What does it take to start a church? That’s a question many pastors and church planters ask themselves when God calls them to do so.

Oftentimes, when pastors begin planning for their church launch, they think about where they are going to hold services, who they are going to ask help them to start the church, and how they are going to market and announce the church to the community.

These are questions and thoughts that definitely need to be answered when starting a church. However, what most pastors and church planters do not initially think about at the outset is establishing a solid legal foundation. 

When launching a church, it is imperative that one of the first things you begin working on is establishing a solid legal foundation.

Starting a church legally can be done in 5 steps:

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

I’ll explain a little more about each step below.

5 steps to legally start your church

Step 1 - Incorporate your church

The first step in legally starting your church is choosing a name for your church or ministry and drafting and filing 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 of the gospel, make sure that the purpose statement declares 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.)

The second step in establishing your church’s legal foundation is obtaining a Federal Employer Identification Number (F.E.I.N.) from the IRS.

In essence, this number acts as your organization’s Social Security number. Furthermore, this number, in addition to your articles of incorporation, allows you to open a bank account in the name of the organization, and thus begin receiving donations.

Applying for an F.E.I.N is one of the most simple steps of the process, but doing so incorrectly can lead to severe problems. 

For example, if your church obtains an F.E.I.N. that has a “ministry designation” then the IRS will expect it to submit Form 990. 

There have been instances of churches incorrectly obtaining their F.E.I.N, waiting several years before applying for their 501(c)(3) status, and then receive a revocation letter from the IRS all because of a simple mistake in obtaining the F.E.I.N.

This is one reason why it is important to correctly obtain your F.E.I.N.

Step 3 - Create and adopt bylaws tailored to your church

The creation of the bylaws is step three in the process of starting your church the right way. The bylaws will be the most important document to your church (outside of the Bible, of course).

This document helps protect your church from the aggressive public accommodation laws that violate the church’s First Amendment Rights. (For example, same-sex marriage laws, transgender laws, etc.)

Keep in mind that your bylaws are a living document.

What I mean by this is that as legislation changes, so too do your bylaws. The document will need to be updated periodically to reflect the current laws that may negatively impact the church.

If your church already has bylaws and you think they may need to be updated, give us a call at 877-494-4655, and we’ll be happy to help.

Step 4 - Establish policies and procedures

Step four, when legally launching your church, is establishing policies and procedures.

Think of the bylaws as the fundamental and foundational piece of the ministry and the policies as the document that helps govern day-to-day activities. 

Churches and ministries that go through our StartRIGHT® Program receive key policies such as:

• Accountable Reimbursement Policy
• Conflict of Interest Policy
• Benevolence Policy
• Indemnification Policy
• Anti-Terrorism Policy

Policies not only help protect the integrity and the vision of the ministry but they also help to satisfy some state and federal requirements.

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

The fifth step in establishing your church’s legal foundation is securing 501(c)(3) approval with the IRS. Of the 5 steps mentioned, this is the most time-consuming and labor-intensive step of the entire process.

IRS Form 1023 is twenty-five pages long, and when it is properly filled out, it can be anywhere between 80 to 100 pages of content for churches, and 60 to 70 pages of content for ministries.

The IRS itself estimates that the completion of Form 1023, from beginning to end, takes anywhere between 100 to 150 hours to complete. I do not know of many pastors who have that type of spare time available.

But this is where we can help.

Through our StartRIGHT® Program, we have helped more than 16,000 churches and ministries to obtain their 501(c)(3) status. Why not allow us the opportunity to also help you?

One more step to not overlook when starting a church

In addition to the 5 steps mentioned above, there is an additional step that pertains to state-level exemptions. Oftentimes, these state-level exemptions can save your church or ministry thousands of dollars over the course of a year.

For example, 31 of the 50 states offer sales tax exemption for churches and ministries, but in the majority of the states, you have to complete an additional filing with the Secretary of State in order to obtain the exemption.

In addition, states such as California, Texas, and Utah require corporations in their state to pay a franchise tax each year. In short, franchise tax is a corporate tax levied upon a corporation for the privilege of doing business in a particular state. These states do, however, allow churches and ministries to apply for exemption from this tax.

There are several other exemptions at the state level that may apply to your church or ministry. Give us a call today at 877-494-4655 to find out what exemptions pertain to you.

Recommended blog articles for you: 

• “Does a Church Need to be 501(c)(3) Approved?”
• “Approved by IRS, Revoked by State”
• “How to Make the Dreams for Your Church Reality”