To register a nonprofit in Texas, you form a nonprofit corporation by filing a Certificate of Formation (Form 202) with the Texas Secretary of State for a $25 fee, then apply separately to the IRS for 501(c)(3) tax-exempt status and to the Texas Comptroller for state franchise and sales tax exemptions. State incorporation and tax-exempt status are two different things, and the language you put in your formation document controls whether the federal application goes smoothly or stalls for months.
Pick a Name That Clears the State’s Rules
Your corporate name must be distinguishable from any entity already on file with the Texas Secretary of State, and it must include an indicator such as “Corporation,” “Company,” “Incorporated,” or an abbreviation of one of those words. You can check availability through the Secretary of State’s SOSDirect system before filing.
Write a Purpose Statement That Works for the IRS Too
Your stated purpose has to work for two audiences: the Secretary of State, which just wants a purpose, and the IRS, which will later measure it against Section 501(c)(3). If you plan to seek 501(c)(3) status, the purpose should fit one of the recognized exempt categories, which include charitable, educational, religious, scientific, and literary purposes.1Internal Revenue Service. Exemption Requirements – 501(c)(3) Organizations A generic “any lawful purpose” clause will not satisfy the IRS. Draft the statement once and use it consistently in your Certificate of Formation and later on Form 1023.
Designate a Registered Agent and Office
Every Texas entity must designate and continuously maintain a registered agent and registered office in the state. The agent is the person or organization authorized to receive lawsuits and official notices for your nonprofit. It can be a Texas resident or an organization authorized to do business here, and the registered office must be a street address where the agent can be personally served, not a mailbox service or answering service.2State of Texas. Texas Business Organizations Code BUS ORG 5.201 A board member can serve at the organization’s office address, or you can hire a commercial service, typically $35 to $350 a year.
Line Up Your Board, Officers, and Bylaws Before You File
Texas law requires a nonprofit corporation to have at least three directors and at least two officers, a president and a secretary. Any two or more offices may be held by the same person, so one individual could serve as both president and secretary.3Justia Law. Texas Business Organizations Code Title 2, Chapter 22, Subchapter E – Directors and Officers The IRS looks more favorably on independent governance, and many grant-making foundations require at least three unrelated board members.
Bylaws are the internal rules for how your organization runs: board meetings, voting, officer duties, terms, and conflict-of-interest procedures. The Secretary of State does not require you to submit bylaws with your filing, but the IRS will ask for them on your exemption application. Write them before you file so nothing contradicts your formation document later.
Prepare the Certificate of Formation
The Certificate of Formation (Form 202) is the document that legally creates your nonprofit corporation.4Office of the Texas Secretary of State. Instructions for Certificate of Formation – Nonprofit Corporation It contains the name, purpose, registered agent and office, initial directors, and duration. Two clauses inside it deserve careful attention if you want 501(c)(3) status.
The Purpose Clause
Limit the purpose language exclusively to one or more exempt purposes and avoid anything that suggests a non-exempt purpose.1Internal Revenue Service. Exemption Requirements – 501(c)(3) Organizations Broad “any lawful purpose” language will not clear the IRS.
The Dissolution Clause
The IRS requires that your organizing document dedicate remaining assets to exempt purposes if the organization dissolves. The IRS offers this sample language: “Upon the dissolution of this organization, assets shall be distributed for one or more exempt purposes within the meaning of IRC Section 501(c)(3), or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for a public purpose.”5Internal Revenue Service. Does the Organizing Document Contain the Dissolution Provision Required Under Section 501(c)(3) Put it in from the start and you will not need to amend the document to get through the IRS review.
File Form 202 With the Secretary of State
You can submit Form 202 online through SOSDirect, by mail, or in person.6Office of the Texas Secretary of State. Business and Nonprofit Forms The filing fee is $25.7Texas Secretary of State. Certificate of Formation Nonprofit Corporation Form 202 If you mail the form, send two copies. Standard processing takes several weeks; expedited options, including same-day and next-day service, are available through Texas Express for an added fee.8Office of the Texas Secretary of State. Filing Options Once the state approves the filing, you receive a file-stamped copy. Keep it; you will need it for the IRS and to open a bank account.
