To form a nonprofit in Texas, you file a Certificate of Formation (Form 202) with the Texas Secretary of State, pay a $25 filing fee, obtain a federal Employer Identification Number, and then apply separately to the IRS for 501(c)(3) recognition and to the Texas Comptroller for state tax exemptions. The state filing itself is quick and cheap; the federal tax-exempt determination is what takes real time and money. Getting the founding documents right at the start matters, because the IRS reads them closely when you apply for exempt status.
Pick a Name and Line Up a Registered Agent
Your corporate name has to be distinguishable from every other entity already on file with the Secretary of State. Chapter 5 of the Texas Business Organizations Code sets that rule, and a filing that uses a name too similar to an existing one gets rejected. Search the SOSDirect online portal before you commit; each search costs $1.1Office of the Texas Secretary of State. SOSDirect – An Online Business Service
Every Texas nonprofit must designate a registered agent to accept legal documents and official mail. The agent can be an individual Texas resident or a business entity authorized to operate in the state, and the registered office must be a physical Texas address where someone can accept service during business hours. A P.O. box doesn’t qualify unless the commercial mail service itself is the registered agent.2Texas Secretary of State. Registered Agents You must keep an agent and office continuously; letting the position lapse can lead to involuntary termination of the entity.3Office of the Texas Secretary of State. Registered Agents FAQs
Many organizations appoint a founder or board member as agent to start. Commercial services typically charge $100 to $300 per year and are worth it when no board member has a reliable Texas office address.
Set Your Board and Draft Bylaws
Texas requires a nonprofit corporation to have at least three directors. They don’t need to be Texas residents, but each must be named with an address in the Certificate of Formation. The Business Organizations Code also requires a president and a secretary at minimum; you can add a vice president, treasurer, or other positions. One person may hold two officer roles, but the same individual cannot be both president and secretary.4State of Texas. Texas Business Organizations Code Section 22-231 – Officers
Bylaws are the internal rulebook: how meetings run, how directors are elected and removed, what officers can decide, how the board votes. You don’t file them with the state, but banks, grant-makers, and the IRS will ask for them. Draft them before or right after incorporation.
A conflict of interest policy isn’t required by Texas law, but the IRS asks about it directly on Form 1023. Adopt one that requires directors and officers to disclose financial interests and recuse themselves from related votes. Having it in place before you apply signals the IRS that self-dealing is taken seriously.
File the Certificate of Formation
The Certificate of Formation is filed on Form 202, available from the Secretary of State.5Texas Secretary of State. Form 202 – Certificate of Formation – Nonprofit Corporation The form asks for the entity name, registered agent, directors, and whether the corporation will have voting members or be governed by the board alone. Two sections regularly cause problems, because the IRS has specific language expectations for both.
The Purpose Clause
p>The IRS suggests language stating that the corporation is organized exclusively for charitable, religious, educational, or scientific purposes, including making distributions to organizations that qualify under Section 501(c)(3) of the Internal Revenue Code.6Internal Revenue Service. Suggested Language for Corporations and Associations You can add descriptions of specific programs, but that broad IRS-approved language should be the foundation.
The Dissolution Clause
The clause must state that upon dissolution, remaining assets will be distributed to another 501(c)(3) organization or to a government entity for a public purpose.6Internal Revenue Service. Suggested Language for Corporations and Associations Without this language, the IRS will reject your exemption application and you’ll have to amend the Certificate of Formation before reapplying. Form 202 includes a text area specifically for adding tax-exempt language.
Filing and Fees
You can file online through SOSDirect or mail two signed copies to the Secretary of State in Austin. The filing fee is $25, payable by credit card online or by check through the mail; credit card payments include a 2.7% convenience fee.7Office of the Texas Secretary of State. Form 202 – Instructions for Certificate of Formation – Nonprofit Corporation
Standard processing time depends on the Secretary of State’s current workload. Texas offers tiered expedited service on top of the $25 filing fee: $50 for processing within roughly two to three business days, $500 for next-business-day service, and $750 for same-day service on filings received by noon.8Office of the Secretary of State. Introducing Texas Express Expedited Business Filings For most nonprofits the standard timeline is fine, because the real bottleneck is the IRS exemption application.
Get an Employer Identification Number
An EIN is the nine-digit number the IRS assigns to your organization for tax reporting, hiring employees, and opening bank accounts. The fastest route is the online application on the IRS website, which issues the number immediately upon approval.9Internal Revenue Service. Get an Employer Identification Number The tool is free and runs during IRS business hours. Form SS-4 by fax or mail is available as a fallback.10Internal Revenue Service. About Form SS-4, Application for Employer Identification Number (EIN)
You’ll need the corporation’s legal name exactly as it appears on the Certificate of Formation, plus the name and Social Security number of a “responsible party” who controls or manages the entity. Get the EIN before you apply for tax-exempt status; both the IRS and the Texas Comptroller require it on their applications.
Apply for 501(c)(3) Recognition
Federal tax-exempt status is a separate process from state incorporation.11Office of the Law Revision Counsel. 26 USC 501 – Exemption From Tax on Corporations, Certain Trusts, Etc The IRS offers two application paths, and eligibility depends on the size and complexity of your organization.
