Considering starting a nonprofit in Texas? The most effective startup founders and boards follow these steps to establish their nonprofits.
Starting a nonprofit is an effective way to serve your community and make a positive impact. For individuals hoping to make the world a better place, a nonprofit organization holds the key to bringing about real change.
However, creating a nonprofit organization requires many steps, including learning how to raise money for a nonprofit and recruiting a board of directors. Follow this step-by-step guide to learn how to start a nonprofit in Texas.
1. Name Your Organization
You want your nonprofit’s name to be dynamic and memorable, distinguishing your nonprofit from others within your niche. The name choose should help to immediately elicit trust and credibility with prospective new supporters.
Start by conducting a name search with the Texas Secretary of State to ensure you don’t choose a name that’s already trademarked. Skipping this step could lead to unprecedented legal hurdles down the line.
2. Recruit a Board of Directors
Recruiting the best candidates for your board of directors means you instantaneously acquire expert contributors, mission evangelists, passionate fundraisers, and staff cheerleaders with the organization’s best interest at heart. Your organization’s needs should guide this recruitment process. Carefully vet all candidates to avoid conflicts of interest.
The board of directors requirements in Texas include:
- A minimum of three board of directors members
- No residency or membership requirements
- Must serve until a successor is elected
3. File Articles of Incorporation
An official hallmark for the creation of your organization is filing your nonprofit’s articles of incorporation. To do so, fill out Form 202: Certification of Formation for a Nonprofit Corporation with the Texas Secretary of State’s office. The form can be filed either via mail, fax, or in-person, and requires a $25 filing fee. Note that while the certificate of formation form provides the minimal information necessary for creating a nonprofit in Texas, it doesn’t include the language required by the IRS to obtain federal tax exemption status.
4. Obtain Employer Identification Number (EIN)
Your nonprofit corporation is legally required to obtain a federal employer identification number (EIN). This unique, nine-digit number is required for all types of nonprofits. With the EIN, you’ll be able to open a bank account, apply for 501 (c)(3) status, and submit 990 returns to the IRS.
To obtain an EIN, fill out the IRS Form SS-4 via mail, phone, fax, or online.
5. Establish Governing Documents and Policies
The state requires that nonprofits complete and register essential organizational governing documents and policies. Popularly referred to as bylaws, these serve as the organization’s operating manual.
Note that Texas does not require a copy of the bylaws to be filed with the state, but a copy of the bylaws is required by the IRS when seeking tax exemption as a 501(c)(3) organization. However, if you are using Form 1023-EZ, you will not be required to present a copy of the bylaws.
Your board of directors should establish these bylaws. To store bylaws and host effective board meetings, consider leveraging board meeting software. Tools like meeting analytics and automated meeting briefs ensure you hold smarter meetings.
6. Apply for Texas Tax Exemption(s)
As a registered nonprofit organization in Texas, you are eligible for some tax exemptions. Your nonprofit treasurer should help your organization fill out the following applicable forms, all of which are accessible through the Texas Comptroller:
- AP-204 Application for Exemption (federal)
- AP-205 Application for Exemption (charitable organizations)
- AP-206 Application for Exemption (homeowners’ associations)
- AP-207 Application for Exemption (educational organizations)
- AP-209 Application for Exemption (religious organizations)
To stay up-to-date with what exemptions you are eligible for, consult the Texas Comptroller.
Getting Started With OnBoard
Once your nonprofit is formed, it’s time to get down to business. A board portal solution purpose-built for nonprofit organizations, like OnBoard, helps nonprofit boards work smarter and achieve more for their organizations.
Download OnBoard’s free board meeting agenda template to organize an effective meeting. Then, request a free demo to see how else the software can help your organization achieve its goals.
Frequently Asked Questions
How Much Does it Cost to Start a Nonprofit in Texas?
The Texas Secretary of State charges a $25 filing fee plus an additional state-mandated 2.7% convenience fee to file a nonprofit Certificate of Formation. You will also pay an additional $40 to file a name reservation application if you wish to reserve your nonprofit's name before you've filed the Certificate of Formation.
How Many Board Members are Required for a Nonprofit in Texas?
Texas mandates a minimum of three board members for any nonprofit within the state.
How Long Does it Take to Start a Nonprofit in Texas?
The average time it takes to start a nonprofit in Texas is 3-5 business days. You also have the option of paying an additional $25 expedite fee to complete your registration in 2 business days.
How Many Nonprofit Organizations are in Texas?
There are nearly 100,000 nonprofit organizations in Texas.
About The Author
- Gina Guy is an implementation consultant who specializes in working with nonprofit organizations get the most from their board meetings. She loves helping customers ease their workloads through their use of OnBoard. A Purdue University graduate, Gina enjoys refinishing furniture, running, kayaking, and traveling in her spare time. She lives in Monticello, Indiana, with her husband.
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