Incorporation and Nonprofit Status
Steps for Filing Articles of Incorporation
If your neighborhood association plans to apply for nonprofit status, you must first file Articles of Incorporation with the Secretary of State. Here are the steps to consider when incorporating:
- Call the Secretary of State Corporations Division at (512) 463-5555 to check on the availability of your corporate name. The state does not allow duplication of corporate names, and your proposed name may already be in use.
- Write your Articles of Incorporation. The neighborhood coordinator has sample articles for you to follow. If possible, have an attorney check your Articles of Incorporation before submitting them to the state.
- The forms must be notarized. All the officers of the corporation must sign two copies of the Articles of Incorporation in front of a Notary Public.
- Send two copies of the Articles of Incorporation, along with a $25 filing fee to:
Secretary of State
Statutory Filings Division & Corporate Section
P.O. Box 13697
Austin, TX 78711
Applying for Nonprofit Status
Articles of Incorporation do not make an organization a nonprofit organization. Nonprofit status is given by the Internal Revenue Service (IRS). Applying for and maintaining nonprofit status requires a great deal of paperwork and record keeping.
The benefits of nonprofit status are:
- To avoid paying income tax on interest earned in the association's bank account and on qualified nonprofit income
- To avoid paying sales tax on your purchases
- To enable your neighborhood association to accept tax-deductible donations
A neighborhood association is eligible for nonprofit status if:
- It is incorporated by the state as a nonprofit corporation
- It is organized solely for charitable purposes
To apply for nonprofit status, you must file IRS Form 1023 seeking tax-exempt status and charitable organization status. IRS Publication 557 explains how to complete Form 1023. The IRS requires the submittal of a filing fee along with Form 1023. To determine the appropriate filing fee for your organization, complete Form 8718 User Fee for Exempt Organization Determination Letter Request. Many organizations find that professional assistance in filing these forms is necessary.