Getting Starting Guide: Starting a Church
If you have the vision, commitment, and passion to create a church from scratch, the legal part doesn’t have to be too hard. In fact, there are ten basic steps that you will need to follow to create a church. We go through these steps in this post but first, let’s define a church.
What is a Church?
At its most basic, a church is a nonprofit organization that has a charitable purpose to provide a place of worship and religious education. Congress has special tax laws and privileges in place for churches and other religious organizations. In general, churches are exempt from income tax and receive other favorable treatment under the tax code. For the full IRS guidelines regarding taxation, see the “Tax Guide for Churches & Religious Organizations.”
To protect religious liberties afforded by the Constitution, the guidelines around what constitutes a church are intentionally vague. The IRS will never look at the content of a church’s doctrine to determine its legitimacy. Instead, the IRS takes the following considerations into account. A church does not need to meet all of the following criteria, but they are all taken into consideration:
Distinct legal entity
Recognized creed and form of worship
Definite and distinct ecclesiastical government
Formal code of doctrine and discipline
Distinct religious history
Membership not associated with any other church or denomination
Organization of ordained ministers
Schools for the preparation of its ministers
Literature of its own
Sunday schools or some other form of youth religious education
Organized worship
The process for a church to get up and running is similar to any other nonprofit organization. Churches are not required to become legal entities or to file for 501(c)(3) tax-exemption status. We will explain why below.
10 Steps to Starting a Church
STEP 1: Choose a Church and Check Availability
First, begin this process by thinking of names for your new church. You may already have the perfect name in mind, but try to come up with a few alternatives in case the one you want is not available in your state. Each state has a different way of tracking name availability.
If the name is available, that’s great! You can move forward to the next step. If your name isn’t available, all is not lost. You will need a unique corporate name for filing with the state, so you have the opportunity to find another name that fits your church.
STEP 2: Establish a Board of Directors
Once your name is set, it is time to establish your church’s board of directors (sometimes called a church council or deacons). Legally, churches are considered nonprofit organizations. That means, no one individual can own or operate a church. Instead, churches and other religious organizations are run by a team of individuals called “the board of directors.” Each board member volunteers his or her time to make big-picture decisions for the organization, hire its staff, and oversee operations. As you assemble your church’s board of directors, choose people with diverse backgrounds, skill sets, and communities. Most importantly, make sure that everyone you choose for your board shares the same basic vision for how the church will operate and what kind of community you want to create.
STEP 3: Create a Statement of Faith
Write a statement about why you want to start this church. Start by writing down the tenets of your new church, as you see them. Share this statement with others on your board of directors for feedback. Together, you can begin crafting the tenets of your new church and the core beliefs you share.
STEP 4: Craft a Church Vision as a Group
Define your organization’s mission with the rest of the board of directors. Identify the religious messages you wish to share, the kind of community you want to cultivate, and any logistic or management ideas that come up. Make sure to include:
● What activities will the church undertake?
● Where and when will church services occur?
● What are the core beliefs (statement of faith)?
● How will money be raised (estimate expenses for the next three years)?
STEP 5: File Articles of Incorporation with the State
With a name, a vision, and a board of directors in place, legally establishing your nonprofit religious organization is the next step. This is necessary to establish a boundary between your own personal liability and that of the church. A distinct legal entity prevents any of the church’s debts and liabilities from being enforced against your own personal assets.
In most states, a nonprofit organization can be incorporated simply by filing Articles of Incorporation, although the incorporation process is relatively simple, it is essential to get right. That’s why we recommend contacting us to handle the church formation process for you - schedule a FREE 15 min. consultation to discuss your needs.
STEP 6: Draft Church-Centric Bylaws
Bylaws are an organization’s operating manual. They do not need to be filed anywhere because they are an internal description of how the organization will run. However, it is still essential that they be completed and discussed by the board before the church begins operations. The bylaws will help establish the internal management of the organization as well as provide procedures to handle any conflicts that may arise.
STEP 7: Obtain an Employer Identification Number
Even if your church will not be hiring any employees right away, it will still need to obtain an Employer Identification Number (EIN). This is basically the social security number for the church, and it will be necessary to provide to open a bank account, apply for tax-exemption status (if you choose to do so), and much more.
STEP 8: Establish a Church Bank Account
Before you begin handling any money for the church, make sure to open a separate bank account in the church’s name. You will likely need the Articles of Incorporation, EIN, and Bylaws to open an account. Keep all church funds completely separate from personal funds of board members, and only use church funds for expenses that serve the church’s purposes.
STEP 9: Hold Board Organizational Meeting
Once steps 1-8 are complete, the final startup task is to hold an Organizational Meeting. This meeting will be the official beginning of the church’s operations. At this meeting, the board will appoint each member, adopt the church bylaws, and elect officers. Make sure that good notes are kept about everything that occurred at the Organizational Meeting. Moving forward, all official church business should be conducted in board meetings. All major decisions, including the decision to open bank accounts, file for federal tax-exemption, create committees, etc. should be discussed and voted upon by the board.
STEP 10: File for 501(c)(3) Tax Exemption Status
While not necessary to the operation of a church, many churches choose to file for 501(c)(3) tax exemption status. This assures donors that their contributions are tax-deductible. However, this tax benefit does come with some trade-offs. To maintain tax-exemption, churches must not conduct political lobbying or attempt to influence political campaigns; engage in any illegal activities; or financially benefit any individual (this requirement does not include reasonable payments for services rendered or property purchased).
Download our FREE “Starting a Church Checklist”
Click here to download our “Starting a Church Checklist” for starting a church or religious organization. This checklist provides a roadmap for the path that lies ahead. It’s not always easy, but I know you have the drive, commitment, and follow-through to get it done!
At Enterprise Esquire, we understand, whether you are spreading gospel or delivering souls, business must still be done.
That’s why we created our Church Formation legal service packages. These are affordable, value-packed legal services provided on a flat rate. We offer two levels: Full Throttle and Victory Lap. Each is designed to walk you through these first crucial processes in developing your church. They include
● Consultation
● Clearing your Church Name with Your State
● Filing Articles of Incorporation
● And more!
If you have any questions about this article or the free checklist, schedule a FREE 15-minute consultation with Alexis Hart-McDowell, Esquire.
