Legal Requirements for Running a Non-Profit Organization in Tarrant County

The Texas Code of Business Organizations requires a non-profit corporation to have at least three directors, a president, and a secretary. A not-for-profit corporation is created by submitting a certificate of formation to the Secretary of State. See Form 202 (Word 152 kb, PDF 142 kb). A non-profit corporation can be created for any legal purpose, the purpose of which must be indicated in its certificate of incorporation.

The designation “501 (c)” (refers only to a specific federal tax provision). If you need information about a federal tax provision or if a tax provision affects your training certificate, you should contact your own tax advisor, lawyer or the IRS. The Secretary of State's Form 202 meets the minimum requirements of state law, but does not include any additional returns that the IRS may require to obtain tax exemption. Many non-profit organizations use the term “member” as a synonym for “supporter” or “donor”.

However, apart from this fundraising use, the Texas Code of Business Organizations establishes a non-profit corporation with a formal membership structure. Pursuant to section 1.002 (5) of the Texas Code of Business Organizations, a “member of a nonprofit corporation” is a person who has membership rights in the nonprofit corporation under its governing documents. Members of a nonprofit corporation are similar to shareholders of a for-profit corporation in the sense that both members and shareholders can have significant rights with respect to internal corporate governance. However, unlike shareholders, members of a nonprofit corporation are generally not owners and do not issue shares.

When creating a nonprofit corporation, you must determine if the corporation will have members and, if so, who will govern the corporation: the members, a board of directors, or both. A non-profit corporation is presumed to have members. If you are forming a not-for-profit corporation with no members, the certificate of formation must include a statement to that effect. The same person cannot be president and secretary at the same time.

Officers and directors must be natural persons, but may be known by other titles. Any corporation can pay reasonable compensation for services provided to the corporation. Keep in mind that the Secretary of State does not determine what is considered reasonable compensation. A document presented in 1993 in the IRS Continuing Education Program for specialists in exempt organizations discusses reasonable compensation.

This document is available on the IRS website (PDF, 116 kb). There are restrictions on political contributions by nonprofit corporations. For information on this topic, you can contact your private attorney, the Texas Ethics Commission (51) 463-5800, the Federal Election Commission, and the IRS. You may also want to review Title 15 of the Texas Election Code. The Texas Attorney General has the legal authority to investigate charities that operate as non-profit corporations and inspect the books and records of all corporations, including non-profit corporations.

The Secretary of State does not have that authority. In addition, the IRS can revoke a nonprofit corporation's tax exemption for violations of federal tax laws. Under certain circumstances, the books and records of a nonprofit corporation are also available to the public under the Texas Public Information Act (Chapter 552 of the Government Code). Section 552.003 (A) of the Public Information Act defines “government body” as “the part, section, or part of an organization, corporation, commission, committee, institution, or agency that spends or receives full or partial support from public funds”.

For more information on the Public Information Act, contact the Attorney General; the Secretary of State cannot provide advice on the application of the Public Information Act to a particular nonprofit corporation. Some organizations that have obtained tax exemption from the Internal Revenue Service must make certain documents available to the public. Bylaws may be available if included as part of an organization's exemption request; for more information visit IRS website. The Secretary of State's office cannot help you obtain these documents. While a nonprofit corporation is not required to notify Secretary of State about changes in information from officers or directors at time change occurs it can file periodic report even if Secretary has not requested it; submitting voluntary report does not affect duty to submit report on time when requested by Secretary. The Texas Business Organizations Code (the “Code”) states that nonprofit created under special law is subject to Title 1 and Chapter 22 Code extent it is not inconsistent with special law. Tarrant County provides information contained on this website as public service; every effort is made ensure information provided is correct; however in any case where you are required legally rely on information contained these pages you should consult official records Tarrant County; Tarrant County is not responsible content nor does it endorse any site that is linked from Tarrant County website. Texas doesn't require your organization apply for business license unless you sell goods. When forming a non-profit organization in Tarrant County there are certain legal requirements that must be met in order to ensure compliance with state and federal laws. The Texas Code of Business Organizations requires all non-profits to have at least three directors - including one president and one secretary - as well as submit an official certificate of formation to their local Secretary of State office (Form 202).

This document should include details about what purpose your organization serves and any other relevant information. It's important to note that while many non-profits use terms like 'member' or 'donor' interchangeably with 'supporter', according to Section 1.002 (5) of Texas' Business Organizations Code they are actually two distinct entities - members having more significant rights when it comes to internal corporate governance than donors or supporters do. When creating your non-profit organization you must also decide whether it will have members or just be governed by its board of directors - if it does have members then their rights must be outlined in its governing documents - and no one person can serve as both president and secretary at once. Reasonable compensation can be paid for services provided by officers and directors but it's important to note that this amount should be determined by an independent third party such as an accountant or lawyer - not by your local Secretary of State office. Political contributions by non-profits are also restricted so it's important to consult with your private attorney or contact organizations like The Texas Ethics Commission (51) 463-5800 or The Federal Election Commission for more information on this topic before making any donations. The Texas Attorney General has legal authority to investigate charities operating as non-profits as well as inspect their books and records - something which The Secretary Of State does not have authority over - while The Internal Revenue Service can revoke an organization's tax exemption status if they violate federal tax laws. Under certain circumstances books and records belonging to non-profits may also be made available to members of the public under The Texas Public Information Act (Chapter 552).Organizations which have obtained tax exemption from The Internal Revenue Service must make certain documents available upon request while those filing Form 990-PF must submit copies to certain state attorneys general - though most non-profits are not required to file Form 990 with either The Texas Attorney General or Secretary Of State offices. Finally it's important to note that while most organizations don't need business licenses unless they're selling goods - those actively soliciting funds within Texas may need one so it's best practice to check with your local government office before doing so.

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