A Mid-Year Checklist for Pastors

By Christine Bove

It’s that time of year! The summertime is the perfect time to tie up loose ends and to take care of internal housekeeping for your ministry.

I recently wrote a blog about how your church can thrive during the summer. But in this blog, I’d like to help you take one step further.

There are a few administrative action steps to take care of at the beginning of June. This can look like updating your minister’s housing allowance or filing specific tax documents. 

To make starting off your summer easy, we have compiled a to-do list for you to make sure your ministry is on a firm legal foundation. 

Double-check the minister’s housing allowance

For a compliant housing allowance, the church needs to maintain accurate documentation. This documentation includes both official board meeting minutes and the housing allowance statement.

A common error churches make is assigning specific dollar amounts for the minister’s housing allowance. Doing this potentially limits the exclusion of taxes you will be able to claim. 

To make sure your minister’s housing allowance is honoring to your pastor and is in-line with the government’s standards, here are three components to put in place.

1. Designate 100% of the pastor’s salary as housing allowance. While this is not required, doing so makes the upkeep of the housing allowance easier, and it allows you to exclude the maximum amount possible. You can read more about Housing Allowance compliance here.
2. Create minutes to document the designated amount. Housing allowance must be documented and approved by the board of directors in order for it to be valid. So, it is critical that the board of directors holds a meeting to vote on the housing allowance and take meeting minutes to verify the decision was correctly made. We recommend that this board meeting take place by January 15. 
3. Make sure the minister uses the housing allowance statement. This statement should be completed and turned into the board annually by January 15. As well, we recommend the pastor keep a copy in his or her personal records as a backup. The statement should include: 

• The actual cost of providing a home.
• The estimated cost of providing a home.
• The fair market rental value of the home.

Do you have more questions about the housing allowance? We offer two services that can help you prepare and approve a housing allowance and compensation. Call us at  877-494-4655 for more information. 

Tax calendar dates

Even though April 15 has passed, there are still important tax documents that need to be filed from your organization. 

Refer to the list below for the next few important tax dates.

June 15: Minister’s pay the 2nd quarter installment of estimated tax for 2019 using form 1040ES.

June 15: Church pays monthly payroll tax deposit.

July 15: Church pays monthly payroll tax deposit.

July 31: Church files form 941 quarterly tax return for the second quarter.

Double-check your 501(c)(3) status

 In order to maintain tax-exempt status, non-church nonprofits must file an annual Form 990. Failure to file for three consecutive years will result in the revocation of the organization’s tax-exempt status.

You can easily check your organization’s tax-exempt status in the IRS Publication 78.

Publication 78 is a cumulative list of organizations that have received their official tax-exempt status from the IRS. If you are in the process of receiving 501(c)(3) status, you will not see your organization’s name listed here yet. Once your church or ministry receives its Federal Determination Letter, it will officially be recognized as a 501(c)(3) organization by the IRS, and your organization’s name will be listed on Publication 78. This makes it easy for your donors and members to see that they are giving donations to a legitimate organization.

To keep your 501(c)(3) current, you will want to make the necessary adjustments to any new laws and regulations. 

We recommend doing an in-house compliance audit. To make internal audits easier, we developed a 53-point compliance audit that you can perform yourself. This will help make sure your ministry is in compliance with IRS regulations. 

Hold board meetings

June is a perfect time to gather your board members together. Together, you can talk through the vision of the church, future decisions, and any internal adjustments that need to be made.

Updates and discussions could be about:

• Bylaws
• Statement of beliefs
• Doctrines
• Policies and procedures
• Contracts
• Housing allowances
• Church funds and budget
• Missionary funding
• Building plans and strategies
• New or reoccurring initiatives
• Sermon series plans

While it is best practice to update these documents earlier in the year, it’s understandable that life happens. So updating these documents at the start of June is an excellent way of making sure your church’s documents are in order so you are compliant.

Staying compliant at the state and federal level can be overwhelming, especially when it comes to the forms that need to be filed annually. For this reason, we have created our KeepRIGHT Service that helps organizations stay up to date with internal document updates, annual reports, and annual board meetings. If you have more questions or are interested in this service, call us at 877-494-4655.

Invest in the future of your church

Meeting with your board can also be a fun time for coming up with ideas regarding the future of your church! There are so many opportunities for spreading the Gospel. Below are a few ideas of what you and your board can talk about in making your vision happen.

Start a Community Development Corporation (CDC) 

In addition to your church, you can start a nonprofit that focuses on an area of ministry your church is passionate about. Nonprofit organizations are established to help serve the community while also relieving a burden of the government.

Some nonprofit ideas are:

• Homeless shelter 
• Food pantry or soup kitchen
• After school program
• Thrift store

A CDC is a type of nonprofit that is created to promote community health and development. CDCs can either be religious or secular. Many churches choose to establish a secular CDCs so they can apply for grants from the government or from other businesses that may not be available to their church.

Start a for-profit arm

You can also create an excellent evangelism opportunity by starting a church-owned business. This is a great way to share the Gospel to your community, but it is also an excellent source of income for the church that is outside of tithes and offerings. 

Create a “Doing Business As” name 

Creating a Doing Business As (DBA) (a.k.a. fictitious name or assumed name) provides freedom for your church to accomplish various tasks and initiatives under a name different from its corporate name.

A DBA could be as simple as having a shortened name from your church’s name so people can write the shorter version on their offering checks. Some banks won’t accept names on checks that don’t match the corporate name exactly. However, if a DBA is registered, the bank will accept the shortened name. 

A DBA could also be used when the church wants to create a name for a specific activity of the church and be able to receive donations in that name. A church with a food pantry could register a DBA to receive funds in the name of the food pantry. 

The sky is the limit

There are so many potential opportunities for churches to go to the next level of growth in their ministries during the summertime. Summertime can be seen as a new year. 

It’s a chance to recalibrate and solidify what is important within the organization. It’s also a chance to start new initiatives or to revitalize ones that have been put on the back burner. 

We would love to come alongside you and help make your dreams come to life. 

Click here to download your free mid-year checklist! 

If you have any questions or are interested in any of the services mentioned above, I encourage you to call us at 877-494-4655. Or, click here to schedule a call and one of our specialists will reach out to you.

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