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Curious About 501(c)3 Non-Profits In Texas

Curious About 501(c)3 Non-Profits In Texas

Do you have an idea for a non-profit in Texas to serve your community?

Or are you a board member and curious about the responsibilities of your position? It’s pretty common to have questions about what it means to be a non-profit and how corporations can get 501(c)3 status.  

Depending on your goal, the answer to your questions may surprise you. For instance, don’t expect to land a paid position as a board member. And if you want to support a cause, you’ll likely make a bigger impact by contributing to an existing organization. 

Most importantly, don’t assume creating a non-profit is easy. While there are forms online that you can file yourself, doing so without an attorney can lead to major issues down the road. 

What Is A 501(c)3 Non-Profit Organization?

It’s important to realize that non-profit organizations don’t require 501(c)3 status. However, if your mission requires donations and grants, having 501(c)3 status from the IRS will greatly help your cause. 

Furthermore, this isn’t a plan you want to take on alone. There are many nuances regarding 501(c)3 organizations that the help of an attorney can make a much smoother process. However, don’t be quick to trust documents and legal services that are found online. You need an experienced attorney who will personally guide you every step of the way. 

Will My Organization Qualify For 501(c)3 Status?

The first step in figuring out whether you can claim 501(c)3 status depends on the type of your organization. The tax exemption status from the IRS is selective and only applies to organizations with a commitment to improving the community. 

Organizations that may qualify include:

  • Charitable 
  • Religious
  • Educational
  • Scientific
  • Literacy
  • Testing for public safety
  • Fostering
  • National or international amateur sports competition
  • Preventing cruelty to children or animals

While your organization may fall under one of these categories, another inquiry is if  a similar organization already exists. While the IRS does not limit the number of 501(c)3 organizations, partnering with an existing organization may increase the impact you seek to make.

Especially when it comes to animal rescues, your money, efforts, and impact will likely go much further by partnering with an existing organization. Carson Law can help organize a new non-profit or help you partner with an existing non-profit.

Ready to apply for 501(c)3 status? Talk to the Carson Law Firm first to make sure your application contains the correct language and avoid major issues down the road. Contact us today to get started. 

Why Should A Non-Profit Become A 501(c)3 Organization?

A common misconception regarding non-profits is that they are automatically granted 501(c)3 exemption status. While your organization can function as a non-profit without the status, it does make fundraising more difficult.

For instance, people typically want to make tax deductible donations. Without 501(c)3 status, the donors would not be able to write off contributions. Moreover, most grants are only available to 501(c)3 organizations. Especially if you solicit donations from individuals in the giving sector, you can only expect donations in the $100 range here and there if they’re not tax deductible. 

If you’re not relying on soliciting tax-deductible donations or grants, then forgoing 501(c)3 status may be ok in your situation. However, it is still advisable to have an attorney on board to make sure your organization is operating properly.

Wondering how you’ll navigate all the nuances of creating and operating a 501(c)3 non-profit organization? Contact the Carson Law Firm today to ensure everything is done correctly from start to finish. 

How Do I Get 501(c)3 Status For My Organization?

I can’t stress enough how important it is to hire an attorney before applying for 501(c)3 status. If anything is done incorrectly, it can have devastating impacts, including a loss of public trust that the organization will need.

Additionally, it’s not advisable to file the required forms yourself. This is a task better left for your attorney to avoid any major mistakes. 

First, your attorney will file Texas Form 202 with the Secretary of State. This is where you will declare the purpose of your charitable organization and include language required by the IRS to allow for non-profit status. Different types of organizations will require different but very specific language. Unless you’re an attorney with 501(c)3 experience, this can easily go wrong. 

Once everything is filed with the Secretary of State, you will get your employee identification number (EIN). It’s critical to file with the Secretary of State first to make sure they approve of your organization’s name. Rectifying a change of name with the IRS after receiving your EIN will be incredibly difficult and expensive. 

It’s also important to understand that, like most of America right now, the IRS is dealing with a serious backlog. Currently, you can expect a minimum of an 8-month waiting period. The last thing you want after that period of time is to realize you have to start over and wait another 8 months.

However, if you do decide to forgo filing on the federal level and just stick to the state level, you will need to meet with your team. This includes your attorney, tax professional, and financial planner to really understand the long-term impacts of that decision.

How Do I Keep My 501(c)3 Non-Profit In Good Legal Standing?

Aside from creating a non-profit organization and filing for 501(c)3 status, running your organization appropriately is a hurdle in and of itself. Some of the protocols you’ll need to follow include:

  • Creating and following bylaws
  • Putting together a board of directors
  • Tracking finances
  • Keeping all documents organized and ready for tax season

Additionally, your organization needs to work closely with its attorney, tax professional, financial planner, and any other experts you may need. Figuring out exactly what you should be doing and what experts to work with can be confusing. But if you work with an attorney with experience in non-profits, they can help you develop a good plan. 

All in all, you need to keep the focus of your non-profit’s mission. An excess of funds doesn’t mean bonuses for staff, but instead additional funding for the community you serve. Furthermore, a non-profit does not exempt anyone from labor laws, minimum wages, or criminal charges. You are expected to run your organization fairly, legally, and transparently. 

Create & Run Your 501(c)3 Non-Profit With Integrity  

You wouldn’t give medical advice without a license, would you? Hopefully, your answer is a resounding “No” because that would be unethical and illegal. 

It’s important to take that same caution with other areas of your life. For instance, unless you are a financial professional, don’t assume you can handle your non-profit’s finances. Moreover, it’s very risky to navigate legal matters without an experienced attorney. 

To make sure your non-profit is set up for success from the beginning, you need an attorney by your side. And it doesn’t end there, either. Throughout the life of your organization, you will need legal advice from a licensed attorney to remain in good legal standing. From day one until the day the organization winds down, there are specific protocols that you must follow. Find out how Carson Law Firm can help you navigate creating and running a 501(c)3 non-profit. Contact us today!