Company Formation

Forming a Church

Wondering how to start a church? Forming a church is not too different from forming any other nonprofit organization but there are some important nuances associated with church formation.

Churches are just religious nonprofits, so forming a church requires the same process as any other nonprofit organization, right?

Not quite. Although the processes are similar, there are also some distinct differences.

The first question you need to address is your motivation for forming a new church. If by starting a new church you hope to emulate the luxurious lifestyle of your favorite televangelist, stop right there. Churches are not-for-profit entities, and most struggle to raise enough funds to pay the electric bill. Likewise, if your motivation is rooted in a personal grudge against your last church, you should probably re-evaluate your decision.

Denominationally-based churches often have a set process for forming a new congregation. But if your new church will not be denominationally-based, you will need to establish the process yourself. At a minimum, the process you adopt should address the following areas.

EIN (Employer Identification Number)

For IRS purposes, an EIN is your church's social security number - the number the government will use to classify and identify your church as a legal entity. Fortunately, obtaining an EIN is the easiest part of the church formation process. The IRS website (www.irs.gov) has all the information you need to either download Form SS4 or secure an EIN by phone. Once you have obtained an EIN, you will need to keep it handy because it will occasionally be required for legal documents.

Incorporation

Churches don't have to be incorporated to be recognized as tax-exempt organizations. As long as the church adheres to certain common-sense guidelines published by the IRS (see the IRS website for more information), the church can function as tax-exempt, non-incorporated legal entity. However, most churches elect to incorporate to shield board members, ministry leaders, and others from legal liability. To begin the incorporation process, you will need to file Articles of Incorporation with the state in which you reside. If you need help, your attorney or accountant should be able to guide you through the process. Although there is a fee for incorporation, it is usually minimal.

Bylaws

Your bylaws need to define several important features of your church including membership, governance, and a dissolution clause. Some churches choose to address a broad variety of topics in their bylaws, while others opt for a minimalist approach. Ultimately, the amount of information your bylaws contain isn't as important as making sure your bases are covered. But remember: You will have to live with whatever is contained in your bylaws, so think twice before you insert unnecessary clauses.

Organizational Meeting

After your bylaws have been drafted and reviewed by a professional (attorney or accountant), you are ready for the final step - an organizational meeting. At this meeting, the church will be required to approve its bylaws and elect initial board members in accordance with the process described in the bylaws. Since the church doesn't legally exist until this meeting occurs, a permanent record of the meeting's minutes should be kept with the church' other official documents.

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