So you’ve been called to start a church. You feel compelled to reach out to the community in a new way, with your own goals, hopes, and messaging. You’re ready to start the work…but you have no clue how to get started.
You aren’t the first! Starting a church can be a huge task, one that’s almost impossible to take on all by yourself. Churches require a team to get off the ground, so be sure you have a group you trust to dive into this process with.
No matter what, you’re not in this alone. There is a network of other churches, nonprofit professionals, and resources out there to help you along the way. Also, in this article, we’ll walk you through the steps it takes to legally start your new church.
When you’re ready to start fundraising, all of us at Donorbox will be here for you, too. We try to make your work starting a new church as easy as possible by offering comprehensive, easy-to-use fundraising tools to help you make the most of your fundraising efforts. Read on to learn more about how to legally start your church.
Why Start a Church?
You have the idea to start a church and spread the gospel, but you aren’t quite sure if that’s enough justification to start a church in a specific area. It can be daunting to make the decision to start a new church, but with the right mindset, you can determine if it’s really the right move for you and for the community you’re working with. Here are four questions to ask yourself:
- Are you hoping to reach people who aren’t currently reached by the gospel? Consider if there is an existing church trying to reach the same people you are.
- Does the area you’re looking at need to be ecclesiastically revitalized? Even if there are existing churches in your area, consider how they’re serving their mission. Do they successfully draw in new members, or has their supporter base gone a little stale? You might be able to bring fresh energy into the area with a new church.
- Do you already have a group of supporters who want to become their own church? If you run a bible group or some other kind of smaller gathering, consider expanding it into a new church.
- Is God really calling on you to start a new church? If you feel compelled to do so, consider that you might be following God’s wishes for you.
Once you have answers to these questions, you’ll have a better sense of how right it is for you to start your own church. But what does it mean, legally, to be a church? Read on to learn how the IRS defines the term.
How Does the IRS Define a Church?
It may seem difficult to define a church. What does it mean to be a church? And, what about a ministry?
These two terms, “church” and “ministry,” are often used interchangeably, but they are different entities in the eyes of the IRS. Both churches and ministries are eligible for tax-exempt, nonprofit status under section 501(c)(3). However, ministries have to apply for such status within 27 months of formation. Churches don’t have to apply since they are automatically given nonprofit status.
There are also differences in the annual filings required for ministries and churches. Ministries with 501(c)(3) status must file form 990 annually; churches don’t have to file this form unless they officially apply for 501(c)(3) status (more on that later!).
So what’s the difference? The IRS has a list of fourteen characteristics they attribute to churches. They are as follows:
- Legal existence
- Recognized form of worship
- Defined ecclesiastical government
- Formal code of doctrine
- Specific religious history
- Membership not associated with any other church or denomination
- Organization of ordained ministers
- Ordained ministers who are selected after completing courses of study
- Literature of its own
- Established places of worship
- Regular congregations
- Regular religious services
- Sunday schools for the religious instruction of the young
- Schools for the preparation of its members
To qualify as a church, you don’t need to have all of these qualities, but you should have some. Usually, the IRS uses a combination of some of these characteristics coupled with other circumstances to establish whether you qualify as a church for federal tax purposes.
Keep these characteristics in mind as you work to start your own church.
What is “Church Planting”?
Much like a farmer spreading seeds to grow multiple plants, church planting involves setting up multiple churches to spread God’s word. Often, these new churches are established and the “planter” moves on to start more.
Church planting usually includes the following activities:
- Training church leaders
- Gathering supporters/a congregation
- Organizing the church, including writing church bylaws
- Finding a physical location to worship
How does this differ from starting a church? The answer is it doesn’t, really, at least not in modern practice. The term “planting” has more of a religious connotation as it refers primarily to the act of spreading the gospel. What does that look like in our modern times? Starting a church!
Starting a church often requires the same activities as planting a church, and the terms are often used interchangeably. Read on for a step-by-step guide that includes the legal requirements for starting a church.
