Legal Stuff is a Pain

Well, it's about time I wrote a little about the legal/administrative stuff I've been dealing with regarding our new church. It's a real pain! It's difficult to know how to move forward with all that stuff, especially when every state has different laws, and every bank in every state has different rules.

Here's what I've found, however, with regard to starting a church (in the specific state of Tennessee):

1. The first thing you need to do is to get a P.O. Box, unless you want to receive mail at your house. I suggest having a P.O. Box, for lots of reasons, from the professionalism of having church-related mail (including financial support!) come to a special place, to not putting your home address out there for the world to see from day one.

Getting a P.O. box is not as easy as you think! The US Post Office is the cheapest place I found, about 1/2 the price of the UPS Store (although you may find the UPS Store has more convenient locations for your area). They also give you a ton of box size choices, and there are post offices all over the place. Two things you will need to do to get the P.O. box are have a permanent STREET address on your application form (so, if you aren't "on the field" yet, you have to find someone to help there) and a person to appear in person who lives in the state you are starting the church in.

This last one is according to the lady I talked to at the Knoxville post office. You have to show an ID (a driver's license works) to get a P.O. box, and she said the license had to be in-state. Having someone in the town you are planting the church in to help you get a P.O. box is huge.

2. The second thing you need to get is a Federal Employer Identification Number. This is easy enough to do on the IRS website. The form you need is SS-4, and you can fill it out online. The reason you want to get a P.O. box first, is that you can use that P.O. box as a mailing address on the online federal application. The form is easy, and when you are done, you will be given a federal EIN to use on a bunch of stuff.

From what I've been told, all gifts to churches are instantly considered tax-deductible by the IRS, as long as the church has a federal EIN. There is some disagreement on the legalese here. I've been told is that there is another form you have to turn in (an application for tax-exempt status), but your donations are considered tax-deductible retroactively up to 14 months before you file your tax-exempt status form. So, in practice, you are good to go as long as you have that EIN and you move forward with the tax-exempt form. More info on that as I go through the process.

3. The third thing you will want to do is get a bank account to deposit your donations into. That is also not as easy as you think! You must have that federal EIN, a letter showing an action on the part of your church board authorizing the opening of a bank account, and within that letter you must name at least one person as a check signer. You must have the social security number of the signers as well as their birthdate and church title. You probably are going to have to bring them in to sign something, depending on the bank. I'm still working on the bank thing (I am going to show up and work through the process soon) so again, more info on that soon.

Just as a basic thing, most reputable church planter guys out there are suggesting that the pastor NOT be a check signer, and that he NEVER signs his own checks. The first part may not be possible in all situations, but the second one should be. Just think about the possible issues with signing your own paycheck, and then you'll understand why it's strongly discouraged!

4. Finally, most churches will incorporate. There are some huge advantages to incorporation, although some people think that if you incorporate, you are selling your soul to the government, Satan, etc. Mostly the people I can find who say that freak me out a bit, they kind of sound like "Chicken Little."

You can read all about church incorporation online. Just google it! In Tennessee, you can register your church and incorporate online. I messed up the application the first time, still waiting to hear back on the second try. It costs $100, and you're supposed to get a refund if you mess up like I did. More info soon on this one, as well.

Also, many churches will apply for 501 (3)(c) status as a non-profit organization (a bunch of paperwork, but some rewards for doing it) as they get rolling. We're not anywhere near that point yet, but I'm sure we'll deal with it sometime.

So, good luck, and if you can find a free lawyer, go for it! :)