How to Start a Church Without Getting in Trouble

It's thrilling and important to start a church, but it also comes with a lot of duties and some legal problems. A lot of novice church planters ask themselves, "How do I start a church without getting in trouble?" The good news is that if you have the correct information, plan ahead, and get help from a professional, you may start your church on a solid basis and avoid frequent legal and operational pitfalls. This blog gives you a complete plan for creating a church that follows the law, is well-run, and is ready to grow.

1. Learn How a Church is Set Up Legally

You need to choose and set up the correct legal structure before you can run a church legally. Most churches become nonprofit organizations to safeguard their leaders, give them reputation, and make it easier for them to get tax-exempt status.

Important Steps:

• In your state, you can form a nonprofit corporation. This makes your church a separate legal organization.
• Write and file Articles of Incorporation with the government of the state.
• Make church rules that spell out how the church will be run, who can join, when meetings will be held, and who will be in charge.

2. Get Tax-Exempt Status

Churches frequently ask the IRS for 501(c)(3) tax-exempt status so they can run without paying federal income tax and so donors can make tax-deductible gifts.

Things to think about:

• Churches don't have to pay taxes, but filling out IRS Form 1023 or 1023-EZ to get formal recognition makes things clearer and more trustworthy.
• Follow the IRS guidelines for political activity, money that comes from businesses that aren't related to your main business, and being open about your finances.
• Keep good documents to prove your tax-exempt status during audits.

3. Make Sure There Are Clear Rules for Leadership and Governance

Good administration keeps your ministry safe and makes sure everyone follows the rules. Your church's bylaws should say:

• The roles, duties, and periods of the board of directors or elders.
• How to hire and manage pastors and staff.
• Rules for meetings, quorum, and voting.
• Policies for resolving conflicts and punishing people.

Good governance stops problems with management and the law.

4. Set Up Rules and Controls for Money

Good financial management protects your church's money and keeps donors' trust. Implement:

• Approval and budgeting processes.
• Separating tasks for processing money.
• Regular audits and reports on finances.
• Set rules for donations, getting money back for expenses, and contracts.

5. Follow the Rules for Employment and Volunteering

If you have paid workers or volunteers, you must observe the labor regulations that apply to you. These include:

• Correctly putting workers into the right categories, like employees or independent contractors.
• Withholding taxes from paychecks and reporting wages.
• Giving benefits and protections that are required by law.
• Putting in place regulations for kid safety and background checks for volunteers.

6. Get Insurance to Protect Your Ministry

Churches have their own set of concerns, such as damage to property and lawsuits. To get:

• Insurance for general liability.
• Insurance for property.
• Coverage for workers' compensation.
• Liability insurance for directors and officers (D&O).

Insurance helps protect you from losing money when things go wrong.

7. Keep Detailed Records and Documents

For legal compliance and smooth ministry operations, it is important to have accurate and well-organized records. Important papers are:

• Paperwork for incorporation and rules.
• Letters and forms for tax exemption.
• Minutes and decisions from meetings.
• Receipts and financial statements.
• Records of work and volunteering.

8. Teach Your Leaders and Church Members

Regular training and communication make sure that everyone knows and follows church rules, laws, and mission goals. Retreats for leaders, training sessions for board members, and clear written rules are all very helpful.

9. Get Professional Help with Your Money and Legal Issues

To start a church without any problems, you need to hire professionals:

• Lawyers that focus on church law for incorporation, bylaws, and following the rules.
• Accountants who know about tax concerns and financial reporting for nonprofits.
• Insurance agents that know about hazards that are unique to churches.

How to Use Church Law and Strategy to Help Your Church Start Up

Regan runs Church Law and Strategy, which helps new churches with all of their legal and operational needs. With our subscription tiers, like The STARTUP PLAN, you'll get all the paperwork you need to start your business, legal credits, and expert advice to help you do it right.

Checklist for Starting a Church Without Getting into Trouble

1. Incorporate as a nonprofit and write your rules.
2. Request or confirm tax-exempt status under 501(c)(3).
3. Set up rules and clear leadership positions for governance.
4. Put in place solid budgeting and financial controls.
5. Follow the rules for hiring workers and volunteers.
6. Get the right kind of insurance.
7. Keep detailed records and documents.
8. Teach the leaders and the congregation about the rules.
9. Get help from lawyers, accountants, and insurance agents.

In Conclusion

To start a church without getting into trouble with the law, you need to prepare carefully, follow the rules, and get good advice. If you follow these procedures and work with skilled professionals, your ministry can become strong, do its job well, and worship God with honesty. Church Law and Strategy wants to assist church planters like you develop churches that are healthy, legal, and will thrive for years to come.

Links Inside

• Find out more about the legal package for starting a church.
• Look into the services of a church governance lawyer.
• Learn about church compliance and legal audit reports.

Links to Other Sites

• IRS guide on Starting a Nonprofit
• ECFA article on Church Governance and Compliance
• Christianity Today’s guide on Church Planting Best Practices

Please note that this blog article is only for informational reasons and does not give legal advice. Reading this material does not make you a client of Church Law and Strategy or its representatives. Please talk to a professional lawyer for particular legal counsel that is right for your church or organization.