The first thing to carefully evaluate is WHY you are going to start a church. Unless you are clearly directed of God, and led of the Holy Spirit – please stop reading right here. Don’t do it! Especially don’t do it, if your intentions are to start a church just for a perceived monetary value or gain. God will never bless this work. The IRS watches for the “Phony house church” as a tax scam.” Just another means to “Laundry monies.”
We are often intimidated by the unfamiliar. In this article, we will explain the step by step process, of creating a non-profit corporation, organizing a church, filing with the state, and perhaps the IRS/Federal Government, [Did you note I said perhaps? For there is no requirement you do anything with the IRS.]. Have your organizational meeting, and even how to open a church Bank account. All of this is part of the excellence, in good administration.
Some churches are started by a man sent out from his local church, with a clean and clear relationship with the pastor and leaders of the sending church. Other-times, one has a clear directive from the Lord Himself as to where, when, and why a church is to be planted. But if the new church being ‘planted,’ is without clean relationships with those he knew in ministry from his past, there is little likelihood of success. God is interested in good, clean relationships. Most of all, He desires us to be in relationships of accountability with other ministry. Starting a church is much simpler than forming a “Para-church” ministry, and has noannual filing requirements with the IRS.
You might ask, “What is the difference?” A Para-church ministry, is any form of ministry that is not created specifically to be a church. eg: Rev. John Smith the Evangelist. We are often asked, how many people does it take to start a church? Many churches have been formed with only a handful (10?) of attendees. We have written a “Do it yourself” Manual called More Great Samples that will help you. It will lead you through all the steps, with sample letters to the Secretary of State etc.. Following is a summation of the steps:
1. You need to get an Employer Identification Number, also referred to as an EIN. It’s similar to your social security number, but it’s for a business, or in this case, for your church. To acquire this number, you’ll need to file an SS4 form with the IRS. This can be found at the IRS website, which we provide here for your convenience. http://www.irs.gov/businesses/small/article/0,,id=102767,00.html
Look over the SS4 form and fill in the blanks. You can mail it in – OR you can apply over the telephone. call the toll-free Business and Specialty Tax Line, at 1-800-829-4933. If you are outside the continental USA, (Alaska and Hawaii) call 215-516-6999. They will walk you through the process of getting the EIN number. You will receive correspondence from them shortly, assigning your church an EIN number. Keep this letter, and make some copies, you’ll need it from time to time. If you have started the church before forming the corporation, just notify the IRS, and they will simply assign the previously issued EIN to your new corporation.
2. How about a name for the church? You may have a name already picked out, and are perhaps even using it. But as part of the process of filing with the Secretary of State, you will need to have this name approved. They will do a check in the state records to see if the name you wish yo use is available. That is to be sure no one else is using this name already, or has a name very close to it. If so, you cannot use that name, and you will have to choose another. But don’t be alarmed, if your choice “Church on the Rock Christ Jesus,” is not available, try “Church on the Rock Jesus-[the name of your city],” or “Church on the Rock Christ Jesus-Ministries,” etc. List several choices of preferred names, and they will let you know which name is available. They will reserve that name for you for about 30 days giving you time to file the Articles of Incorporation.
3. Now you are ready to file the Articles of Incorporation (Usually with three or more sets of Originals), with the Secretary of State, along with the required filing fees. NOTE – Most states filing fees are less than $100.00. If you mail the Articles of Incorporation to the office of the Secretary of State, you will likely wait awhile, sometimes up to three or four months, to get the “Time-Date Stamped” Articles back. But if you drive to the Secretary of State’s office, and often they have satellite offices in nearby larger cities, you can “Walk the papers through,” and the waiting time frame is shortened to a week or even less.
4. By-Laws – While waiting for the “Time-Date Stamped” Copies to be returned, you can be writing your church By-Laws. The aforementioned manual More Great Samples has some very good Biblical By-Laws for your use. By that I mean they are not Democratic in nature they are, by design, theocratic. Please take the time to go to this Link and read what we have to say about By-Laws, as this is the most important step in the entire process. If established correctly, the church can be led by God’s appointed Shepherds, with provisions for accountability built into them. If not, it will likely be driven by the sheep (or elected Deacons).
