Please choose from the following commonly asked questions.
I want to start a nonprofit organization. What steps do I need to take to get my nonprofit agency started?
- Should I?
Before you get started, you should explore if creating a nonprofit is really the right choice. There are more than 21,000 nonprofits in Dallas alone and there is very limited funding available. Ask yourself if you are prepared to compete for those limited funds.
- Review "Get Ready Get Set: What You Need to Know Before Starting a Nonprofit"
- Review "Forming a Nonprofit Tax-Exempt Corporation in Texas"
- Research other nonprofits in the area who may already be doing what you want to do and explore ways to partner with them.
- File for a Certificate of Formation with the Secretary of State
A nonprofit corporation is created by filing a certificate of formation with the Secretary of State in accordance with the Texas Business Organizations Code ("BOC"). Not all nonprofit corporations are entitled to exemption from state or federal taxes.
Download Certificate of Formation forms
- Apply for Tax Exempt Status with the IRS
Download the Tax Exempt forms or contact the IRS at 1-800-829-3676 or visit the IRS District office at 1100 Commerce Street for IRS Publication 557, Form 1023, Form ss-4 and Form 8718. Publication 557 explains the process which you must follow to complete Form 1023 for the IRS to review prior to their issuing a determination letter. Funders and others may ask to see a copy of your determination letter as proof that you are a “qualified” nonprofit organization.
Fee to file for tax exemption/request determination letter: $450 - $850
View the steps of interactions with the IRS
FAQs About Applying for Tax-Exemption with the IRS
- Apply for Texas Franchise & Sales Tax Exemption with the Texas Comptroller
Certain 501(c) tax-exempt organizations may qualify for exemption from franchise and sales taxes in Texas. Refer to the website listed below for a list of eligible organizations and, if appropriate, submit the proper exemption application (AP-204, AP-205, AP-206, AP-207, AP-209) along with a copy of the articles of incorporation and the IRS determination letter.
- Develop your Bylaws
Your bylaws will guide your organization’s day to day operations. These should be drafted carefully and may require the assistance of an attorney experienced in nonprofit law.
- Develop a Board of Directors with at least 3 unrelated members.
Where can I obtain the nonprofit start-up forms?
All of the nonprofit start-up forms can be obtained by calling the IRS at 1-800-829-3676 or on to their website at http://www.irs.gov/formspubs/index.html.
IRS Publication 557 - Reviews process to apply for Tax Exempt Status
Instructions for Form 1023
Form 1023 - Application for 501c3 Tax Exemption
Instructions for Form SS-4
Form SS-4 - Application for Employer Identification Number
Form 8718 - User Fee for Exempt Organization
Where do I file my Certificate of Formation (formerly called Articles of Incorporation)?
The Certificate of Formation is filed with the Secretary of State's office in Austin. They may be contacted at (512) 463-5586. More information may be found by clicking the following link: http://www.sos.state.tx.us/corp/nonprofit_org.shtml.
Download Certificate of Formation forms
Are there costs involved in filing the 501(c)(3) paperwork with the IRS?
Fees range from $400 - $850. See IRS form 8718 to determine the appropriate filing fee.
Is it necessary to hire an attorney when applying for a 501(c)(3)?
It is always wise to consult with an attorney familiar with nonprofit law to assist you in drafting your articles of incorporation and by-laws for your organization, as well as the completion of IRS forms 1023. Technical assistance in completing form 1023 is also available from the IRS by calling toll free at 1-877-829-5500. If your agency serves the low-income population, assistance may also be available through Texas C-Bar: http://www.texascbar.org/
How do I apply for exempt status from the limited sales, excise and use tax?
An organization must complete an Application for Exemption and file with the Texas Comptroller of Public Accounts. For more information and to obtain a form, please visit the Texas Comptroller Website: http://www.window.state.tx.us/taxinfo/taxforms/93-forms.html
Is there an agency like the Center in another part of the Country?
The Alliance for Nonprofit Management – Resource for and listing of management support organizations (MSOs), individual professionals and a range of national/regional, umbrella, research and academic, publishing and philanthropic organizations that provide technical assistance (training and consulting) to nonprofits.
Search for a Consultant or Provider in your area using the search at the bottom of the page.
In another area in Texas?
Greenlights, Austin TX - Greenlights strengthens nonprofits for extraordinary performance and impact.
What is a Form 990?
Just as individuals and corporations must file annual "tax returns," nonprofits must file annual "information returns." (Churches, government agencies, individuals, and businesses need not file Form 990.) Federal Form 990 ("Return of Organizations Exempt from Income Tax") and Form 990EZ compile financial information, program activities, names of board members, and other basic information. Form 990EZ is a shortened version of Form 990 for smaller organizations.
More information on Form 990
Should I hire a CPA?
Hiring an accountant can assist your organization in a number of ways, from helping to set up accounting systems to developing a budget and system for your monthly review of budget vs. actual results. More information about hiring a CPA and about accounting and financial matters in general can be found at: http://www.managementhelp.org/np_progs/fnc_mod/fnance.htm.
How do I set up a Board of Directors?
The first step in setting up your board is to recruit board members. Additional information regarding setting up and maintaining your Board can be found at: http://www.mapnp.org/library/boards/boards.htm#anchor585925.
How do I recruit staff?
Opportunity 501 is a nonprofit job listing for Texas published by the Center for Nonprofit Management. Postings are listed in an online job bank, as well as in a print edition mailed to 2,500 nonprofits, career centers and universities. To review current postings, click here. Rates start at just $99 and Ads can also be posted within 24 hours for immediate exposure.