from the Texas Veterans Commission, and complete a Certification of New Veteran-Owned Business, which you can obtain from the Comptroller of Public Accounts. After you have these documents, you can file for free at the Secretary of State's website at www.sos.state.tx.us.

Where can I learn more about Texas nonprofits?

To learn more about nonprofits, visit the Nonprofits area of Nolo's website.