The process of starting a non-profit
The first thing one needs to establish a non-profit entity is the interest to start one. The National Center for Charitable Statistics indicates that by 2009 Texas was home to more than 104,000 non-profit establishments. Therefore, before starting a non-profit organisation, the founder or founders must determine the necessity for the organisation (May & Texas, 2011). Conduct a research to determine whether a similar organization is in existence within their location and server a similar cause. Working together helps to avoid saturating effects of raising funds and voluntary time available in the region. It is also important to take into account fiscal sponsorship under 501(c), an umbrella organisation that incubates non-profit charitable non-profit organisations (Harbor Compliance, 2013).
It is important to consider and chose a legless structure. These range from B-Corporation, non-profit LLC, unincorporated non-profit association, L3C, to trusts (May & Texas, 2011). It is necessary to learn about the structure before settling one. However, it is important to note that B-Corporations are present in Texas. The founder must conduct a name search to check the availability of the desired name. Texas State provides this information through its search engine in the Secretary of State Database. Alternatively, one may reserve a name through emailing the state department through its mail firstname.lastname@example.org or by calling (512) 463-5555.
Next step is the recruitment of incorporator and/or preliminary directors. Incorporators/organisers execute the creation of the certificate and submission to the state departments. Texas requires a minimum of one incorporator. The state demands a minimum of three director of the organisation.
It is a must to appoint an agent who is registered. The funders must identify a non-profits Texas approved Agent. The reception of notices of lawsuits as well as additional legal services for the corporation is done by these individuals (Cornforth & William, 2014). One must receive a certificate of formation to start organizing the non-profit corporation. The certificate must be submitted to Texas State Secretary at http://www.sos.state.tx.us, which is the states online portal. The applicants must fill form 202 which is needed for the Certificate of Formation of a non-profit corporation. The form is then mailed or faxed to the secretary of state for action. A fee of $25 is incurred,and the turnaround is about 3-5 days. All these are governed by Texas statues - Business Organization Code- Title 2: Corporation- Chapter 22: Non-profit Corporation.
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A specific language is required by the IRS in the article of incorporation for the organisation to be eligible for 501(c) (3) tax exemption by the federal government. IRS Pub 557 provides necessary assistance and model language. An original copy has to be submitted. The indication of filing a stamped copy of the document will be returned by the secretary (Harbor Compliance, 2013).
An application for Texas Tax Exemption(s) has to be done, various other categories of organizations are to be exempted from paying hotel occupation tax, sales tax, and franchise tax by Texas state law permits 501(c)(3) (Harbor Compliance, 2013). Most non-profit establishments are not entitled to register; this is according to Texas law. However, registration before soliciting funds or employing solicitors is a requirement by the state. Those who need registration in multiple states must review this guideline Charitable Solicitation Registration via the unified Registration Statement (URS). A total of 39 states acknowledge the URS. The following situation is a requirement during registration in Texas: For phone advocates, promoters and publications, and public safety establishments, registration with the Texas Secretary of State- Statutory Documents Section is required. Secondly, the establishments that petition for law implementation, veterans causes or public safety ought to be listed by Texas Attorney General (Cornforth & William, 2014).
Business licenses and permits have to be obtained in order to operate your institution legally. The licenses as well as permits are applicable. To satisfy the expansive number of federal, state, and local demands necessitates research regarding you organisation type and location through Small Business Administration Business License and Permit look-up tool. It is inevitable to file tax returns to the federal and state governments (Cornforth & William, 2014).
It is also a requirement by the law to file an information report at least once every four years when the secretary of state demands so. File Form 802: Non-profit Corporation Periodic Report with the Texas Secretary of state. A fee of five dollars is mandatory.
In conclusion, for you to establish a non-profit establishment you need to follow all the correct channels. This is by amalgamating EIN, 501(c) (3), bylaws, records, and charitable registration.