Form 1023-EZ or Full Form 1023
The streamlined Form 1023-EZ is available to organizations that project annual gross receipts of $50,000 or less for each of the next three years and hold total assets worth $250,000 or less.12Internal Revenue Service. Instructions for Form 1023-EZ (Rev. January 2025) The financial thresholds are only the start. The IRS eligibility worksheet disqualifies dozens of organization types, including successors to for-profit entities, organizations requesting classification as supporting organizations, entities formed under foreign law, and organizations that operate schools, hospitals, or credit counseling services. Work through the full worksheet before assuming you qualify.
Organizations that exceed those thresholds or fail the worksheet must file the full Form 1023, which requires detailed descriptions of planned programs, projected financials, compensation arrangements, and fundraising plans.
Fees and Timing
The user fee for Form 1023 is $600. For Form 1023-EZ it is $275. Both are paid through Pay.gov at the time of filing.13Internal Revenue Service. Form 1023 and 1023-EZ: Amount of User Fee
Processing speed varies dramatically. The IRS issues 80% of Form 1023-EZ determinations within about 22 days. For the full Form 1023, 80% of determinations take up to 191 days, roughly six months.14Internal Revenue Service. Where’s My Application for Tax-Exempt Status? Plan accordingly if you need the determination letter before applying for grants or state tax exemptions.
Apply for Texas Tax Exemptions
Federal exempt status does not automatically carry over to Texas taxes. Apply separately with the Texas Comptroller using Form AP-204 to request exemption from franchise tax, sales tax on purchases related to your exempt purpose, and hotel occupancy tax when staff travel on the organization’s behalf.15Texas Comptroller. Tax Exemptions for Qualified Organizations Include your IRS determination letter, or, if you haven’t received it yet, your governing documents showing the organization meets state eligibility standards. If approved, the Comptroller issues a Texas exemption letter to keep in your permanent files and present to vendors for tax-free purchases.
Even without exemption in hand, the Texas franchise tax no-tax-due threshold for reports due in 2026 is $2,650,000 in annualized total revenue.16Texas Comptroller of Public Accounts. 2026 Franchise Tax Instructions Nearly every new nonprofit falls well below that, so franchise tax generally isn’t owed regardless. The Public Information Report is still required.
Keep the Entity in Good Standing
Annual IRS Filings
The IRS requires annual information returns from nearly all tax-exempt organizations. Which form you file depends on size:
- Form 990-N (e-Postcard) for organizations that normally have gross receipts of $50,000 or less.
- Form 990-EZ for organizations with gross receipts under $200,000 and total assets under $500,000.
- Form 990 for organizations with gross receipts of $200,000 or more, or total assets of $500,000 or more.
These thresholds apply for the 2024 tax year and forward.17Internal Revenue Service. Exempt Organization Annual Filing Requirements Overview If you fail to file the required 990-series return for three consecutive years, the IRS automatically revokes exempt status. There’s no warning, no grace period, and no discretion. Once revoked, the organization owes income tax on its earnings, donors can no longer deduct contributions, and you have to reapply and pay the user fee again.18Internal Revenue Service. Automatic Revocation of Exemption
Texas State Filings
Every Texas corporation must file a Public Information Report with the Comptroller’s office annually, even when the entity falls below the no-tax-due threshold and owes no franchise tax.19Texas Comptroller of Public Accounts. Texas Franchise Tax Public Information Report and Ownership Information Report The report lists your officers, directors, and basic organizational details, and is due on the franchise tax report due date.
Texas nonprofit corporations also file a periodic report with the Secretary of State under Section 22.358 of the Business Organizations Code. The Secretary of State sends notice to your registered office when the report is due.20Cornell Law Institute. 1 Texas Administrative Code 79-27 – Nonprofit Corporation Periodic Reports Missing it can lead to administrative forfeiture of your right to conduct business, so keep the registered agent address current or you won’t see the notice.
Fundraising Solicitation Rules
Texas doesn’t require most charities to register before soliciting donations, which is more relaxed than many other states. Specific categories do face registration and bonding requirements: law enforcement-related organizations soliciting by telephone, veterans organizations that hire outside solicitors, and public safety organizations covered by the Public Safety Solicitation Act.21Office of the Attorney General. Registration and Filings If your organization falls into one of those categories, check the specific statute before fundraising. Otherwise, you can solicit without registering, though Texas law still holds all charitable organizations accountable for fraudulent or misleading solicitation.
What It Costs, All In
Beyond the $25 state filing fee, several other costs add up:
- Certificate of Formation: $25 standard, or $75 to $775 with expedited processing.
- IRS exemption application: $275 for Form 1023-EZ or $600 for the full Form 1023.13Internal Revenue Service. Form 1023 and 1023-EZ: Amount of User Fee
- Registered agent service: free when a board member serves, or roughly $100 to $300 per year for a commercial service.
- Directors and officers insurance: typically $500 to $1,700 per year for $1 million in coverage, though many small nonprofits start without it.
- Legal assistance: professional fees for incorporation and the tax-exempt application run from a few hundred dollars for simple formations to several thousand for complex organizations.
A straightforward formation using the 1023-EZ runs about $300 in government fees. Organizations needing the full Form 1023 should budget at least $625 in fees before any professional help.