5 Steps to Legally Start a Church

By Christine Bove

What does it take to start a church or ministry? 

It may seem simple at first. But once you factor in all the paperwork, legal procedures, and finer details, the process becomes overwhelming. The fact is there are so many details involved in creating a new church or nonprofit organization.

You have to think through where the church will be located, how the services will be designed, creating a launch team, strategizing a financial plan, and more. 

In addition, you need to know how to establish a solid legal foundation for your church.

Establishing a solid legal foundation ensures your church is functioning in compliance and creates room for your church to grow. Because of the freedom and security it gives, it’s one of the top priorities for establishing a church or ministry.

These are the steps to follow:

1. Incorporate your church
2. Obtain a Federal Employer Identification Number (F.E.I.N.)
3. Create and adopt Bylaws for your church
4. Establish policies and procedures
5. Apply for and obtain the 501(c)(3) tax-exempt status

Step 1: Incorporate your church

The first step in legally starting your church is choosing a name for your church or ministry. Check the secretary of state’s office (for the state in which your organization resides) to make sure no other organization exists with the exact same name. After securing a unique name, draft and file the articles of incorporation with the secretary of state.

Your articles of incorporation should include a purpose statement, a dissolution statement, and other state and IRS provisional language.

If your church plans to ordain ministers, make sure that your purpose statement specifies that your church or ministry has the intent to license, ordain, and oversee ministers of the gospel. 

Step 2: Obtain a Federal Employer Identification Number (F.E.I.N.)

For your second step, you will want to obtain a Federal Employer Identification Number (F.E.I.N.) from the IRS.

This number becomes your organization’s tax identification number. With this number, along with your articles of incorporation, you are able to open a bank account in the name of the organization. Once you have a bank account, you can begin to receive donations. 

It’s important to note that applying for your F.E.I.N. must be done correctly, or it may lead to classification problems in the future. 

There have been instances of churches incorrectly applying for the F.E.I.N., waiting several years to apply for their 501(c)(3) status, and then receiving a revocation letter from the IRS. All of this can be avoided by correctly applying for the F.E.I.N.

Step 3: Create and adopt Bylaws for your church

After obtaining your F.E.I.N., your church or organization will want to create bylaws. 

Outside of the Bible itself, the bylaws will be the most important document to your church.

Bylaws help protect your church from public accommodation laws that violate the church’s First Amendment right, including: same-sex marriage laws, transgender laws, etc.

To keep your bylaws relevant, your bylaws must change along with new legislation. This document will need to be updated periodically to reflect the current laws.

Step 4: Establish policies and procedures

To build a good infrastructure for your church or ministry, you will also want to develop and implement policies and procedures. 

Policies are the documents that help govern day-to-day activities, and they help the church remain in compliance with both state and IRS regulations. While bylaws outline the governing structure and set the rules for decision making in the ministry, policies and procedures guide daily operations.

Some policies you will want to implement include:

• Accountable reimbursement policy,
• Conflict of interest policy,
• Benevolence policy,
• Indemnification policy, and
• Ant-Terrorism policy.

Step 5: Apply for and obtain the 501(c)(3) tax-exempt status

The final step in legally establishing your church or organization is securing 501(c)(3) approval with the IRS. 

This is the most time-consuming and labor-intensive process of legally establishing your church or ministry. 

The IRS estimates it takes anywhere from 100 to 150 hours to complete Form 1023.

IRS Form 1023 is twenty-five pages long, including all of the schedules. When properly filled out, it can include anywhere between 50 to 70 pages of content for churches, and 40 to 60 pages of content for ministries.

As you can see a lot of time and information must be invested to complete this application.

We know many pastors and ministry leaders do not have this sort of time available to dedicate to this process. For this reason, we have created our StartRIGHT Service. We love to come alongside pastors and leaders of ministries to make sure they have a solid foundation for their organization. 

Don’t forget…

Some states have additional filing requirements.

For example, thirty-one out of the fifty states offer sales tax exemption for churches and ministries, but you have to complete an additional filing with the secretary of state to obtain the exemption. 

Other states require corporations in their state to pay a franchise tax annually. Franchise tax is a corporate tax levied on a corporation to be able to do business in a particular state. 

This being said, some states allow churches and ministries to apply for an exemption from this particular tax.

While this can be an overwhelming process, you don’t have to do it alone! We have specialists here at StartCHURCH that are well-prepared in this field and know what it takes for churches and ministries to grown and thrive. 

For more information on how to start a church or ministry, call us at 770-638-3444.

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