Protecting the members of the nonprofit group from personal legal liability is one of the main reasons for forming a nonprofit corporation. With a nonprofit corporation the officers, directors, and members will not usually be liable for the nonprofit corporation’s debts or liabilities including lawsuit judgments. The nonprofit corporation is a separate legal entity that has perpetual existence.
After the Texas nonprofit corporation is formed by the Texas Secretary of State’s office and the nonprofit corporation files for tax-exempt status under Section 501(c )(3) of the Internal Revenue Code and the nonprofit corporation receives tax-exempt status from the Texas Secretary of State, it has annual filing requirements with the IRS.
Your non-profit must have a mission. Take the time to write out a mission statement that identifies the societal need you wish to satisfy. Then outline how your nonprofit corporation will go about satisfying the need. Then you must recruit directors. You must have at least three directors for your nonprofit corporation. Directors do not have to reside within Texas, nor do they have to be of a certain age.
Choose a name for your organization. Your nonprofit corporation’s name may not be the same as, or deceptively similar to, other corporate names on file with the Secretary of State (limited exceptions apply). The Texas Secretary of State can provide a preliminary determination of business name availability.
You should then prepare and file articles of information with the Texas Secretary of State. Then create the bylaws for the organization. The bylaws are the internal rules and procedures of the non-profit. You should then hold an organizational meeting and prepare a records book. At this time, you can apply to get the Texas and Federal employer identification numbers. Once that step is complete, you can apply for tax exemptions at the state and federal levels.
If you would like advice from a Waco business attorney, please contact us at 254-753-6437.
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