It may seem unusual for a church to have an attorney, but nearly all churches are structured as nonprofit organizations and are registered with the Internal Revenue Service (IRS). That means they must follow specific business and accounting practices. Any type of religious organization can benefit from legal counsel.
A nonprofit organization will need a church attorney to ensure they follow legally accepted business accounting procedures, IRS requirements, appropriate business practices, and lawful Human Resource (HR) procedures. Engaging an attorney upfront can prevent future problems.
An attorney has experience helping religious organizations both establish themselves and operate according to the law. Churches need to be registered as nonprofit organizations to receive tax and other benefits. In addition, many churches that start small end up being powerful entities. They may grow steadily and find themselves large enough to consider investing funds, purchasing property, and employing people.
Establishing a solid legal foundation can ensure the church complies with laws, giving leaders the freedom and confidence to focus on growing their church or ministry. Listed below are ways an attorney can help start a new church.
The first step in creating a new church is to incorporate the entity. Incorporation has many steps, and a church can assist with the following:
- Choose a name. Have the attorney ensure it is not a name already registered with the state or used by another entity, religious or otherwise.
- Draft and file articles of incorporation. An attorney will complete these documents on the church’s behalf. Articles include a purpose statement, mission statement, and dissolution statement. It will also include copious legal language required by the state and the IRS. It will also specify the intent to hire people and license, ordain, and oversee ministers. The attorney will officially file the articles of incorporation with the secretary of state’s office.
Obtain a Tax Identification Number
A tax identification number is assigned by the IRS to the entity. Along with the articles of incorporation, this number enables the entity to open a bank under the organization’s name. They can then begin to receive donations and raise funds. An attorney should apply for the tax identification number on the church’s behalf, as it must be done under the correct classification to avoid legal problems.
Create and Adopt Bylaws
Bylaws are governing principles that guide the church’s management and operations. An attorney will often include the following in the church bylaws:
- Management powers and responsibilities. Defining who has the authority to do specific activities, such as entering into a contract, is essential. In addition, this part of the bylaws should spell out the specific obligations of board members, management, and church officers.
- Management voting procedures. This topic specifies who can vote on important decisions, approve resolutions, how many votes are needed for approvals, and how votes will be cast. It should also address how the church can be dissolved or enter into major transactions, such as investing or buying property through voting.
- Meeting governance. Board, officer, and management meetings need protocols that should be spelled out in the governing documents. Protocols include rules about how meetings are conducted, how much notice is required, how many members constitute a quorum, and how often meetings are held.
- Procedures for replacing management. Board members, directors, and officers will change, whether through resignation or removal. The process for filling these positions should be outlined in the bylaws.
- Statement on religious views. A church’s mission helps define the church and its denomination. Recording religious beliefs in an official bylaws document can help minimize confusion or dissent. These views could include the church’s stance on same-sex marriage, divorce, and similar issues.
Establish Policies and Procedures
A solid infrastructure comes from well-planned and thoughtful policies and procedures. Documenting these items and how to implement them can help a church run smoothly and lawfully. Policies and procedures govern day-to-day operations and help the church remain compliant with government and IRS regulations.
Typical topics covered in policies and procedures include:
- Employment processes, including hiring, firing, employee benefits, compensation, discipline, and working hours.
- Accounting reimbursement policies and procedures.
- Conflict of interest.
- Code of conduct.
- Fundraising, donation policies, and procedures.
- Employee or departmental duties and responsibilities.
- Organizational chart.
Obtain Tax-Exempt Status
To legally establish a church, a final step is to have the church attorney secure 501(c)(3) approval with the IRS. This is a long and arduous process, which is best completed by an attorney. It can take more than 100 hours to complete the application form and the required schedules, but it needs to be done for the church to enjoy nonprofit status and have a solid foundation.
An attorney may also complete various other paperwork required by the state, such as completing a Certificate of Formation, filing exemptions from certain tax requirements, and applying for additional tax advantages.
How can an Attorney Help Maintain an Established Church?
Once a church is incorporated and running, an attorney should remain part of the church’s leadership team. An attorney can continue to counsel on various issues as the church grows or situations arise, such as the ones listed below.
Employment and Accounting
Many churches have some paid employees and many volunteers. There should be clear policies and standards for anyone working on the church’s behalf, including background checks and proper supervision. As the church grows, it may hire more people. An attorney can ensure compliance with employment law.
Additionally, nonprofit status requires specific IRS reporting and accounting procedures, many of which change frequently. An attorney can advise on any changes. An annual review of operations, finances, and governing documents could be beneficial as well.
As church membership increases, a church may be ready to build or buy a new facility. A church attorney can help guide them through these often complex transactions.
Also, a church may offer social services, develop camps, or even Bible study programs. An attorney can structure these entities if they generate revenue that needs to be separated from the church.
Churches will often sponsor or otherwise engage in ministries in their local area, state, country, or even abroad. An attorney can help leadership understand their liabilities while sponsoring or conducting outside activities.
Sermons, music, art, and even Sunday school lessons could be considered a church’s intellectual property. Laws regarding intellectual property can be complicated, so consultation with an attorney is beneficial to protect these assets.
An attorney should be engaged at the first sign of a potential crisis, such as an accusation, negative publicity, or public or private allegations of misconduct. Misconduct related to finances, sexual abuse, and other issues could damage a church’s reputation or harm its members and the general public. Engaging a trusted attorney can help a church manage a crisis.
A church and its members and leaders are not immune to being sued. An attorney familiar with representing religious organizations must be involved immediately whenever a lawsuit is filed or threatened. Church leaders, members, contractors, vendors, or volunteers that harm children or others can fall through the security cracks. A church attorney can counsel on preventing sexual abuse through effective policies and procedures.
Church Law Attorneys at Anchor Legal Group, PLLC Handle the Legal Side of Building a New Church
Churches are not immune to legal issues, and nonprofits must also adhere to lawful business practices, tax laws, reporting, and operations. The church law attorneys at Anchor Legal Group, PLLC will make sure your new church is in accordance with the law. Call us at 757-LAW-0000 or contact us online for an initial consultation. Located in Virginia Beach, we represent clients throughout Chesapeake, Norfolk, Suffolk, Portsmouth, Newport News, Hampton, and Eastern Shore, Virginia. We also serve our clients throughout the United States through our network of associated attorneys.