How to Form a Nonprofit in Texas

Step 1: Choose a Name

Your name must be distinguishable from other entities on file with the Texas Secretary of State, and it cannot falsely imply a government affiliation. Texas does not require a corporate designator like "Incorporated" or "Corporation" for a nonprofit; one "may be used but is not required," per the Texas Secretary of State's Form 202 instructions. If you aren't ready to file yet, you can reserve an available name for 120 days for a $40 fee using Form 501.

Step 2: Appoint a Registered Agent

Texas requires a registered agent who is either an individual Texas resident or an organization authorized to do business in the state, with a physical Texas street address (a P.O. box isn't acceptable), per the Form 202 instructions. The registered agent must consent to the appointment, which the certificate of formation itself affirms.

Step 3: File Form 202, Certificate of Formation

File Form 202 with the Texas Secretary of State for a $25 filing fee. The form requires naming the entity, the registered agent and office, and at least three initial directors (a minimum of three is required), along with whether the corporation will have voting members, and its purpose. The form notes it does not itself contain the language needed for state or federal tax-exempt status, so if you intend to seek 501(c)(3) status, add the IRS's required purpose and dissolution clause language in the supplemental provisions section (see our guide on nonprofit articles of incorporation).

Step 4: Adopt Bylaws and Hold Your Organizational Meeting

Once the state approves your certificate of formation, the initial directors hold an organizational meeting to adopt bylaws, elect officers, and approve administrative matters like opening a bank account. Keep the minutes; banks and the IRS can both ask for them.

Step 5: Get an EIN and Apply for 501(c)(3) Status

Apply for a free EIN directly through the IRS, then apply to the IRS for 501(c)(3) status using Form 1023-EZ ($275 user fee) or the full Form 1023 ($600 user fee), depending on your organization's size and type, per the IRS. See our guide on how to apply for 501(c)(3) tax-exempt status for the eligibility rules.

Step 6: Apply for Texas Franchise and Sales Tax Exemption

Getting a federal 501(c)(3) determination letter does not automatically exempt a Texas nonprofit from Texas franchise tax or sales tax. Apply separately to the Texas Comptroller of Public Accounts using Form AP-204, Texas Application for Exemption, attaching a copy of your IRS determination letter and a file-stamped copy of your articles of incorporation, per the Texas Comptroller. Once approved, the Comptroller issues an exemption letter letting the organization make qualifying purchases tax-free for its exempt purpose; note that an exempt organization still generally has to collect sales tax on most of what it sells.

Step 7: Periodic Reports, Not an Annual Report

Unlike many states, Texas doesn't require nonprofit corporations to file a routine annual report. Instead, the Secretary of State can request an informational report, listing the registered agent, office, and current officers and directors, but not more than once every four years, per the Texas Secretary of State. Failing to file within 30 days of a request results in forfeiture of the right to transact business, and failing to file within 120 days can lead to involuntary termination, reversible by filing the overdue report with a fee of up to $25 if the corporate name is still available.

Comparing to a Texas LLC

A Texas nonprofit corporation and a Texas LLC file with the same Secretary of State but are different entity types serving different purposes; an LLC cannot hold 501(c)(3) status using the shorter Form 1023-EZ and generally isn't the structure for a charitable mission. If you're still deciding on a structure, see our Texas LLC formation page for how that process and its costs compare.

Texas's Lighter Reporting Schedule Can Create a False Sense of Security

Because Texas doesn't require an annual report, some nonprofits forget to keep their registered agent and officer information current until the Secretary of State actually requests a periodic report, which can surface outdated information all at once. Keep your internal records current even without a yearly state filing forcing the issue.

Don't Skip the State Tax Exemption Application

A surprising number of newly approved 501(c)(3) organizations assume their IRS determination letter automatically covers Texas taxes. It doesn't. File Form AP-204 with the Texas Comptroller once your federal exemption comes through, rather than discovering the gap when a franchise tax notice arrives.

The Optional Corporate Designator Is a Branding Choice, Not Just a Legal One

Because Texas doesn't require a word like "Incorporated" in your name, you have more naming flexibility than in some other states. Consider whether including one helps or hurts how donors and partners perceive your organization, since it's a choice here rather than a requirement.

This Is Not Legal Advice

Specific questions about your articles' required language, your registered agent arrangement, or your eligibility for Texas tax exemption are fact-specific. Talk to a nonprofit attorney or tax professional if your situation doesn't match the general steps described here.