When Starting Your Church Over is Best
By Raul Rivera
"So, what do you have?" was my question to Pastor Dixon, who had called to seek out help with his church. He knew something was not quite right with how they had been running the administrative side of the church...he just did not know what it was that was not right. He soon revealed that all he had was just a handful of papers. Some were bank statements; others were church bylaws with no signatures and a checking account that had not been reconciled in years. As the conversation continued, he also shared with me that there was no documentation on how each of the current board members were appointed or how the pastor's salary was approved, nor had there ever, during the course of their 7-year existence, been a time where any minutes were taken or any W-2's or 1099 forms were filed. This had him concerned but he did not know what to do.
God won't let us get scrutinized
Pastor Dixon's situation is not unique. There are hundreds and hundreds of churches today in similar circumstances, with a good majority not aware that they are out of compliance. In all of the years that I have been helping churches with their compliance issues, more than ever, state and federal government agencies are willing to use the hammer against churches and ministers. As with Pastor Dixon' scenario, everything about the church seems to be just fine on the surface. They are having great worship services; he is dedicated to the Word and uncompromising with his preaching. With all of that going on, many churches tend to fall into the rut that somehow God will not allow anything negative to challenge the church.
Should I consider starting over?
I often get asked, "Should I start my church over?" What many ministers mean by the question is whether or not they should restart their legal status. In some cases, that is warranted. Below are four major items for you to consider. Feel free to use the items as a quick test to see if you should give consideration to a "FreshSTART" of your church's legal status. As a rule, if two or more of these apply to your ministry, you should give us a call and speak to one of our consultants.
1. Missing minutes: Many churches have board meetings and make major decisions without ever taking minutes. I have seen IRS inquiries where they have asked for the church's minutes since inception. If a church is audited, the one thing that can save or sink it is the minutes.
2. No W-2 or 1099-Misc: Filing these two very important forms each year is required by federal law. In any instance when the minister has received any money from or through the church a W-2 must be filed; no exceptions. I have spoken to ministers that have said their church has never filed any W-2 forms for their salaries. That can lead to large Trust Fund Recovery Penalties and possible prosecution. Another form is the 1099-Misc. For some reason this form continues to be largely ignored by the church. Anytime the church pays any guest speaker a love offering the church must take the proper measures to ensure compliance with section 6041. It requires the church to do its due diligence and gather personal information from a guest speaker and then issue form 1099 if the speaker receives a cumulative total of $600.00 or more for the year.
3. Bad bylaws: Have you looked at your bylaws lately? What do they say? When examining a church, the IRS will compare your decisions and the way the church makes them to see if they are in compliance with what the bylaws say. Many churches have bylaws that they have adopted that have not been read in years and the way these churches make their decisions is completely different from what the bylaws say. Moreover, how were they approved and adopted? Are the same board members that approved them still there? Have they been reviewed in the last year? This is a really big deal. Not only can the IRS or the state hit the church very hard, so can disgruntled members. Courts settle church lawsuits by first looking at what the bylaws say. If the bylaws are deficient, then they look at state law. This is always a bad deal for a church, since state law almost always sides with members and not the board.
4. Unsettled board: Have you considered how each board member/elder of the church became legally appointed to his/her position? Is it documented? This is where trouble starts. Because most churches keep inadequate minutes, they likely do not have any documentation showing how board members/elders were appointed. In addition, many were appointed in a manner that was inconsistent with what the bylaws say. In 100% of every court case where the board members were appointed in a manner that was inconsistent with the church's bylaws, courts have ruled against them. What if someone challenged the pastor/founder of the church claiming he/she was never properly appointed? Are you certain you have sufficient documentation to defend such a claim? What if the majority of the board is made up of family? The regulation of section 501(c)(3) requires that the board be made up of mostly unrelated individuals.
Pastor Dixon's success story
Pastor Dixon got a "FreshSTART" over two years ago. Today his church continues to grow but something is different. Pastor Dixon tells me he sleeps better at night. After going through our FreshSTART program, he attended one of our conferences, which helped him maintain a level of compliance like never before.
Breathe again; a fresh legal start
The usual response when someone finds out that his/her church needs a restart is to feel overwhelmed or fearful about how to move forward. Many have known something is wrong with the legal side of their church, but have not known what to do; they feel alone and unsure. If that is you, I have great news...there is hope! There is a way to regain your confidence in the foundation of your church and begin to breathe again. I am committed to helping pastors and ministry leaders in situations like this to have both a partner and a plan for moving forward in a new realignment with the law. With StartCHURCH's FreshStart Program, you are just 30 days away from having a fresh legal start. This program helps you get some closure on your past and welcomes in a new season of legal compliance. If you need a FreshStart, please call us today at 770-638-3444. We would be honored to serve you in this new ministry season.