Starting a non-profit organization in Central Texas is an exciting endeavor that can have a positive impact on the community. But before you get started, it's important to understand the requirements and regulations that come with forming a non-profit organization. The first step is to define the purpose of your organization. This will help you determine if your organization qualifies for certain grants and if your donors are eligible for tax exemptions.
To be exempt, a non-profit organization must meet certain requirements and file a request with the Internal Revenue Service (IRS) and the Texas Comptroller of Public Accounts. It may be more practical and less expensive to identify a fiscal sponsor to develop your idea of a non-profit organization than creating a new organization. To form a non-profit corporation in Texas, you must file a Certificate of Incorporation: Nonprofit Corporation (Form 20) with the Texas Secretary of State. You should also be familiar with the state and federal procedures for how to start a non-profit organization in Texas.
Creating a tax-exempt 501 (c) non-profit organization offers advantages that help 501 (c) organizations use donor money more effectively and have a greater impact. A non-profit corporation is different from other companies because each non-profit corporation has a special purpose. Best practices dictate that the founder of a non-profit organization should only be paid if they are hired as the executive director of the organization and do not sit on the board of directors as a voting member. Nonprofit organizations are created by people who want to make the world a better place, so consider using a non-profit creation tool that will guide you through the registration process so that your non-profit organization is properly configured and entitled to federal tax exemption.
A non-profit organization must apply for exemption from state sales tax using Form AP-205 on the Texas Comptroller of Public Accounts website. It's important to understand the federal and Texas-specific rules and regulations that apply to your organization in order to run a successful non-profit in Texas. The two main considerations when determining how to structure your non-profit are limiting liability for organizers and avoiding taxes. A non-profit corporation that does not file its periodic report within 30 days of submission by the Secretary of State will lose its right to conduct business transactions in Texas.
There are many 501 (c) designations for non-profits, but three common types are 501 (c) (3), 501 (c) (4), and 501 (c) (6) organizations. The Texas Code of Business Organizations outlines who should serve on the board of directors of a non-profit organization.