How to Start a Ministry

By Raul Rivera

When the Lord lays it on your heart to begin a ministry, it is common to start thinking about the spiritual and logistical sides of establishing a ministry.

You may begin to ask yourself questions such as, “What type of ministry will I start?” “Where will we start?” “Who will be involved?” “How will we receive financial support?” 

While these considerations are definitely important, most people don’t consider the legal aspect of starting a ministry. Oftentimes, this is because they don’t know where to begin.

In today’s blog, I want to walk you through five simple steps that help you to effectively establish your ministry’s legal foundation:

1. Get incorporated with your county or state.
2. Create your bylaws.
3. Decide if your ministry will ordain ministers.
4. Obtain 501(c)(3) tax-exempt status.
5. Be aware of your responsibility to file Form 990.

Please note this blog pertains to non-church ministries. If you are interested in starting a church and would like more information about establishing a solid legal foundation, click here for more information.

5 steps to legally starting your ministry

1. Incorporate your ministry

Let us begin by being aware of the definition of a corporation.

A corporation is an artificial entity completely separate and distinct from its founders and members.

It’s important to note that before incorporating your ministry, you will want to select a corporate name for your ministry, and you will also want to think of at least two other individuals who will serve along side you as a board member.

So, why is incorporating the first step you should take when starting your ministry? 

Incorporating creates a legal entity that is separate and distinct from its founders and members, protecting them from personal liability.

Why is this important? Consider the following scenario. 

Hannah is the founder of a ministry that provides meals for single-parent families. On a cold winter morning as Hannah was delivering meals in the ministry’s van, the van hit a patch of ice causing her to crash into another car. Although no one was seriously injured, the person she hit still required medical attention. As a result, the individual sued the ministry. While the ministry had a legal matter on its hands, Hannah’s personal assets were protected because she incorporated her ministry.

This protection is what is commonly known as the “corporate veil.”

The corporate veil helps protect founders and board members when acting responsibly on behalf of the ministry. 

Like the example, Hannah’s personal assets were not at stake because she took the step of incorporating her ministry.

(Recommended reading: "How to Better Protect Your Ministry's Religious Liberties")

2. Creating your ministry’s bylaws

The bylaws are a part of your ministry’s governing documents. They are the rules and guidelines by which your ministry will operate.

Having bylaws that clearly lay out your ministry’s structure, culture, and principles allows for consistency and helps cast vision for the future. 

Bylaws are defined as a set of general rules and regulations that guide and direct the daily affairs of the members of an organization. Bylaws are crucial for churches and ministries because when properly structured, they do the following:

1. Clarify the purpose of the organization;
2. Provide protection by distinguishing the theocratic government of the ministry;
3. Give guidelines for how the board can and cannot make decisions;
4. Guide the board in how to establish policies and procedures for the ministry, including succession, finances, ordinations, etc.; and
5. Give guidelines to help ensure that the board is operating according to IRS regulations for tax-exempt organizations.

In essence, bylaws are the driving force that will help your ministry run smoothly.

When bylaws are well-written, tailored to your ministry, and utilized correctly, they can effectively streamline the focus of your ministry. 

3. Determine if your ministry will ordain ministers of the gospel

When establishing the legal foundation for your ministry, you will need to determine early on if your ministry will legally ordain ministers of the gospel.

It is important to note that I am not speaking about spiritual ordination, but rather legal ordination.

Legal ordination allows ordained ministers to receive tax benefits, such as housing allowance and self-employment tax exemption, that are afforded to legally ordained ministers.

In order for your ministry to legally ordain ministers, there should be language clearly indicated in your articles of incorporation and bylaws that the ministry will do so.

(Recommended reading: "Are You Sure Your Ordination is Legal?" ) 

4. Obtain 501(c)(3) tax-exempt status

Federal tax-exempt status is a privilege given to organizations that are organized exclusively for public benefit.

Tax-exempt status relieves those organizations from paying federal income tax on their net earnings and allows donors to receive a tax deduction for making such contributions.

Organizations that are not churches, and whose gross receipts are normally $5,000 or more in a year, must apply within 27 months of incorporating in order to receive approval retroactive to the date of incorporation.

To receive 501(c)(3) tax-exempt status, you must apply using Form 1023.  

Once Form 1023 is reviewed by the IRS, organizations that get approved will receive a Favorable Determination Letter.

This letter informs you that your ministry is officially recognized as a 501(c)(3) tax-exempt organization. If you receive an approval letter, then you have achieved tax exempt status!

5. Be aware of your responsibility to file Form 990

Any non-profit organization, except churches, are required to file Form 990 annually. 

The IRS uses Form 990 to ensure that tax-exempt organizations are remaining compliant with the tax code and nonprofit laws in order to remain a tax-exempt entity.

There are three forms to consider when it comes to filing Form 990.

The form you should file is dependent upon your ministry’s amount of income and assets. The three forms are Form 990-N, Form 990-EZ, and Form 990-Long. 

I recently wrote two blogs that speak to the necessity of ministry’s filing Form 990 and the associated consequences of filing a late Form 990 or not at all.

You can access both of those blogs by clicking here and here.

Are you ready to start your ministry?

Although this is a short list of steps to take to legally establish your ministry, it can still be intimidating when you attempt to do the actual work.

At StartCHURCH, we have a team of specialized consultants that can help you with every step of the process! Give us a call at 877-494-4655 for more information.

We also want to invite you to attend a conference near you to learn everything you will need to know about starting your own ministry!

Recommended blogs for you:

• "Tax Reform Implications for Churches and Ministries"
• "Do Ministers Have to Pay Estimated Taxes?"
• "Do You Know How to Take Board Meeting Minutes?"

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