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Am I Running a Church or Ministry?

Written by Christine Bove on May 07, 2019 in IRS Compliance

You have a dream. God has called you and given you a vision to impact your community and bring people closer to Him. 

The question now is, how should you do this? Are you being called to start a ministry? Or is God calling you to start a church?

Both churches and ministries qualify as tax-exempt organizations under section 501(c)(3) of the Internal Revenue Code. So, what’s the difference? And does it really matter?

Many pastors and ministry leaders have questions about the importance of correctly classifying a church or ministry.

The fact is, misclassification may cause issues for your church or ministry down the road.

There are distinctions the IRS has created to describe the difference between a church and a ministry. Failure to fall under the correct classification will result in issues in your organization’s future. These issues usually result in trouble with annual filing, incorrect purpose and language in your articles of incorporation, hinderances with funding, and more. 

So how do you rightly classify what God is calling you to do? You have this dream of starting a church or ministry, but you are still unsure which one.

At StartCHURCH, we love helping you make your dream a reality. And not only do we want to help you make this vision become a reality, but we want to help you create a firm, legal foundation for it.

Let's take a look at how the IRS classifies churches and ministries. 

Classification differences

While both types of organizations fall under section 501(c)(3) of the Internal Revenue Code, ministries and churches fall under two different subsections. 

Because of their differences, government requirements vary per classification. Therefore, it is necessary to correctly determine which type of nonprofit your organization is.

To determine if your organization is a church or ministry, you can refer to the IRS’s 14 point test. This is a guide the IRS uses to determine if an organization meets church classification. If you go through this test and realize your organization doesn’t fit into these points or descriptions, you might be seeking to start a ministry. You can read the 14 Point test here, or you can refer to the infographic below.


It is important to note that even though a church can check off all of the points on the list, the IRS still looks at the quality of each of those points and activities to confirm the classification. 

Are you still not sure if your organization is a church or a ministry? Here are four questions you can ask yourself to get additional clarity:

  1. Am I trying to start a church?
  2. Will I have a congregation and membership?
  3. Will we have frequent and consistent worship services in an established location?
  4. Will our actives be outreach-oriented?

Core differences

Both churches and nonprofits have compliance regulations and annual requirements. But it is within these regulations and requirements we see their most significant differences.

Under section 501(c)(3), religious organizations are classified as tax-exempt organizations. Along with this, donors can receive a tax deduction for their contributions and donations. So, while churches and other types of nonprofits can both share this benefit, they have different filing requirements.

Tax exemption

Churches and nonprofit ministries have two different filing timelines. This is one of the major impactful tax differences between the two.

Nonprofit ministries are required to file for tax-exempt status within 27 months of their incorporation date. A church has more leniency with its timeline. Churches are not held to the 27-month timeframe. However, at StartCHURCH, we do not recommend waiting beyond the 27-month window for churches to get their 501(c)(3) tax-exempt status.

Along with timeline requirements, the type of organization you have may affect your state incorporation paperwork.

In some states, churches and ministries are established under different portions of the law. This is important to note. If you establish your church or ministry under the wrong code in your state, there may be future issues with taxes, annual filings, and more. 

In the same way, some states offer sales tax and franchise tax exemptions to nonprofit organizations. 

Certain states allow churches to file for sales tax and franchise tax exemptions before applying for 501(c)(3) status. Other states require you to obtain 501(c)(3) status before you apply for state and or franchise tax exemptions.

Annual requirements

Both churches and nonprofit ministries have annual requirements, but there are a few differences that are important to note.

Every year, nonprofit ministries are required to file Form 990 with the IRS. Churches are exempt from that filing. 

There are also annual reports to be aware of. You can read this blog to find out more about annual requirements for nonprofits and churches. 

Seeing your vision come to pass

The administrative side of starting a church or ministry can be overwhelming. There are many steps that need to be taken to make sure an organization has a solid legal foundation. 

As mentioned above, at StartCHURCH, we are absolutely passionate about helping make the vision God has given you to become a reality. And not just to exist, but to have a solid legal foundation so that your ministry can thrive. 

If you still have questions and want to know if the vision you have for your community falls under the church category or ministry category, give us a call at 877-494-4655.

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I Want to Start a Ministry!

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Please feel free to comment. We always appreciate good dialogue. However, we do moderate each comment to ensure that it is on topic and not derogatory to other participants. We ask that you keep your comments brief and pertinent to the topic so that others may benefit.

Raul Rivera

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