1.  Is it true that only a church or church denomination can start a church?

No, that is not true.  Although churches and church denominations start new churches all the time, it is not necessary to already have a church in order to start a new one.  Any group of people that wants to worship together, even a small group, may start a church. In addition, an individual may start a church on behalf of a group.  This book will walk you through the simple but necessary steps of starting a legitimate church.

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2.   Does a person have to be an ordained minister to start a church?

No, a person does not need to be an ordained minister prior to starting a church.  The Bible doesn’t teach that only currently ordained clergy may start a church.  Anyone who has been called by God into the ministry is qualified to start a church, and may thereafter be ordained through that church. Individuals who were previously ordained through a church or church denomination may start a church even if their ministerial credentials have been revoked. If you believe that you've been called by God to enter the full-time ministry but you'd like to be ordained in a new church that you start or help to start, rather than in an existing one, you may be ordained in that new church.  This book will show you how.

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3.   Is a layperson (someone who is not an ordained minister) qualified to start a church?

Yes, a layperson is qualified to start a church for at least two reasons.  First, the Bible does not prohibit it but more likely encourages it. The scriptures teach that we are all ministers of the Word of God.  And we’re all called to spread the gospel of Jesus Christ and to “seek and save the lost.”  Second, starting a church is a personal expression of the religious freedom that is guaranteed to all citizens under the First Amendment of the United States Constitution. Anyone who has been inspired by God to help start a ministry, is qualified to start a church and may thereafter help ordain someone else through that church. Building On Faith will show you how.

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4.   Does any government body have authority to legislate where, why, how or who may start a church?

No, absolutely not!  Contrary to what some may believe, no government body in America, whether local, state or federal, has authority to legislate where, why, how or by whom a church may be started.  Such legislation would clearly be unconstitutional under the First Amendment.  Imagine a small town in America where most of the residents believe in Jesus Christ, but where no “church" currently exists.  Consider the absurdity of a law that forbade the community from starting a church unless it was done in a certain way, at a certain time and place, or by someone with certain credentials.  If those requirements couldn’t be met, the people would effectively be prohibited from worshipping together. That happens in other countries.  But it doesn’t, or shouldn’t, happen here.  When it comes to erecting an actual church building, zoning codes are important to keep in mind.  But starting a church is not the same thing as erecting a building.  This book will teach those whom God has called into the ministry or inspired to help start one, how to start a legitimate church.

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5.   Can a church have just one member, or one family as its sole members?

This is an interesting question whose answer is "Yes" and "No."  As a matter of constitutional and religious freedom, a church can have only one member, or one family as its sole members.  One of the most wonderful things about living in America is that we are free to believe anything we want, and act on those beliefs, as long as they are not harmful or dangerous to ourselves or to others, or violate any laws or any clearly established public policy.

However, as a matter of tax law--where a church takes the position that it should be tax-exempt--a church may NOT have only one member, or one family as its sole members.  If that were allowed, then anyone could call himself, or any family could call itself, a church and stop paying taxes.  But that is not permitted under the tax laws.  Therefore, any individual or family choosing to start a church that is restricted in membership to that individual or family, should not expect to secure tax-exempt status, or to otherwise reduce or eliminate their tax liability, in connection with that church.

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6.   Why does every state have a nonprofit corporation law that also governs "church corporations?"

The purpose of the nonprofit corporation statutes of each state and the District of Columbia is to give churches the opportunity to incorporate if they so desire.  There are certain benefits and advantages to incorporating a church.  States decided some time ago to allow churches to incorporate so they could enjoy the many benefits and limited liability that is afforded other corporations.  Virginia and West Virginia began allowing churches to incorporate only recently.  Among other advantages, the corporation serves as a vehicle for promoting and carrying out the activities of a church with more seamless participation in our modern, business-oriented society.  It also helps protect church members from legal liability.

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7.   Is church incorporation a requirement? Doesn't it create "state-run" churches?

No, churches are not required to incorporate. Instead, churches may be formed as unincorporated associations of individuals who come together for a common religious purpose. Many church leaders choose to incorporate because they see certain benefits and advantages in doing so. The primary reason that churches incorporate is to take advantage of limited liability protection. This means that any liability incurred by the church, such as a multi-million dollar verdict against the church, is recoverable only to the extent of the church's assets. Thus, individual church members are shielded from personal responsibility for those liabilities. Churches generally appreciate the opportunity to remove any threat of personal liability that may otherwise hang over their members. When a church is formed as an unincorporated association, the individual members generally bear the brunt of that liability. And that is not a result most churches are willing to live with. Moreover, church leaders arguably have a duty to disclose to potential members that they are formed as an unincorporated association, and how that form may affect the potential member. When churches do so, they often report that potential members are scared off. Another benefit of incorporation, is the fact that a corporation is qualified to own property in its name, while an unincorporated association is not. And, a church corporation may sue and be sued. Although no church wants to be sued, the fact is that litigation against churches continues to soar through the years, where not long ago, it was unheard of. In their roles as protectors, many church leaders would rather have the church be sued, and not the individual members.