Excellent By-Laws, will contain an extensive “Statement of Faith,” where we should address virtually everything that we may ever wish we could have at our disposal in a court of law, in the midst of a lawsuit. We will NOT be unable to bring the Bible into the courtroom to use in our defense, therefore, we must incorporate the Word of God into your secular document (By-Laws), for that is what we will be required to present in the courtroom. And it is only what we have in 1.) our By-Laws, and 2.) in our written Minutes, that we can use in our defense. Again, please read our On Line Article on Church By-Laws. The More Great Samples Manual comes with a CD-Rom, so that you can easily develop this important document. Just save the CD into a new file on your computer, and edit to suit your own needs.
5. Organizational Meeting – It is very important to have an Organizational Meeting, where the By-Laws are adopted and Directors are elected. Too many times this important step of having the organizational meeting is missed, and that is really bad news legally. (See our Article A Sin Of Omissionto learn more). We refer to this meeting as “The birthing process” of the corporation. If there are no Minutes of such a meeting, it could be argued in a court of law – the church does not yet exist. The More Great Samples Manual we mentioned earlier, has a sample set of Minutes [an agenda) for such a meeting, containing 14 Resolutions which address all the issues relevant to organizing the non-profit corporation.
6. Opening a Bank Account - One of those Resolutions, authorizes the opening of a Church Bank Account. It identifies which bank, who is authorized to go to the bank to open the account, and who are to be the Signatories on the account. There is a sample “Excerpt” of this Resolution taken from the organizational meeting Minute, for you to take to the Bank. The one who is authorized, will take the excerpt from the Minutes, a copy of the Articles of Incorporation, and the EIN letter to the Bank. Be prepared to have all the other signatories come to the bank at the same time, for since “911,” with the enactment of the “Patriot Act,” all regulations have been severely tightened. The Bank MAY also ask (Require) you to present your 501(c)(3) Exemption Ruling Letter to open the account. Be patient with them, and explain that you are a new church and you may, or may not, even file for this letter, as you are not required to do so. In any case, you need the account opened now, not in two or three months time. They WILL get around to waiving this requirement – if they give you trouble, just go down the street to another bank.
7. In California, you have to file an FTB 3500, with the California Franchise Tax Board. [http://www.ftb.ca.gov/forms/misc/3500.pdf] This is also the case in some other states as well. Filing this Form will result in getting the church approved as a non-profit, tax exempt organization, exempted from having to pay the $800 annual Tax levied against all legal entities. There is no rush on this, usually within the first six to eighteen months, but it can also be filed at the same time you file the Articles of incorporation.
8. Filing the IRS Form 1023 – What is the 501(c)(3)? The church is NOT required to file the Form 1023 to be tax exempt. The church IS tax exempt, without having to ask the IRS for something in writing (The Exemption Ruling Letter). There are certain benefits in having this letter, but you can file and get it at any time. In six months, two, ten, thirty years, or never. Click here: http://www.irs.gov/pub/irs-pdf/i1023.pdf to see in their own words, in their own publication, that filing the “Form 1023 is Not Necessary – “The following types of organizations may be considered tax exempt, under 501(c)(3) even if they do not file Form 1023.” And the first organization listed is – “Churches.”
That’s it! You are now correctly organized and ready to hold services and legally issue receipts. You are now “Up and going.” A church can be started for as little as under $200. See our articleCost to Get Started to get a breakdown of costs.
This information is provided to help you with the process of creating your own start up materials, the legal documents, for your church or ministry. We are not attorneys, and are not attempting to practice law by doing this; We are only providing you with excellent samples, in the spirit of good Church Administration. When we do these things for ourselves, I often contact an attorney before filing. We therefore suggest you do the same.
The above information is provided as a service to the Body of Christ by ADMINISTRATIVE ASSISTANCE
If you would like more information about similar issues, please consider “The Church Administration ‘How To’ Manual.” This Manual, endorsed by three CPA’s, an EA and two attorneys, was updated again in January, 2011, for the 12th time, since its original publication in 1991.
- Reporting The Minister – W-2 or 1099?
- Who Can Spend Church Monies?
- Can The Pastor Do As He Likes?
- Some Say Don’t Incorporate! WHY?
- Can The Church ‘Give’ Small Gifts?