The Legal Documents and Requirements for Churches

Not a week goes by that we are not talking to someone in ministry regarding issues that have arisen in a church. One of the first things we ask is: What does your Constitution and Bylaws state? We were always shocked that the person did not know in the early days. We are no longer stunned. Both clergy and the people in the pew have no idea what their legal documents state. They are often surprised that even their Statement of Faith is not what the church practices and believes. This ignorance is dangerous ground and the basis for many churches in court today.

We constantly hear, "What's the big deal? Why do we have to have all of this?" Most of it is redundant; it's too complicated. Unfortunately, many who have stated this no longer have a church because the church no longer exists.

The "big deal" is that as an incorporated business, often as a nonprofit, there are state laws that must be followed. Leaders who declare ignorance on these matters should understand a legal truth: "I didn't know" is not a defense in a court of law. As a leader, it is your job to know. Failure to do so cannot only harm the church as a whole but also have individual consequences for the leader(s) as determined by state law. Below are the legal documents required to form and maintain a church.

Each ministry needs to review its documents regularly to ensure they comply with their state’s laws and that the documents they do have are being followed. Include a review to ensure the church is protected regarding hot button. Note on a calendar each year those items that must be accomplished to stay in compliance so that nothing is missed. Failure to follow state laws or your own established guidelines can place a ministry in legal jeopardy. This link will take you to a comprehensive list of all Secretary of State offices in the United States, where you will be able to locate the exact requirements (including yearly requirements), forms, statutes, and contact information you may need: http://www.e-secretaryofstate.com/

Name Reservation or Search

If you are starting a new job, you will need to search your state to see if the name you wish to use has already been taken. The official name may be different than the one used. For example, there are many First Baptist churches listed. Their official name, however, may be First Baptist Church of Podunk Holler, First Baptist Church of Big City, or First Baptist Church at the Beach. Officially, their names are different. In their local community, they may be known as First Baptist. There is no perfect name for a church. However, choose a name that reflects the vision and the community. Ensure that a name you choose does not exist within a 30 to 50-mile radius. This will help avoid confusion or misunderstanding. Your Secretary of State’s office can assist in this search and name reservation if you so desire.

Articles of Incorporation

This is the first required document for a ministry by the government. Articles of Incorporation may vary from state to state, so be sure to locate what is needed in your state. Most churches must incorporate as a non-profit corporation; each state defines what qualifies as a non-profit. Whether to have members or not varies from state to state; wording is key. Please check with an attorney to determine what is best for your state and situation. Follow your state’s sample form of Articles of Incorporation and have it reviewed by an attorney before submitting.

The Constitution (Statement of Faith and Bylaws)

The Constitution is the foundation by which the church will govern itself. Each state has specific requirements and topics that must be included to satisfy state law. Please consult with an attorney to make sure that your documents comply. All corporations (secular and non-profit) may make their own rules and guidelines. However, they must follow them. In the event of legal action against the organization, there will be a discovery process to determine if the organization has followed its own rules and guidelines. Failure to do so consistently can adversely affect the outcome for the organization. A church is unique in that the Constitution lays out how it will organize and establishes what it believes through the Statement of Faith. While the Bylaws (organizational guidelines) may be changed, the Statement of Faith should not be altered except to provide additional protection or clarification of doctrine and beliefs. If a church needs to amend its Bylaws, it must do so without violating its Statement of Faith and follow the procedure laid out in their Bylaws. Although the Constitution and Bylaws are not always required to be submitted to the Secretary of State’s office, we recommend submitting it as an additional layer of protection for the document. Anytime the Bylaws section of the document is amended and ratified, the new document should be forwarded to supersede the previous. (The Constitution and the items making up the Constitution are explained in detail in The Business of Ministry, written by Daniel & Melissa Woltmann.)

Employer Identification Number (EIN)

All organizations must file for an Employer Identification Number, whether they will have employees or not. This number identifies you with the IRS and the state. This is NOT the same number as your tax-exempt number. Please don't apply for your EIN until your organization is wholly formed. Follow this link to learn more about the EIN application process: https://www.irs.gov/charities-non-profits/employer-identification-number.

IRS – 501c3 Status

You must file for a 501c3 tax exemption if you receive donations (tithes and offerings). You must have a 501c3 status to provide tax receipts to those who give to your church. The IRS has many helpful links to help you file correctly. As the IRS website states, “State law governs nonprofit status, which is determined by an organization’s articles of incorporation or trust documents. Federal law governs tax-exempt status. The Internal Revenue Code specifically refers to exemption from federal income tax.” Follow this link to find all the information you will need to file the appropriate forms to apply for your 501c3 status: https://www.irs.gov/charities-and-nonprofits

Bank Accounts

Banks require an organization’s Articles of Incorporation and EIN to open a bank account. You will need to establish a business bank account to do business and receive donations primarily to ensure financial oversight. Be sure to follow your church’s guidelines on who should be check signers and who should hold debit and credit cards. This is an area where oversight by multiple people is a must.

Church Minutes

As your organization conducts business and grows, it is required by law that business meeting minutes are kept. These minutes include all deacon and trustee meetings, all church business meetings, and any special meetings called to conduct the business and ministry of the church. Your Minister of Records must ensure that these documents are dutifully filed on the church property and kept in order and up to date. This protects the leaders and the members and provides a clear picture of the church’s business and ministry practices and decisions. Without them, decisions and actions taken could be declared null and void. Failure to hold the required meetings by state law and those designated in the Bylaws of the church could result in the potential loss of the church’s 501c3 status; this is due to statutes in the US Tax Code. These minutes are considered public records. The church may limit viewing to church members (unless during litigation). The process for requesting to see these documents should be described in the Bylaws of the Constitution.

Church Membership

Church membership records are also legal documents. In some states, a baptism record may be used as proof of identity. The church must explain its membership guidelines and place protections in them for the sake of the church and the individual. Often, churches do not “purge the rolls” as indicated in their Bylaws. This negligence could be detrimental. Establish guidelines for joining, maintaining, and removing a member, then follow them equally for everyone. Always keep your records current.

Financial Records

The church’s financial records are considered public records as well. The Constitution and Bylaws should outline how the church’s budget is determined. The Bylaws should also reflect who, how, and when these documents may be reviewed. Ensure that your Bylaws protect records of those giving to the church; those items may not be requested. The bylaws should include guidelines for budget and financial reporting to the membership. This reporting may be annually, biannually, quarterly, or monthly. Whatever the church decides and writes in the Bylaws must be followed. Your state may indicate how often financial records are reported for nonprofits. Include those requirements as a minimum. Further reporting may be added. Regardless, whatever the Bylaws state for financial reporting must be followed. Failure to do so may violate state laws and the IRS Tax Code.

These are the items necessary to begin and then maintain a church legally. While a church can biblically exist without these items, without them, there is no legal protection for the church's people. Without them, members and non-members may not use donations, tithes, and offerings as deductions on their taxes. Without them, owning properties, conducting business, and organizing additional ministries may be significantly hindered.

We cannot stress enough the importance of maintaining these documents. Seek legal counsel to ensure your documents comply with state laws and the US Tax Code. Review them annually.
Faithfully follow the guidelines outlined in your documents to protect the church.

Understand that we are commanded in Scripture to be subject to the laws of the land, provided they do not ask us to violate Scripture. Currently, none of these legal requirements violate any biblical principles. However, failure to follow the laws of the land by a church and its members will violate those laws and Scripture, thus harming the testimony (and possible continuation) of the church in its community.