Get an EIN, But Not Too Early
You need an Employer Identification Number from the IRS before you can apply for tax-exempt status, open a bank account, or hire employees. Apply online at no cost and receive the number immediately.9Internal Revenue Service. Obtaining an Employer Identification Number for an Exempt Organization
Wait until your Certificate of Formation has been approved before applying. The IRS treats issuance of the EIN as the point at which the organization is legally formed, which starts the clock on annual filing obligations. If you fail to file the required annual returns for three consecutive years, the IRS automatically revokes tax-exempt status.9Internal Revenue Service. Obtaining an Employer Identification Number for an Exempt Organization
Apply for Federal 501(c)(3) Status
Incorporating creates a legal entity but does not exempt it from federal income tax and does not make donations deductible. That requires a separate application to the IRS under Section 501(c)(3).10Office of the Law Revision Counsel. 26 U.S.C. 501 – Exemption From Tax on Corporations, Certain Trusts, Etc.
Which Form to Use
The IRS offers two forms, both submitted electronically through Pay.gov:
- Form 1023-EZ, the streamlined application, is available to organizations projecting annual gross receipts of $50,000 or less for each of the next three years and holding total assets of $250,000 or less. The user fee is $275.11Internal Revenue Service. Instructions for Form 1023-EZ12Internal Revenue Service. Form 1023 and 1023-EZ – Amount of User Fee
- Form 1023, the full application, is required for everyone else. The user fee is $600.12Internal Revenue Service. Form 1023 and 1023-EZ – Amount of User Fee
You will need your file-stamped Certificate of Formation, your bylaws, a conflict-of-interest policy, and detailed financial information.13Internal Revenue Service. About Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code
How Long It Takes
As of early 2026, the IRS issues 80% of Form 1023-EZ determinations within about 22 days. Form 1023 takes longer: 80% of applications are processed within roughly 191 days, about six months.14Internal Revenue Service. Where’s My Application for Tax-Exempt Status? Applications flagged for additional review run longer. Approval comes in the form of a determination letter.
Apply for Texas State Tax Exemptions
Federal 501(c)(3) recognition does not automatically exempt you from Texas state taxes. You apply separately to the Texas Comptroller of Public Accounts.
Franchise Tax
Texas imposes a franchise tax on most entities doing business in the state, and nonprofits are not automatically exempt. You have to submit an application with supporting documentation.15Texas Comptroller of Public Accounts. Exemptions – Franchise Tax Frequently Asked Questions The Comptroller has different forms depending on your type of organization: Form AP-205 for charitable organizations, AP-207 for educational organizations, and AP-209 for religious organizations, among others.16Texas Comptroller of Public Accounts. Texas Applications for Tax Exemption Organizations granted the exemption are not required to file franchise tax reports, including the Public Information Report. Skip this step and your nonprofit is treated as a taxable entity for reporting purposes.17Texas Comptroller of Public Accounts. Texas Franchise Tax Public Information Report and Ownership Information Report
Sales Tax
Qualifying nonprofits can apply for exemption from Texas sales tax on purchases related to the organization’s exempt purpose. The organization must be granted exempt status by the Comptroller before making tax-free purchases, and the exemption applies only to purchases tied to the exempt purpose. Employees and volunteers cannot use it for personal items, even on official business.18Texas Comptroller of Public Accounts. Nonprofit and Exempt Organizations – Purchases and Sales
What You Take on Once You’re Registered
Registration brings continuing obligations. Tax-exempt organizations must file an annual information return with the IRS: Form 990-N (the e-Postcard) if gross receipts are normally $50,000 or less,19Internal Revenue Service. Annual Electronic Filing Requirement for Small Exempt Organizations – Form 990-N (e-Postcard) Form 990-EZ if gross receipts are under $200,000 and total assets under $500,000,20Internal Revenue Service. Annual Electronic Notice Form 990-N for Small Organizations FAQs Who Must File and the full Form 990 above those thresholds. Three consecutive years without filing triggers automatic revocation with no warning and no grace period; reinstatement requires a new application and another user fee.21Internal Revenue Service. Automatic Revocation of Exemption
The Texas Secretary of State may also require a periodic report (Form 802) listing current directors and officers, required no more than once every four years. The Secretary of State notifies you when a filing is due.22Office of the Texas Secretary of State. Form 802 – Instructions for Periodic Report – Nonprofit Corporation