To establish a charity in Texas and get 501(c)(3) status, you must first:

Step 1: Give Your Texas Nonprofit a Name
Step 2: Select Your Registered Agent

Step 3: Choose Your Board Members & Officers
Step 4 Adopt Bylaws and a Conflict of Interest Policy
Step 5: Submit your Certificate of Formation.
Step 6: Obtain an EIN
Step 7: Apply for 501(c)(3) status (3)

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It is simple to establish a 501(c)(3) non-profit organisation in Texas.

To establish a 501(c)(3) tax-exempt Texas nonprofit organisation, first establish a nonprofit company in accordance with state law and then apply to the Internal Revenue Service (IRS) for 501(c)(3) tax exemption.

Step 1: Give Your Texas Nonprofit a Name

The first and most crucial step in establishing your nonprofit company is deciding on a name. Make sure your name meets Texas naming regulations and is readily searchable by prospective members and contributors.

1. Follow the naming conventions:

The following words must not appear in the name of your organisation:
Words associated with the US Olympic Committee, such as ‘Olympic,’ ‘Olympiad,’ or ‘Citis Altius Fortius.’
Financial institution terms include ‘bank,’ ‘band and trust,’ and ‘trust corporation.’
Any words or phrases that might be seen as very insulting
There is no need for the name to contain an organisational identifier such as “Inc.”, “Ltd.”, “Incorporated,” or “Company.”

2. Does the name exist in Texas? Do a name search on the State of Texas Website to ensure that the name you choose isn’t already used.

3. Is the URL accessible? We propose that you investigate if your company’s name is accessible as a web domain. Even if you don’t intend to create a company website right away, you may wish to purchase the URL to prevent others from doing so.

Step 2: Select a Texas Registered Agent.

A Texas registered agent must be designated by your charity.

What exactly is a Registered Agent? A registered agent is a person or corporate organisation that accepts vital legal papers on your behalf. Consider your registered agent to be your company’s point of contact with the state.

Who is eligible to be a Registered Agent? A registered agent must be a Texas citizen or an organisation, such as a registered agent service, that is permitted to do business in Texas. You may choose someone from your organisation, even yourself.

Step 3: Choose your Directors and Officers

A board of directors is made up of an organization’s directors. This board of directors is in charge of managing the nonprofit’s activities.

Officers are the president, secretary, and other members of a nonprofit who have specific roles and authority.

A board member is not an officer.

To be qualified for 501(c)(3) status, your Texas nonprofit corporation’s organisational structure MUST include:

At least three directors who are not connected to one another
The president
A secretarial assistant

Step 4 Adopt Bylaws and a Conflict of Interest Policy

Your organisation must have the following two papers in order to apply for 501(c)(3) status:

Conflict of interest policy bylaws
What exactly are bylaws? Bylaws are the guidelines that outline the nonprofit’s operational processes.

What is the definition of a Conflict of Interest Policy? A Conflict of Interest Policy is a set of guidelines put in place to guarantee that any decisions made by the board of directors or officials benefit the organisation rather than individual members.

Step 5: Submit your Texas Certificate of Formation.

Form 202 – Certificate of Formation for the State of Texas is required to register your nonprofit.

To guarantee that your organisation is qualified to qualify for 501(c)(3) status, you must expressly specify the following in the Certificate of Formation:

1. Function:

To be eligible for 501(c)(3) status, the organization’s purpose must be expressly confined to one or more of the following:

2. Decomposition:

You must indicate exactly what the organization’s assets will be used for and what will happen to the assets if the organisation is disbanded.

To be qualified for 501(c)(3) status, your organization’s assets must only be utilised for purposes authorised by Section 501(c) (3).

Step 6: Obtain an EIN

What exactly is an EIN? The Employer Identification Number (EIN), also known as the Federal Tax Identification Number (FTIN), is used to identify a commercial organisation, such as your nonprofit company. It is basically your company’s social security number.

Why do I need an EIN? An EIN is necessary for the following activities:

To establish a commercial bank account for the firm
In terms of federal and state taxation
To recruit workers for the firm
How can I get an EIN? After founding the firm, the business owner obtains an EIN from the IRS (free of charge). This may be done online or in the mail. For additional information, see our EIN Lookup guide.

Step 7: Request a Tax Exemption

Application for Federal Tax Exemption: Section 501(c) (3)

Before applying for 501(c)(3) tax-exempt status with the Internal Revenue Service, a charity must,

Elect at least three independent directors. File the Certificate of Formation with the necessary conditions (As covered in Step 5)
Adopt the bylaws as well as the conflict of interest policy.
Do you have an EIN?
Once these four qualifications are completed, your organisation may apply to the Internal Revenue Service (IRS) for tax-exempt status under section 501(c)(3) by submitting Form-1023 online.

If your application is granted, the IRS will issue you a letter confirming that your organisation is tax-exempt under Section 501(c) (3).

 

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