Draft a set of basic bylaws
Bylaws are the core rules that govern your organization. They address the makeup of the executive board, how officers are elected, how often meetings are held, and similar nuts-and-bolts questions. Think about how you want your group to run, then review other groups’ bylaws before adopting your own. Adopt bylaws by general agreement of your founding members/officers. Be sure to include a procedure to amend the bylaws if necessary. Note that bylaws address the basics of how your group will run. As you organize, you’ll also want to create a set of policies, or standing rules. These are more specific, and you don’t need an amendment to change them. For example, your bylaws might state you have a general meeting a minimum of four times a year; your policies might dictate that a meeting is held on the first Wednesday of each month.
Obtain Tax Exempt Status as a Non-Profit Organization
If the parent organization has not obtained tax-exempt status as a non-profit organization, it may follow the steps below to obtain it:
- Obtain information on tax-exempt status from IRS Form 1023 checklist.
- Create Articles of Incorporation
- Prepare Form 202 – Certificate of Formation – Nonprofit Corporation and file with the Office of the Secretary of State
- Obtain approval by majority vote at membership meeting
- File online for an IRS Employer Identification Number (EIN)
- Prepare Bylaws and approve by majority vote at membership meeting (held after incorporation is complete)
- Prepare IRS Form 1023 – Application for Recognition of Exemption
- File IRS Form 8718 – User Fee for Exempt Organization Determination Letter Request
- Mail the following forms to the IRS:
- Form 8718 and check for filing fee ($400 if gross proceeds for last 4 years or anticipated proceeds for first 4 years average less than $10,000; $850 if averaging over $10,000)
- Form 1023, Application for Recognition of Exemption
- Copy of Certificate of Incorporation from Secretary of State
- Articles of Incorporation
- Copy of signed Bylaws
Obtain Tax-Exempt Status from State and Use Taxes
After receiving a Determination Letter from the IRS indicating your organization qualifies as a public 501(c)(3) charitable organization, request exempt status from State sales and use taxes and franchise taxes as follows:
- Complete form AP-205 – Texas Application for Exemption – Charitable Organizations located in the Texas State comptroller’s website
- Print completed form and mail it along with a copy of the Articles of Incorporation and IRS Determination letter to the Exempt Organization Section of the Comptroller of Public Accounts
Apply For Sales & Use Tax Permit
After your organization receives a letter from the State Comptroller approving an exemption from State sales and use taxes, apply for a State Sales & Use Tax Permit if your organization will be selling taxable items on days other than your two (2) one-day tax-free days
- Complete form AP-201 – Application for Sales and Use Tax Permit located in the Texas State comptroller’s website
- If your organization currently has a permit number (prior to becoming a public 501(c)(3) charitable organization) indicate the number of the form so that the old account can be closed when the new permit is issued.
- Print completed form and mail it to the Comptroller of Public Accounts
Opening a Bank Account
Once an EIN has been received, use it to open a bank account. Each parent organization must have a separate bank account at a facility in proximity to the school.
A member’s social security number should not be used as the organization’s EIN for banking and/or other purposes.