Note that the Secretary of State does not determine what is considered reasonable compensation. Any corporation may pay reasonable compensation for services rendered to the corporation. Officers and directors must be natural persons, but may be known by other titles. The same person cannot be both the president and secretary. The Texas Business Organizations Code requires a nonprofit corporation to have at least three directors, one president, and one secretary. If you are forming a nonprofit corporation without members, the certificate of formation must include a statement to that effect. When forming a nonprofit corporation, you must determine whether the corporation will have members, and if so, who will govern the corporation-the members, a board of directors, or both.Ī nonprofit corporation is presumed to have members. Unlike shareholders, however, members of a nonprofit corporation are typically not owners and are not issued stock. Pursuant to section 1.002(53) of the Texas Business Organizations Code, 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 that both members and shareholders may have significant rights with respect to internal corporate governance. Many nonprofits use the term “member” synonymously with “supporter” or “donor.” Separate from this fundraising use, however, the Texas Business Organizations Code provides for a nonprofit corporation with a formal membership structure. The secretary of state’s Form 202 meets minimum state law requirements but does not include any additional statements that the IRS might require for tax-exempt status. If you need information regarding a federal tax provision or a tax provision impacts your certificate of formation, you should contact your own tax counsel, attorney, or the IRS. The designation “501(c)(3)” refers to a specific federal tax provision only. Questions about state tax-exempt status can be directed to: Exemption from Texas state taxes is determined by the Texas Comptroller of Public Accounts. To learn more about the rules and procedures for obtaining state tax-exempt status, read the FAQs published by the Texas Comptroller of Public Accounts. To learn more about the rules and procedures for obtaining federal tax-exempt status, read IRS Publication 557, “ Tax-Exempt Status for Your Organization.” Questions about federal tax-exempt status can be directed to: To become exempt, the organization must meet certain requirements and apply with both the IRS and the Texas Comptroller of Public Accounts. A nonprofit corporation may be created for any lawful purpose, which purpose must be stated in its certificate of formation.Ī Texas nonprofit organization-whether a corporation or an unincorporated association-is not automatically exempt from federal or state taxes. A nonprofit corporation is created by filing a certificate of formation with the secretary of state. How can I obtain a copy of the bylaws, tax exempt filings or other documents for a nonprofit organization?Ī “nonprofit corporation” is a corporation no part of the income of which is distributable to members, directors, or officers.Does a foreign nonprofit corporation have to register to transact business in Texas if its only contact with the state is solicitation of funds or donations?.Can I obtain a copy of a nonprofit corporation’s IRS Form 990 from the secretary of state?.Are the books and records of a nonprofit corporation available for inspection?.Who has authority to investigate the activities of a nonprofit corporation?.
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