Busting Myths and Sharing Truths About Church Incorporation
By Analiese Rivera
I frequently hear concerns about incorporation, questions about how that will affect your freedom, and whether incorporating gives the government control over your ministry. It’s a valid question, and I wanted to address it properly to provide you with peace of mind. Our goal at StartCHURCH is to equip you as a pastor or ministry leader to make informed decisions that protect your God-given vision. Let’s dive in.
Three Facts About Church Incorporation
Fact 1: Incorporation Shields You with Liability Protection
As a ministry leader, you pour your heart and soul into fulfilling God’s call. You’re likely taking the biggest risks to see souls won for the Kingdom. But here’s the good news: incorporation can safeguard you and your team from personal liability.
In all 50 states, a corporation is recognized as a separate legal entity from its founders and members. This separation creates a protective shield known as indemnification. It means that board members, officers, or founders aren’t personally responsible for the corporation’s debts, liabilities, or legal judgments.
For example, imagine a scenario where a children’s ministry volunteer is found guilty of misconduct. If the church is incorporated, any lawsuit would target the corporation, not the personal assets of the pastor, board, or members. Without incorporation, however, everyone involved could face personal liability. Incorporation ensures your ministry’s mission continues without the leaders bearing unnecessary burdens.
Fact 2: Articles of Incorporation Are Your Ministry’s Legal Foundation
Under state law, the Articles of Incorporation serve as your ministry’s supreme legal document, holding more authority than bylaws or other governing documents. Crafting them carefully is critical to protecting your vision. Here’s what you need to include:
- A Clear Purpose Statement: Define your ministry as a religious corporation with room to grow into various activities aligned with your mission.
- Protection Against Unwanted Changes: Include a clause requiring board approval, including the founder/president, for any amendments to the Articles.
- Membership Guidelines: Establish membership in the Articles, but allow bylaws to outline admission and removal processes. This flexibility saves time and money by avoiding costly state filings for updates.
- Perpetual Existence: Ensure your ministry outlives you by setting its duration as perpetual. Think of D.L. Moody; his incorporated ministry continues to impact lives long after his time on earth. Your vision can do the same!
Fact 3: Incorporation Empowers Your Ministry to Act Independently
One of the greatest benefits of incorporation is the ability to enter into contracts, purchase property, or lease facilities in the ministry’s name, without putting you or your board personally at risk.
For instance, if your church signs a lease for a building and later needs to relocate, if the landlord decides to sue, he can only pursue the corporation, not you or your board members. If the ministry faces challenges and must dissolve, incorporation allows you to close responsibly without personal financial consequences. This freedom lets you focus on ministry, not legal worries.
Three Myths About Church Incorporation
Myth 1: Incorporation Puts the State Above Christ
Some believe incorporating a church subjects it to state control, diminishing Christ’s authority. This misconception arises from confusing the spiritual Body of Christ with the legal entity of a corporation. The church, Christ’s bride, remains under His headship. Incorporation is simply a practical tool to protect the ministry’s ability to operate in the world.
An incorporated church can boldly preach the Gospel, uphold its doctrines, and stand firm in its beliefs, even if they challenge societal norms. The state cannot hinder your freedom to worship or share your faith.
Myth 2: Incorporation Requires Signing Away Free Speech
A persistent rumor claims that incorporated churches must apply for 501(c)(3) status and surren`der their free speech rights to do so. This is simply not true. At StartCHURCH, we’ve helped thousands of churches secure 501(c)(3) status, and not one has ever been asked to sign a waiver limiting free speech. Courts have consistently upheld constitutional protections that protect a church’s right to worship and speak freely.
Myth 3: Only Incorporated Churches Face State and Federal Regulations
Some believe that unincorporated churches are exempt from government oversight. This is a dangerous myth. Both incorporated and unincorporated churches are subject to IRS regulations, including payroll tax withholdings, ministerial tax obligations, and unrelated business income taxes.
Consider the case of Indianapolis Baptist Temple, which claimed “free church” status and refused to withhold employee taxes. The result? A federal court seized its assets to settle tax debts. IRS Code Section 7611(H)(1)(A) clearly states that tax laws apply to all churches, incorporated or not. Proper incorporation, with carefully drafted clauses, ensures you retain control while meeting legal requirements.
How to Incorporate Your Ministry with Confidence
Ready to incorporate your church or ministry? The process involves filing Articles of Incorporation with your state’s Secretary of State. While it requires precision, you don’t have to navigate it alone. Our StartRIGHT Service offers expert guidance to ensure your ministry’s legal foundation is rock-solid. Give us a call at 770-638-3444 to get started today.
Let’s Protect Your God-Given Vision!
Incorporation isn’t about surrendering control but empowering your ministry to thrive. By understanding the facts and debunking the myths, you can make informed decisions that defend your calling and expand your impact for the Kingdom. Call 770-638-3444 to learn more.
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