Sharing the Word of God with your community is the highest calling of a follower of Christ. One of the best ways to fulfill this spiritual (and societal) duty is by starting a church on mission to serve Christ.
Whether you’re considering planting a church or starting a new one to care for believers and reach the lost, several theological, organizational, and legal considerations are involved in starting a church.
If you’re wondering how to start a church legally, this blog shares valuable insight from our lawyers on the steps you need to start a church in a complex legal landscape.
Theological Considerations for How to Start a Church
Theological nuances are pivotal in shaping your approach to legal matters in church establishment.
Each denomination carries unique requirements, shaping the ecclesiological framework in which your church must operate. These requirements will influence the legal side of church formation.
Your next steps:
- If you’re starting a denominational church, contact your denomination’s headquarters for guidance they may have on the legal aspects of starting a church.
- Inquire if your denomination headquarters has pre-existing forms for documenting essential information for starting a church. This will help you develop your proposed church structure and operational guidelines.
Any templates and forms your denomination can provide may streamline the legal aspects of starting a church and help your church adhere to the established standards of your denomination.
If you’re starting a non-denominational church, you won’t have this institutional support. Instead, you must articulate your own structural framework, which could complicate the process. However, you’ll have more freedom to design a structure that aligns with your unique vision.
Defining Your Governance Structure
Denominational and non-denominational churches exercise varying degrees of flexibility in shaping their entity structures. However, in both cases, your theology, mission and values should inform the structure of your church.
Your entity structure will support your purpose and set parameters for organizing the people, activities and policies that will carry out your mission and vision.
Your next steps:
- Establish your organizational structure
- Clearly define the roles and responsibilities of church members, governing bodies, staff, and volunteers, including key positions such as the pastor, deacons, and elders
- Outline a cohesive structure/hierarchy that facilitates collaboration and ensures everyone understands their roles within the church community
- Strategize mission-promoting activities
- Identify activities and events that align with and actively advance your church’s mission
- Create a plan to execute these initiatives, fostering engagement and connection within your community
- Implement governance policies and systems
- Document the necessary policies and systems to govern various church activities
- Establish clear guidelines for decision-making processes, financial management and other critical aspects that contribute to the smooth functioning of your church
These components lay the groundwork for a well-organized and purpose-driven church.
Ultimately, this structure will provide a solid organizational framework and underpin the theological foundation upon which your church stands.
Defining Your Legal Structure
In addition to creating a theologically informed governance structure, you’ll need to set up a legal framework to support your religious and charitable efforts when starting a church.
Most churches organize legally as nonprofit corporations set up under state law to enjoy tax-exempt privileges.
Notably for churches, obtaining IRS recognition of federal tax-exempt status is optional. Churches automatically possess 501(c)(3) tax-exempt status if they satisfy the 501(c)(3) requirements, even without formal IRS recognition of tax-exempt status. (However, local and state tax exemptions are more complex. Learn more in our article Are Churches Tax Exempt?)
The requirements for qualifying as a 501(c)(3) tax-exempt church include:
- The church must be organized and operated for religious, charitable, or educational purposes
- Church funds must be used for the advancement of its religious, charitable, and educational purposes
- Funds may not be used for the impermissible personal benefit of individuals
- Churches may not endorse political candidates or otherwise seek to influence political campaigns
- Churches are limited in the amount of lobbying activities they may engage in
Abiding by these guidelines signals your church is eligible for tax-exempt status — with or without IRS recognition.
They also underscore your church’s commitment to uphold ethical standards, maintain transparency, and channel resources exclusively toward religious endeavors in alignment with your mission.
Should My Church Seek IRS Recognition?
Although IRC section 508(c)(1)(A) relieves churches of the obligation to apply for IRS recognition of tax-exempt status, many churches decide to voluntarily apply for IRS recognition of 501(c)(3) status.
These are some of the benefits and drawbacks you should consider when determining if your church should obtain 501(c)(3) recognition from the IRS:
- Financial investment: It costs $600 to apply for IRS recognition
- Time-consuming application process: Officially applying for tax-exempt status can be lengthy, requiring a significant investment of administrative resources
- Lengthy approval duration: Approval by the IRS typically spans three to six months, and sometimes longer.
- Protecting your congregation and donors: When individuals and organizations donate to your church and claim a charitable contribution deduction, the IRS places the burden on them to prove your organization meets the requirements of a 501(c)(3) organization, leaving them in a more difficult situation if they are audited and your church does not have formal recognition.
- Attracting large donors: Official recognition as a 501(c)(3) entity by the IRS enhances credibility, appealing to donors who prefer to support organizations with established tax-exempt statuses.
- Access to discounts: Status as a nonprofit organization opens doors to potential collaborations, as many businesses extend discounted rates or special partnerships to entities with officially recognized 501(c)(3) status.
- Facilitated tax exemptions: IRS recognition may streamline the process of obtaining state and local tax exemptions in many states.
IRS approval of your church’s 501(c)(3) status carries evidence of your legal compliance with nonprofit requirements. Seeking recognition is therefore a wise step in protecting your donors and accessing resources that will advance your church’s mission.
Creating Organizational Documents
Establishing the legal framework of a church requires specific organizational documentation, especially when seeking tax-exempt status before the IRS. You must tailor these documents to state requirements, denominational considerations, and your organization’s particular needs.
State statutes are instrumental in specifying the mandatory elements for your articles of incorporation, bylaws, and other legal considerations. Additionally, some states offer valuable resources to guide your organization on what to include in your organizational documents.
Articles of Incorporation
In most states, the foundational document for incorporation is the articles of incorporation. This document must adhere to state-specific requirements, and it’s imperative to include provisions that demonstrate your eligibility as a tax-exempt organization.
Your articles outline the vision, mission, governance, and operational activities, which are further detailed in your church bylaws.
Other details include:
- Office address
- Mailing address
- Start date
- Type of nonprofit corporation
While the articles of incorporation provide a high-level overview of the legal formation of the church, your organizational structure is more clearly detailed in your bylaws.
These bylaws outline your organization’s internal governance and operational procedures. For churches affiliated with denominations, you can adapt existing forms provided by the denomination.
To learn more about drafting orderly bylaws that promote — and protect — your church’s mission, read our article: Are Church Bylaws Legally Binding?
Obtaining an Employer Identification Number
After you set up your entity, you’ll need a bank account for your church and an employer identification number (EIN) — even if your organization won’t have employees. This number will identify your church to the IRS.
Be aware that you are not eligible to apply for an EIN until you have legally formed your church.
Your next steps:
- Apply for an employer identification number (EIN)
- Wait for the IRS to review your application
- Get your EIN number
Safeguard Your Church — Before You Start It
Starting a church involves meticulous theological, organizational, and legal considerations tailored to state and federal requirements and your organization’s specific needs.
Engaging legal expertise early streamlines the process and safeguards your organization’s compliance and long-term success within a nuanced legal landscape.
Consult an experienced church lawyer about how to start a church legally to reduce risk for your donors, secure the foundation of your organization, and promote your church’s mission and reach within your community.