How to Start a Church: A Step-by-Step Guide
Once you’ve decided that your calling to start a church of your own is the right step, it’s time to get started! It can feel like a daunting task to tackle, but by following these steps you can approach it with grace and efficiency.
Note: Remember that the process for starting a church varies state-to-state and with other factors. These are all important steps no matter where you are, but depending on what you need for each step, you might need to work out of order.
No worries, if you do! Consider this a checklist and come back to it when you need to figure out the next step toward starting a church.
Here’s How to Start a Church in seven steps.
1. Decide on the basics
The absolute first step? Figure out who you are, how you’ll be known, and what you want your church to be like.
These are the kinds of basic details you’ll need to have in hand as you continue down this list of steps. So what do you need to decide on up front? Here’s a checklist to get you started:
- Your mission. What are you trying to bring to the community? What are your values and guiding principles? If you need some inspiration, here’s a list of mission statement examples.
- Your goals. With establishing your mission, you will undoubtedly begin to consider what your goals for your church are. Is your goal primarily to spread the gospel? To provide a safe haven for those in need in your community? A place for weekly connection? Whatever your goals, it’s important to allow them to shape how you create your church.
- Your leadership structure. Will you have a board of directors? Will your church be elder-led? Or will you let the congregation vote on certain matters? Coming up with this now saves you the headache of trying to establish a leadership structure once things are already in motion.
- Your denomination. Will your church be Catholic, Episcopalian, Lutheran, Baptist, or one of the many other denominations? How will your denomination impact your mission?
- Your name. Of course! You have to have a name in order to become a church—that’s how new supporters will recognize you. Common practice includes pairing the denomination with the location of the physical building. You can also get a little creative here to find the best name for your church.
- Your brand. Yes, just like companies, churches should have a clear, recognizable brand. This is so new supporters and members of your congregation can understand who your church is right from the outset. Will you be traditional or contemporary? What will your materials (flyers, promotional materials) look like? What kind of vibe do you want for your services—serious or more laid back and welcoming?
Establishing these elements will also help you shape what you want your church to be like. It will help guide you as you take on the next steps to setting up a church. It will also help you begin thinking about fundraising for your church—establishing who you are and how you’ll present yourself will help your supporters know that supporting you is the right choice.
2. Write your bylaws
Think of your bylaws as the guide to how your church will be organized. You’ll want to carefully lay out every basic aspect of your church. If you’re hoping to apply for official 501(c)(3) tax-exempt status, you will need to submit your bylaws to show that you are governing your church in a way that complies with the 501(c)(3) requirements.
Luckily, you don’t have to start from scratch! There are great templates and samples of bylaws online—just find one that fits the scope of your church.
3. Get an Employer Identification Number (EIN)
An EIN is used by the IRS for tax purposes and will be vital for a variety of establishing steps and documents, including getting a bank account.
Applying for an EIN is simple. All you have to do is fill out Form SS-4 by following the instructions. Form SS-4 asks for basic information about your church including the name, address, and type of entity. For the type of entity, be sure to select “church or church-controlled organization.”
You can submit your application online, by mail, or by fax.
Note: You may think you don’t need an EIN until you have paid staff. Not true! An EIN serves somewhat the same role as a social security number does for an individual—as an identifier.
4. Open a bank account for your church
Starting a church requires some funds to get started. With fees, salaries (if you have any), and other miscellaneous expenses, you’ll want to have a bank account that works for your needs—and so you can be ready to fundraise!
Before you start collecting funds, you’ll need a place to store them! To find the best bank for your church, consider what’s most important to you. Ask yourself these questions:
- Do I want something nearby so I can easily deposit cash and checks? Or do I not mind a bit of a drive?
- Will I need a loan in the future?
- Do I have enough to meet the account minimums for opening a new account at this certain bank?
- Do these monthly fees work with my budget?
You might consider meeting with officials from multiple banks to get a sense of which one would work best for your church.
