Church / Non-Profit FAQ
1. Why should I incorporate my church or ministry?
Incorporating your church or ministry creates a formal legal entity that provides important protections and benefits. It helps shield pastors, board members, and members from personal liability, allows your organization to own property and open bank accounts in its own name, and strengthens your credibility with donors and the IRS. Incorporation also helps ensure your ministry can continue smoothly even if leadership changes.
2. What is the difference between a nonprofit corporation and a tax-exempt organization?
A nonprofit corporation is formed under state law, while tax-exempt status is granted by the IRS. Incorporation gives your organization legal structure and liability protection. Obtaining federal tax exemption (typically under section 501(c)(3)) allows you to receive tax-deductible donations and exempts your organization from certain federal taxes. Both steps are important and work hand-in-hand.
3. Do all churches need to apply for 501(c)(3) tax-exempt status?
Not necessarily. Churches are automatically recognized as tax-exempt under IRS rules, even without filing for formal recognition. However, many churches choose to apply for 501(c)(3) status to provide assurance to donors, qualify for certain grants, and simplify banking or real estate transactions. We help churches weigh the pros and cons and guide them through the application process if it makes sense to do so.
4. What governance documents do my church or nonprofit need?
Every church or nonprofit should have governing documents such as articles of incorporation, bylaws, and a statement of faith or mission statement. These documents outline your purpose, leadership structure, and decision-making processes. Well-drafted documents help prevent internal disputes and ensure compliance with both state and federal law.
5. How can an attorney help my church or nonprofit stay compliant?
An experienced attorney can help ensure your ministry or nonprofit operates in line with its mission while staying legally compliant. This includes advising on board governance, employment matters, real estate and property issues, contracts, and IRS or state reporting requirements. Ongoing legal counsel can prevent costly mistakes and protect your organization’s reputation and mission.