As for the question whether the church becomes "state-run" by incorporating, many church leaders don't think so. Unlike a typical nonprofit, churches are not generally subject to the scrutiny of their state's attorney general, and mandated-reporting on charitable activities is restricted to non-church entities. Also, most state nonprofit corporation laws are written so that churches can draft their organizing documents (articles and bylaws) in ways that acknowledge the preeminence of the church over the corporate form. In some cases, a board of directors can be completely dispensed with. In others, the church can place all the authority of a board of directors in the hands of its ecclesiastical body, such as an Eldership group, or the Pastor and associate pastors. Even in Maryland, whose nonprofit corporation law appears to infringe on the sovereignty of churches and their right to self-govern, its highest court has specifically ruled that the law "imposes no particular form of church government or property control upon any church incorporating thereunder, but leaves the matter entirely to the will of the churches involved."

The problem arises when churches incorporate blindly. That is, they simply file and adopt boilerplate articles and bylaws. Or, they hire secular lawyers or consultants with little or no experience in drafting governing documents from scratch that specifically benefit the church and its ministry. Churches should do all they can to avoid the frustrating result of having lawpersons completely take over a church or having their biblical missions "usurped" by operation of state law, unless that is the church's specific goal. The solution is simple. Church leaders need a qualified professional who will carefully study their state law and expertly draft documents that solidify the preeminence of the church over the corporate form. Then, it must be taken one step further with a carefully structured Church Constitution that establishes a very clear structure of church authority and the fact that the church is superior to the corporate form in all matters. Not just anyone can help with that.

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8.   Do you recommend church incorporation?

I recommend that you carefully consider all the available options and the reasons for each, then do what is right for your church. Many churches elect to incorporate because of the many benefits and advantages they perceive of doing so. 

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9.  Is it possible to form a church as an association of individuals and completely forego incorporating it?

Yes.  A church may elect to organize as an unincorporated association. Keep in mind that ministries that choose that form potentially submit their individual members to risks and liabilities for the acts or omissions of the association, and it's members.  In other words, each member of the association could face personal responsibility for the debts and liabilities of the church.  It hardly seems right, but with litigation against churches on the rise, this may be a distinct possibility in a number of states. In addition, an unincorporated association cannot legally do many things that a corporation may do, such as own property in its name. You may or may not care about that.

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10.  Is starting a church a constitutionally guaranteed act of religious freedom?

Yes. Starting a church is most definitely a constitutionally guaranteed act and expression of religious freedom.  However, for the purposes of tax law, which is a very important matter for every church to consider, not just every "church" will be considered tax exempt.  So long as taxation is the "law of the land," the state has a "compelling interest" to make sure that only "bona fide" churches--those that are not formed solely for the purpose of skirting the tax laws--secure tax-exempt status.

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11.  Why does the federal government have a test for what a church is or is not?

The simple answer is that, as far as we know, churches have not been recognized as having a "Constitutional right" to be free from taxation. Having said that, it's important to understand that, upon formation, a "bona fide" church is automatically considered tax exempt by the IRS. Nevertheless, in administering its taxing duties, the Internal Revenue Service applies the federal “church” test in reviewing the Section 501(c)(3) tax-exemption applications of religious organizations. According to the IRS, the test is not meant to infringe on religious freedoms. Rather, its intent is to help identify a "bona fide" church for tax law purposes only. A tax-exemption application is filed by religious groups that want the IRS to recognize them as churches, and therefore, exempt from federal income taxes.

If the IRS does not receive an application from a religious group, it does not automatically apply the test to that organization.  But when it does receive an application, it wants to make sure that the applicant is a legitimate church, and not just a scheme to avoid paying taxes.  The criteria used to evaluate church status are imperfect and perhaps even short-sighted.  They may even be legally challenged on several constitutional grounds. But the goal of the test is to help the IRS define the term “church” in a way that doesn’t restrict religious freedoms, and yet prevents abuses by groups, families or individuals that may want to unfairly avoid taxation.  In the view of the IRS, if the “church test" did not exist, then anyone, including individuals, families, and commercial and social enterprises could claim “church” status to avoid paying taxes.  And that would harm the tax exempt opportunities of legitimate churches.

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12.  Isn’t a church automatically tax exempt?

