HOW TO REGISTER A NON-PROFIT IN TEXAS
INTRODUCTION

If you are interested in establishing a non-profit organization in the State of Texas, it is crucial to have it registered in Texas to get started. Although the formation process has similarities with nonprofit registrations in other states in the U.S., Texas has its requirements, rules, and benefits. This article serves as a guide, highlighting the differences between Texas and other states, and providing simplified details on how to register a non-profit in Texas successfully.

CAN A FOREIGN CITIZEN START A NON-PROFIT IN THE US?

The Texas Business Organization Code (TBOC) allows any individual, partnership, association, or corporation, whether alone or with others, to form a Texas nonprofit corporation, regardless of where the organizers live, their domicile, or their state of incorporation. Additionally, a person organizing a Texas nonprofit corporation does not need to be a U.S. citizen. However, the organizer(s) must sign the certificate and acknowledge it in accordance with Section 4.001 of the TBOC.

WHAT ARE THE REQUIREMENTS FOR REGISTERING A NON-PROFIT ORGANISATION IN TEXAS?

To register a non-profit in the State of Texas, you are required to provide the following information;

a. Proposed name of the organization

b. Description of aims and objectives of the organization

c. A minimum of 1 nominator and 3 directors consisting of a President and Secretary

d. Particulars or personal details of the directors and members of the organization

e. Means of identification

f. Bye-laws of the organization (to be prepared by the expert or agent handling the registration)

HOW TO REGISTER A NON PROFIT IN TEXAS

The practical steps for carrying out a seamless registration process in Texas can be summarized as follows;

1. Decide on the type of non-profit that aligns with your objective:

Whether it’s the overall objective of the organization, the qualification of the organizers forming the non-profit, the nature of activities to be carried out, or obtaining a tax exemption status for your organization, it is important you seek clarity on what type of non-profit organizations in the US is best suited for your overall objective. Not every non-profit for instance qualifies for a tax exemption status, and not every category of individuals qualify as organizers of certain kinds of non-profit. Bearing this in mind, you must endeavor to get clarity from experts in this regard before proceeding with the next step.

2. Choose a Name for the Nonprofit:

Your nonprofit must have a unique name that is distinguishable from any other entity registered in Texas. The name cannot imply a purpose other than that of the nonprofit and must include “Corporation,” “Incorporated,” or “Company” to indicate its status as a legal entity.

3. Decide on your incorporator and board of directors:

You are required to provide a minimum of 1 nominator and 3 directors from which a President and Secretary is nominated. A director must be at least 18 years of age.

4. Hire the services of a qualified legal expert or agent to incorporate or register your non-profit:

A qualified expert will assist you with the following;

a. Filing for a certificate of registration

b. Drafting bye-laws and policies in accordance with existing regulations

c. Apply for a tax exemption status with the Internal Revenue Service ( IRS) where applicable

d. Receive legal correspondence on behalf of your organization in Texas

WHAT TYPE OF NON-PROFIT ORGANISATION QUALIFIES FOR A TAX EXEMPTION IN THE UNITED STATES?

The United States Internal Revenue Service provides for types of non-profits that may qualify for a tax exemption status subject to satisfying several requirements. They include;

i. Charitable organizations. i.e. organizations established for the benefit of private interests such as the creator or creator’s family, or designated individuals or persons controlled directly or indirectly by such private interests. In addition, no part of the organization’s earnings is reserved for the benefit of members of the organization

ii. Churches and religious organizations

iii. Private foundations that do not include organizations with broad public support or one that actively support organizations with broad public support and organizations that test for public safety.

iv. Political organizations that operate directly or indirectly for the sole purpose of receiving donations or making expenses

v. Other non- profits that meet requirements other than 501(c)(3) such as welfare organizations, social clubs, civic leagues, labor organizations, business leagues, etc.

TAX EXEMPTION BENEFITS FOR NON-PROFIT ORGANISATIONS REGISTERED IN TEXAS

Nonprofits registered in the state of Texas are entitled to certain tax exemptions provided they file for the said tax exemptions. Some of these tax exemptions include;

1. Federal Tax Exemption (501(c)(3) Status) obtained from the IRS

2. Franchise Tax Exemption obtained from the Texas Comptroller’s office. Your organization must obtain the federal tax exemption to qualify for franchise tax exemption in the State of Texas

Despite these tax exemptions, non-profits registered in the State of Texas are required to file periodic reports with the Texas Secretary of State. The annual report provides information such as details of the nonprofit’s leadership and financial activities. Failure to file these reports can result in penalties or even the dissolution of the nonprofit.

CONCLUSION

There are different types of nonprofit organizations in the United States, especially when it comes to obtaining tax-exempt status with the IRS. Not all nonprofit organizations may qualify for tax-exempt status, and just because a nonprofit organization is registered in the US does not mean it is automatically granted tax-exempt status.

We recommend consulting experts when starting your non-profit in Texas or any US state to avoid costly mistakes before, during, and after the formation process.

Are you ready to launch your non-profit organization in Texas or any other state in the US? Please leave a message through the WhatsApp icon on the lower right part of this page or click HERE, and we will attend to you.

 

 

 

Cynthia Tishion
Cynthia is a lawyer and currently serves as Head of Corporate / Commercial Services at LEX – PRAXIS. With her passion for business and entrepreneurship, she is actively engaged in creating awareness on the legal aspect of businesses through various platforms such as writing, public speaking engagements.

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