How to Start a Nonprofit in Texas

Starting a nonprofit is overwhelming. We make it simple. Texas is one of the cheapest and least bureaucratic states to start a nonprofit in: $25 to file, no general charitable solicitation registration, and no annual report unless the Secretary of State asks for one.

What Texas does not do is hand you tax exemption automatically. Your federal 501(c)(3) letter does not exempt you from Texas franchise or sales tax — you apply separately, and until you do, the state treats you as a taxable corporation with reports to file. Here is the whole process in order.

The Texas steps at a glance

1. Check your name on SOSDirect and reserve it if you need time.
2. Line up three directors and a registered agent with a physical Texas address who signs a written consent.
3. File the Certificate of Formation (Form 202) with the Secretary of State, including the IRS purpose and dissolution language.
4. Adopt bylaws and a conflict-of-interest policy and hold your organizational meeting.
5. Get your federal EIN.
6. Apply for 501(c)(3) status on IRS Form 1023-EZ or the full Form 1023.
7. Apply to the Texas Comptroller on Form AP-204 for franchise and sales tax exemption. Do not skip this.
8. If you own property, file Form 50-115 with your county appraisal district by 30 April.

Step 1: Name your Texas nonprofit

Your name must be distinguishable in the records of the Secretary of State from existing filing entities, registered foreign entities, name reservations and registered names. Words implying banking, insurance, trust powers or a governmental affiliation are typically restricted; confirm the current list with the Secretary of State if your name uses one.

Search on SOSDirect, or call (512) 463-5555. A clean preliminary search is not a guarantee — the final determination is made when the Secretary of State processes your actual formation document.

Name reservation is Form 501, $40, valid for 120 days and renewable for another $40 during the 30-day window before it expires.

Step 2: Directors, officers and your registered agent

Directors: three minimum. The Texas Business Organizations Code is explicit — "a corporation may not have fewer than three directors" — and the number for the initial board must be stated in the Certificate of Formation. Founders coming from a one-director state get this wrong regularly.

Officers. Texas leaves officer structure largely to your bylaws rather than mandating specific titles. Neither directors nor officers face a Texas residency requirement.

Registered agent, and the consent nobody files. Every Texas entity must maintain a registered agent with a physical Texas street address — no P.O. boxes — where the agent can be served during business hours.

Here is the piece founders miss: for any agent designated since 1 January 2010, the agent must have consented in writing or electronically, using Form 401-A, Acceptance of Appointment and Consent to Serve as Registered Agent. The consent form is not filed with the state — you keep it in your records. Because nothing gets submitted, nothing reminds you, and the gap surfaces years later during a periodic report or litigation.

Step 3: File your Certificate of Formation

The filing is Form 202, Certificate of Formation for a Nonprofit Corporation, $25 — one of the lowest formation fees in the country. Filing is through SOSDirect (real-time online), SOSUpload, or by mail. Card payments carry a 2.7% convenience fee.

The Secretary of State strongly encourages electronic filing through SOSDirect or SOSUpload. Texas Express submissions must be in by noon and are processed by close of business; those are review-period commitments, not approval guarantees.

Texas's own instructions point you to IRS Publication 557 before drafting your purpose clause, which tells you something: Texas does not supply the language the IRS needs. You add a purpose clause limiting the corporation to exempt purposes under section 501(c)(3), and a dissolution clause.

On dissolution, Texas law does have a statutory default sending remaining property to 501(c)(3) organizations. Do not rely on it. The IRS organizational test wants an explicit dissolution clause in your Certificate of Formation, not a reference to a state default.

Step 4: Bylaws, policies and your first board meeting

Bylaws are not filed with Texas, but the IRS asks for them. Adopt a conflict-of-interest policy alongside them — not a Texas filing requirement, but Form 1023 asks and the IRS publishes a sample.

Texas does impose a real recordkeeping duty: the corporation must maintain current and accurate financial records with complete entries for each transaction, following generally accepted accounting principles, and the board must annually prepare or approve a financial report — a statement of support, revenue and expenses, a statement of changes in fund balances, a statement of functional expenses, and a balance sheet for each fund. Members also have the right, on written demand stating a proper purpose, to examine and copy books and records relevant to that purpose at their own expense.

Hold an organizational meeting to adopt the bylaws and policy, elect officers, set the fiscal year, and authorize the EIN application and bank account. See our bylaws guide.

Step 5: Get your EIN

Free and immediate at IRS.gov once the Certificate of Formation is filed. See our EIN guide.

Step 6: Apply for 501(c)(3) status

Identical in every state. Most small Texas nonprofits use Form 1023-EZ ($275 user fee); larger organizations file the full Form 1023 ($600). The IRS issues 80% of 1023-EZ determinations within 22 days and 80% of full Form 1023 determinations within 191 days. Read our Form 1023 vs 1023-EZ guide before you choose.

Step 7: Apply for Texas franchise and sales tax exemption

This is the step Texas founders most often skip, and it is the expensive one to skip.