Yes, a legitimate church is "automatically" extended recognition of tax exempt status under federal law. This simply means that they need not file IRS Form 1023, the 501(c)(3) application for recognition of tax-exemption. However, in the eyes of the IRS, an organization that would not pass the federal "church test" is NOT automatically tax exempt, even if it elects not to file a 501(c)(3) tax-exemption application. Individuals, families, commercial endeavors, or any other enterprise that creates a scheme to reduce or eliminate their tax liabilities under the guise of a "church," may be prosecuted by the IRS and required to pay taxes.

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13.  Is filing an application with the IRS for 501(c)(3) tax exemption required for churches?

No. As discussed above, churches are not required to file the 501(c)(3) tax-exemption application (IRS Form 1023) to be recognized either as a church or as tax exempt. However, many churches choose to file the tax-exemption application because of the advantages they believe exist in doing so.

For example, a tax-exemption determination letter makes it clear to church donors that their contributions are tax deductible.  Some church leaders believe that, otherwise, donors could never be sure if their contributions were deductible, and that uncertainty could discourage their willingness to make contributions, especially substantial contributions, to the church.

In addition, every state and the District of Columbia, have a set of laws that allow churches to secure exemptions from some or all of the following taxes: corporate, income, franchise, sales, use, personal property, and real property taxes. Without an IRS determination letter, it could be difficult to secure some of those exemptions. State laws exempting churches from these taxes are typically written with the expectation that churches will first obtain a determination letter from the IRS. Therefore, if a church elects not to file the IRS Form 1023, it's possible that it won't be recognized as tax exempt under state law.

Also, vendors that are asked to forego sales taxes for churches often require proof in the form of a determination letter. Otherwise, they are hesitant to give a sales tax break to an organization that may not be a legitimate church. With respect to ministers, religious organizations whose status and ordination practices the IRS has evaluated and recognized as tax exempt, make it easier for their clergy to claim “parsonage” or “housing allowance” exclusions on their personal income tax returns, as well as other special clergy tax privileges.

Some church leaders conclude that, overall, a tax exemption determination letter from the IRS gives churches a stamp of legitimacy.  Not because the government has the right to approve of churches, because it doesn't. But rather, because Christian churches have good reason to claim all the advantages of the tax laws, and to allow reasonable scrutiny into their legitimacy in doing so.

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14.  Are churches free to ordain anyone they see fit to be in the ministry?

This is another one of those questions whose answer is "Yes" and "No." First, churches are absolutely free to choose whom they believe is fit for ordination into the ministry.  In fact, churches may ordain many different kinds of ministers, including ministers of music, of education, of youth activities, etc…as well as ministers for the pastoral ministry.  When churches ordain their ministers, they do so in accordance with their religious doctrine and principles. That expression of religious freedom is a constitutional right.

However, a church's "ordained" ministers may not necessarily be considered "ministers" for state and federal tax law purposes. To take advantage of the special tax benefits available to clergy, a minister must meet the requirements of the federal "minister test."

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15.  Why is there a federal test for who is "minister?"

The federal test of who is a “minister” is strictly for federal tax law purposes. The IRS has no right telling a church who or how to ordain. But the IRS does not extend the special tax privileges for bona fide ministers to every person ordained by a church. Otherwise, a church could literally ordain all of its employees, officers and directors for the purpose of helping them avoid the payment of taxes. That would be illegal under the tax laws and potentially subject those individuals to prosecution for tax evasion. It would also harm legitimate churches.

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16.  Why is it important to be very careful about who we entrust our church start-up to?

You will find that some of the vendors and so-called "experts" who sell books and services to assist a church start-up carefully omit specific information about their credentials. They create the impression that they're knowledgeable by repeating and restating some facts about church-startups. They even peddle resources that require legal expertise for their effectiveness, but never mention where those resources came from, or who wrote them. They speak as "pseudo-authorities" hoping you'll simply ignore the fact that legally sound resources should be written by legal professionals with experience and expertise in the specific area of law. Some hope you won't notice that their resources may have been "hired out" to "Ghost Writers."

Despite their shortcomings and lack of authority they boldly give legal advice, even on their websites, much of which is ill-advised and plain wrong. For example, when it comes to church-related policies and procedures, constitutions and bylaws, and similar documents, you should take special care not to be fooled. Some of these vendors seem well-intentioned even if they lack competence. Others seem to care less. In general, never trust your church start-up to anyone who: (i) does not have the credentials to assist you with such an important Calling; (ii) does not exhibit a firm, ongoing commitment to Christian ministries; (iii) does not provide you with a complete solution including issues that are unique to churches; (iv) does not disclose all costs up front, and (v) does not provide you with an excellent guarantee, preferably a no-questions-asked, money back guarantee.

