Subchapter “S” companies have little application in the world of religious organizations and should not normally be used. Limited liability companies (an “LLC”) may be used to conduct joint ventures between not-for-profit corporations or when a not-for-profit corporation wishes to “split” certain charitable activities into an entity owned by the not-for-profit organization. Certain characteristics are generally attributed to churches. These attributes of a church were developed by the IRS and by court decisions. Most churches are easy to spot when we see them – a parish hall, rows of pews, probably a bell tower. But what makes a church in the eyes of the IRS? The IRS generally uses a combination of these characteristics as well as other facts and circumstances to determine whether an organization qualifies as a church for federal tax purposes. The Church Law Center of California provides new and established churches with legal advice on issues affecting their risk and governance. If your community is still new, now is a good time to explain the types of legal issues you`ll face as your community grows. Call us today at (949) 689-0437 or via our contact page. Because churches receive special tax-exempt status from the IRS, there are very specific guidelines that determine which organizations can and cannot claim religious affiliation. The type of business to be formed depends on the type of activities you want to carry out through the company.
Churches and ministries were to be established as non-profit “C corporations.” Corporations intended for commercial activities should generally incorporate as C-corporations for profit. The question of establishing definitions for a church has great implications. Institutions that are considered churches are exempt from tax under Section 501(c)(3) of the Tax Code. Common definitions of the word “church” refer to the religious entity or organization, not just the building itself. The definition becomes more complicated when you look at each religious group`s own definition of what constitutes a church. Prepare nonprofit statutes that conform to the nonprofit founding laws of the state in which the church is located. Most states offer a template that can be downloaded from the Secretary of State`s website or another state website for the agency that handles business registrations. The blank template guides you through the minimum information needed to prepare acceptable items.
A church`s nonprofit articles should generally classify it as a membership-based nonprofit rather than the type of nonprofit that needs a board of directors. The church will probably also want to include a purpose clause from the church constitution or other government document. Churches traditionally functioned as unincorporated associations, but this operational format left the church and its staff legally liable for debts, accidents, and harmful acts of employees under church supervision. Many churches have decided to integrate for the benefits and protection of the corporate law structure. The process of incorporating your church is state-specific, although there are many similarities between states. Most states allow churches to incorporate as non-profit organizations under the Not-for-profit Corporations Act. Churches and ministries should consider outsourcing high-liability religious or charitable activities (such as schools, daycares, and assisted living facilities) to a separate not-for-profit corporation. This helps protect church or ministry property from liability associated with the riskiest activity. What for? Because once the risky activity is transferred to the new entity, the church or ministry is no longer directly responsible for the activity. Appoint someone to act as a founder, to manage the incorporation documents. The founder can be any person wishing to prepare and submit the statutes; It doesn`t have to be an elder of the church. Alternatively, the Church may hire a lawyer, business expert, or incorporation service to process the submission.
Companies also have an eternal existence. They don`t die, get sick, or walk away. Thus, conducting church or ministry operations under the auspices of a corporation allows the real property and finances of the ministry to be held and used forever for religious and charitable purposes, regardless of what may happen to the original founders or leaders over time. An association is formed as soon as two or more persons mutually agree to act for a common legitimate aim, profitable or not. An unincorporated corporation may act and do business in the same manner as the other businesses listed below, including ownership of real property. What such an association cannot do, however, is be legally separated from its members. As stated below, individual members of the association may be personally liable for its debts and liabilities of the whole. Whether or not a member of an association accepts a rental agreement, for example, if they enjoy the benefits of that agreement, they may be held personally liable for rent payments in accordance with its terms by participating in services at that place. Like other companies, an unregistered association may issue rules for its own internal management, such as statutes, statutes or statutes. In addition, the tax exemption granted to religious entities under tax codes is generally granted to most unincorporated associations that meet all the conditions for exemption. In California, an unincorporated association is a nonprofit if its incorporation document contains the language required for nonprofit organizations. The term church is found in the Internal Revenue Code, but is not specifically defined.
With the exception of the special rules for ecclesiastical control offices, the use of the term church also includes meetings and associations of churches as well as integrated aid organizations of a church. Part of the confusion about churches arises when the IRS distinguishes between religious institutions such as churches and religious organizations. Appointment of a registered representative. This is a person or entity with a physical address in the state that can accept official mail on behalf of the Church. Some states allow the Church to act as its own registered representative using the Church`s physical address. Other states require you to use an individual or commercial service to act as a registered agent. A corporation is a legal entity incorporated under state law that requires the filing of certain documents with the California Secretary of State.