Pro tip: Usually you’ll need to provide an EIN for a bank account but be sure to ask each bank for their requirements for opening an account. Depending on their answer, you might need to skip this step and return at a later point in the process—an example would be if you need to provide proof of 501(c)(3) status.
5. Get ready to fundraise
Fundraising for your church isn’t as easy as it once was. No more just relying on passing the weekly offering plate. Churches need to get more agile about encouraging donations and offering exciting new ways for their supporters to give.
That’s why when you begin fundraising for your church, you want to be sure to offer your supporters as many ways to give as possible. This means online giving, in-person giving, and more!
To streamline the donation process for your donors and yourself, you’ll want to choose a fundraising platform that lets you:
- Host an online donation form. Just in case you aren’t ready with your own website yet, you can start spreading the word through social media by linking to your campaign hosted on another platform.
- Create a branded donation form that you can easily embed into your own website. If you do have your website up and running, you’ll want a donation form you can easily implement on your website with many visible donate buttons.
- Automate donation receipts with your own customized messaging to save yourself time on administrative tasks.
- Store donation information so you never lose track of who has given to your organization, how much they’ve given, and when.
- Manually add offline donors for any in-person contributions you receive.
- Easily add on text-to-give functionality so your donors can text-to-tithe. More and more churches are choosing to use text-to-give with their congregations.
- Use crowdfunding as an easy, accessible, and momentum-driven way to get more donations quickly.
- Pay only when the platform works for you. Try to choose a platform with a small percentage fee based on how many donations you receive, rather than a flat fee you pay monthly. This means that you don’t pay for a service you aren’t using.
- Ask donors to cover fees. Your supporters want to support you – and they should be able to pay a little more to ensure you receive their full donation.
Maybe the most important feature to look for in a fundraising platform? One that is trusted by other churches.
Donorbox offers all of the features outlined above with our dedicated church fundraising pillar, MinistryMatters. Donorbox gives you the flexibility you need to begin fundraising successfully for your new church, and is trusted by thousands of churches including Brown Line Church, the Calvary Family of Churches, Unity of Boulder, and more around the world. Here’s a short one-minute video to show you how we make this possible –
Raise More for Your Church
6. Obtain a certificate of formation or articles of incorporation
Certificates of formation, often also referred to as articles of incorporation, are necessary for your church to be established in the eyes of the government. The process for obtaining this document varies from state to state, so you’ll want to do some research to find the most efficient way to file in your state. Be sure to file as a nonprofit.
Often when trying to incorporate your church, you’ll need to establish the following:
1. A registered agent. This is a person or entity with a physical address that will receive official mail on your church’s behalf.
2. Someone to file the paperwork. You’ll need to have one designated person, called the “incorporator,” to be the one to prepare and file the articles of incorporation paperwork.
Pro tip: Consider hiring an attorney to handle this part for you. That way, you can be sure the job is done correctly and all necessary information is filed with the state.
3. Consent from the church. This usually means allowing your church elders (or however you set up your leadership structure) to vote on whether to incorporate or not.
Although churches traditionally didn’t operate as incorporated organizations, many choose to due to the legal protections incorporation provides.
7. Apply for official 501(c)(3) status
This step is technically optional. If your church meets the requirements of section 501(c)(3), you’re automatically granted tax-exempt status without having to apply for it – a great perk for churches that are often busy enough with their day-to-day actions.
But there are some compelling reasons why more and more churches are choosing to officially apply for 501(c)(3) status.
Reasons to Apply
- Confidence boost. You don’t want to ever doubt that your organization is tax-exempt, and it can be nice to have the paperwork to prove it. Having the official designation also means those who contribute to your church know for certain that their contributions are tax-deductible – which can be a huge incentive for giving.
- Financial transparency. Although compliant churches are automatically given tax-exempt status, there is one significant difference: they aren’t held to the same annual financial reporting standards as other 501(c)(3) nonprofits. 501(c)(3) nonprofits file some version of IRS form 990 annually. This form includes a variety of information about the organization and its financial practices and many schedules are made available to the public so donors can see exactly what organizations are doing with their donations.