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17. Is it true that we should include as many biblical concepts as possible in our constitution or bylaws because we are prohibited from bringing our Bibles into a courtroom?

No. Those are two of the most dangerous fallacies that some non-authoritative vendors create as they peddle their resources on the internet. It is NOT true that we cannot bring or use our bibles in an American courtroom. I can think of few suggestions more absurd than that. If we find ourselves in a courtroom having to convince a court that it should not entertain a plaintiff's claim because it involves purely religious matters, we would most definitely use our bibles to assert that argument. This is one of the most obvious ways to help a court understand what our specific religious convictions are based on.

It is also NOT true that you should include as many biblical concepts in your constitution or bylaws as possible. That suggestion is based on pure ignorance and a blatant lack of competence in advising churches. You should never accept such advice from anyone other than a legal professional with extensive experience and expertise in working with churches. The danger in throwing as many biblical concepts as possible into a constitution or bylaws is that you cannot predict the religious or biblical issues you may have to tackle in a courtroom. But, in trying to be exhaustive, you end up being exclusive. In other words, if you overlook and fail to include a certain concept in your constitution or bylaws, you give the opposition an opportunity to argue that by not including it you intended to exclude it. This can be very hard to overcome.

There are certain biblical concepts that are important to include in a constitution / bylaws. But, you should rely only on competent, experienced guidance for these matters. Courts will not entertain claims that require them to adjudicate purely religious matters. Instead, they consider claims that are based on the neutral (i.e., not religious) principles of law. A main goal of your constitution / bylaws should be to define relationships, duties and responsibilities in biblical or religious terms for the specific purpose of insulating them from legal scrutiny. Merely throwing as many biblical concepts as possible into the document can be counter-productive to that goal.

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18. Why should I obtain 501c3 status from the government to be tax exempt? Isn't that just a way for the government to bridle a church's free speech?

It is a common misconception among churches in America that if they do NOT file the IRS Form 1023 (501c3 application for recognition of tax exemption), they avoid the restrictions placed on churches to refrain from supporting or opposing either, candidates for public office or pending legislation (through propaganda, substantial fundraising, and publishing or distributing statements). Church leaders often assume that since tax exemption is "automatic," so to speak, they can still engage in these constitutional rights by refusing to file the 501c3 application.

If only it were that simple. The truth is that what's really "automatic" is the prohibition imposed on churches against exercising those constitutional rights. Here's another way to put it.

The IRS is really saying, "If you claim to be a legitimate church, then you automatically give up these constitutional rights. If you want them back, then pay us taxes. In exchange for your cooperation, we won't even require you to turn yourself in to us by filing Form 1023. But, should we catch you exercising those constitutional rights, your exemption will be revoked and you will be forced to pay taxes."

Thus, churches are already restricted from exercising certain constitutional rights whether they file the 501c3 application or not. The idea that our government would require that churches forego certain constitutional rights is incendiary to many church leaders. In a perfect world, there would be no income taxes and everyone, including churches, would be free to exercise all their constitutional rights. But the income tax system in America is very real and nonprofits, including churches, may avoid paying income taxes only by giving up something else.

If a church wants those constitutional rights back, all it needs to do is pay taxes. The only other solution I can see is no income tax system. But, it would take a presidential or congressional act to abolish the income tax system. In any event, although I would prefer that churches give up no rights, here's why this matter doesn't keep me up at night. I know that God is sovereign. There is no authority in heaven or earth that is above God. And no one, including a worldly government, has the power to hold back the hand of God or the advancement of His kingdom. I do not believe that church incorporation or tax exemption will ever prevent God from fulfilling His will through His church.

Of course, should the day ever come that churches are required to become "state" organizations for the purpose of governmental regulation into their religious and spiritual activities, you can count on me to be among the first and loudest protesters.

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19. What additional fees can I expect in starting a church?

Unless you're certain that your preferred church name is available for incorporation, you may choose to reserve the name through your Secretary of State's office. Name reservations run from $10 - $45 per reserved name, depending on your state. Filing the articles of incorporation with the Secretary of State runs from $25 - $125. The fee to file the IRS 501c3 Form 1023, Application for Recognition of Tax Exemption is $750. Each state may also charge fees for filing of state tax exemption applications (income, sales and property taxes). Some state tax exempt applications are free. Others run from $10 - $75 each. Most forms and applications requiring a fee state the fee amount on the form itself. In general, you can expect to pay around $1,000, sometimes less, in mandatory fees when starting a church. These fees must be paid directly to the government agency requiring submission of the form or application.

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