The Comptroller's guidance is blunt: every profit and nonprofit corporation in Texas must file all franchise tax reports and public information reports, with appropriate payment, until the Comptroller's office has granted tax exemption. Your federal determination letter does not do it. Until the state grants exemption, you are a taxable Texas entity filing an annual report by 15 May.

• Form AP-204 — Texas Application for Exemption, Federal and All Others. This is the route for organizations that already hold an IRS 501(c) determination letter, and it covers both franchise tax and sales tax. It does not cover hotel occupancy tax.
• Form AP-205 — the charitable-organization route, used by organizations qualifying under Texas's own charitable-purpose test, which is narrower than the federal definition: substantially all activities devoted to alleviating poverty, disease, pain and suffering by providing food, drugs, medical treatment, shelter, clothing or psychological counselling directly to indigent or similarly deserving individuals for little or no fee. Organizations without federal 501(c)(3) status, or those seeking the broader hotel occupancy tax exemption, use this form.

Neither application carries a fee that we could confirm, and both commonly take several weeks to process. File AP-204 the week your IRS letter arrives.

Property tax and the 30 April deadline

Property tax exemption is applied for with your county appraisal district, not the Comptroller and not the Secretary of State, on Form 50-115, Application for Charitable Organization Property Tax Exemption. The chief appraiser makes the determination.

The general deadline is before 1 May — in practice, 30 April. Founders who have just dealt with the Comptroller for AP-204 assume the same agency handles property tax; it does not, and the deadline does not move for you.

Does Texas require charitable solicitation registration?

No. Texas has no general state-level charitable solicitation registration requirement. Most 501(c)(3) organizations can fundraise in Texas without registering with any state agency — a genuine advantage over the roughly 40 states that do require it.

Three narrow categories are the exception, and each has its own agency, form and bonding requirement:

• Public safety organizations, promoters soliciting for them, and public safety publications — registered with the Secretary of State's Registrations Unit.
• Veterans organizations — registered with the Secretary of State, with a surety bond scaled to the number of counties solicited in.
• Law enforcement telephone solicitation under the Law Enforcement Telephone Solicitation Act — administered by the Attorney General, with a substantial surety bond.

Confirm current fees and bond amounts directly with the Secretary of State's Registrations Unit or the Attorney General if one of these applies to you.

The multi-state trap. Texas's freedom stops at the state line. The moment you solicit donors elsewhere — a nationwide donate button, an email appeal, a direct-mail campaign, a grant application to an out-of-state foundation — you are subject to the registration rules of the states that do require it. Read our state-by-state charitable solicitation registration guide before you fundraise beyond Texas.

Texas fees at a glance

A small Texas nonprofit filing the 1023-EZ realistically spends about $300 to reach a determination letter and state exemption — and most of that is the IRS user fee. Texas is one of the least expensive states in the country to start a nonprofit. Compare in our 50-state registration fee guide.

How long the whole thing takes

Realistically, three to six months from a standing start to a Texas nonprofit that is both federally recognised and state tax exempt on the 1023-EZ track, and six to twelve months or more on the full Form 1023.

Staying compliant after approval

• Periodic report, Form 802. Filed only when the Secretary of State requests it, and the state may not require it more than once every four years. The fee is $5. Failing to respond after notice can lead to involuntary termination, so do not ignore the letter when it comes.
• Franchise tax reports annually by 15 May, until the Comptroller grants your exemption. Once exempt, that obligation generally falls away.
• Board financial report prepared or approved annually, under the Business Organizations Code.
• Federal Form 990, 990-EZ or 990-N, due the 15th day of the fifth month after your fiscal year ends. Three consecutive missed years and the IRS revokes your exempt status automatically. See our Form 990 guide.

Six mistakes Texas founders make

1. Assuming federal exemption covers Texas tax. It does not. Until the Comptroller grants exemption on AP-204 or AP-205, you are a taxable entity filing franchise tax reports.
2. Filing Form 202 without IRS purpose and dissolution language. Texas's statutory dissolution default is not a substitute; the IRS wants the clause in the document.
3. Never getting the registered agent's Form 401-A consent. Required since 2010, kept in your records rather than filed, and therefore forgotten.
4. Filing Form 802 every year. It is requested irregularly, no more than once every four years. The real risk is the opposite — ignoring the request when it arrives, which can lead to involuntary termination.
5. Reading "Texas has no solicitation registration" as national. Fundraise online and you are in roughly 40 other states' rules.
6. Missing the 30 April county property tax deadline, or filing it with the Comptroller instead of the county appraisal district.

Starting a nonprofit in another state?

The federal steps are the same in all 50 states; only the state incorporation, tax exemption, and charitable registration details differ. See our guides for Florida, Georgia, California, or browse all our guides. Book a free call and we will map the exact steps and current fees for your state.

This is general information, not legal or tax advice. Rules and fees change, so confirm current requirements with Texas's agencies and the IRS, or with a qualified professional, before you file.