Since churches don’t have that annual filing requirement, they often don’t operate with as much financial transparency. This can be harmful to your donor’s confidence—how can they know that you’re operating in a financially responsible way?—but also to the general confidence of your congregation.
- Ability to apply for grants. You might think churches are ineligible for grants, but there are some grantmakers out there looking to support churches for specific, community-minded projects. Often grantmakers require 501(c)(3) status, but even those who don’t require it may be more eager to grant a project with full financial transparency.
- State-specific benefits. These vary depending on your state (obviously!) but can be as significant as being exempt from sales and property taxes, meaning more of your budget goes toward growing your church.
There are other benefits, but these are the significant benefits churches consider when deciding if applying for official 501(c)(3) status is right for them.
If applying for official status is right for you, read on to learn more about the application process.
How to Apply
Although it might seem like a daunting process, there are a ton of online resources to help you along as you apply for 501(c)(3) tax-exempt status, including this 501(c)(3) Tax Guide for Churches and Religious Organizations.
- Obtain an EIN, if you haven’t already!
- Figure out which form to file. To apply for 501(c)(3) status, you’ll use either form 1023 or form 1023-EZ. Form 1023-EZ works primarily for smaller churches, but there are a couple of reasons you may want to use the longer form anyway:
- If you want to apply for grants, some grantmakers expect you to have used the longer form for application. This is because the longer form requires you to submit some of your organizational documents, including your bylaws, which is another step toward transparency.
- If your church expands more in the future (and has a larger income because of this), you may need to submit more information to the IRS anyway, so submitting the longer form at the outset saves you more time down the line.
- Receive confirmation from the IRS. Once your application is approved, the IRS will send you a letter of determination informing you of any annual filing requirements and confirming your eligibility to receive tax-deductible contributions.
Once you have your official status in hand, you can accept tax-deductible contributions worry-free.
Start Changing Lives
You’ve done the work to make your church official in the eyes of the government. Now it’s time to start the important work you originally set out to do— to help the community around you by uniting them with God’s word.
Remember as your church continues to grow to stay humble and remember what it was like when you were all the way back on step one, figuring out the basics of who you are and your goals. Continue to grow with a full heart and kindness in every action!
For more tips and resources on fundraising and nonprofit management, you should check out the rest of our Nonprofit Blog. Subscribe to our newsletter for fresh content delivered to your inbox every month!
Frequently Asked Questions (FAQs)
Here are some FAQs to refer to as you get going.
1. Do churches report offerings to the IRS?
No, churches don’t have to report offerings to the IRS, but they do have to keep track of them and provide the appropriate donation receipt so donors can deduct these contributions on their annual taxes. To learn more about donation receipts, check out our complete guide to donation receipts for nonprofits.
2. Do churches have to apply for official tax-exempt status under section 501(c)(3)?
Technically no. Churches that meet the requirements of section 501(c)(3) are automatically granted tax-exempt status, without applying. However, many churches do officially apply for a variety of reasons and benefits, including ease of mind for donors who wish to claim tax exemption for contributions and church elders & leaders who might be concerned about compliance.
3. What are the legal requirements for starting a church?
These vary state-to-state but usually include filing incorporation in your state. In the eyes of the IRS, you must adhere to at least some of the fourteen qualities they use to define a church. In order to be exempt from taxes and eligible for donors to deduct donations to your church on their taxes, you must adhere to the requirements for nonprofits outlined in IRS section 501(c)(3). You may also choose to apply for official 501(c)(3) nonprofit status.
4. What’s the difference between a church and a ministry?
The main practical difference is that a church has a location with a regular congregation and regular meetings. For example, a bible teacher who doesn’t have ties to one church has a ministry. However, the IRS has different definitions of churches and ministries (see the list of fourteen qualities linked above), where churches receive slightly more benefits in that they don’t have to apply for official tax-exempt status under section 501(c)(3), while ministries do.