Ministry Formation

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Poimen
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Ministry Formation

Postby Poimen » June 9th, 2013, 3:19 pm

I'm looking to officially set up World May Believe as a legal Ministry entity, not just my ministry face. I'm not sure if I need to go non profit or not, an LLC, or what steps I need to take. I do want to be able to open bank accounts, etc., in the Ministry name, provided home-school covering, ministerial credentials, etc. Plus continue to be an extension or channel for my own personal ministry as well.
Poimen
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"I wish a buck was still silver, it was back when the country was strong." -- The Hag

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dolfan
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Postby dolfan » June 10th, 2013, 5:16 pm

In Alabama, you can be an unincorporated church association and you can be tax exempt under IRS rules as a church. Certain income may be taxable to the entity. Income paid from revenue is taxable to the payee. As a general rule, under $50K in revenue does not require a Form 990, but does require an electronic information return. Exceptions, of course, may apply.

An LLC would not likely add anything to your ministry. They get overused, IMO. the filing fee to create one is a minimum of $150, and may be slightly more in the county where you record the LLC articles. A new law in Alabama requires you to reserve the LLC name before you can create the LLC. That costs, I think, $28. The form is available through the Business Services links on the AL Secretary of State website

Also, read the online articles at the Christian Law Association.

And, you can call me if you like.
Human government bears the same relation to hell as the church bears to heaven. (David Lipscomb, On Civil Government, 72).

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dolfan
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Postby dolfan » June 12th, 2013, 3:07 am

BTW, all churches are automatically tax exempt. However, as with any tax exempt non profit entity, certain types of income generating activity may trigger taxable income. You have to know what your income generation activity will be and whether it will comply with nontaxable CHURCH income before you settle in a church as your entity type. Certainly, forming a church is WAY easier for 501c purposes to FORM as tax exempt, but it may be that the income generating activity, such as issuing credentials (as Loving God Fellowship does--they do other things and I follow them on Twitter), is outside of the kind of activity of a church unless the person being credentialed is a member, and the nature of the fee (I.e., is it curriculum for ministry development or is it a fee for the credential) makes it inherently necessary to carry on the church ministry.

Take a look first at what the revenue streams would be and whether they qualify as tax exempt for a church. If so, then forming a church is easier than any other way into 501c tax exempt status.
Human government bears the same relation to hell as the church bears to heaven. (David Lipscomb, On Civil Government, 72).

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Poimen
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Postby Poimen » July 28th, 2013, 11:51 pm

Tim, I'd love to get together with you and figure this out better. Maybe we could arrange to meet for lunch, on me of course, and you can get me pointed in the right direction?

Btw, I've been looking through online services ot help ... legalzoom, startchurch, corporatesole, etc.

I'm not sure it's even still allowed in Alabama, but is Corporate sole or Corporate aggregate a viable option as well? As I understand the corporate sole would be under a different 501, but would still allow for tax exempt status. And I would still need to incorporate the financial arm of the corporate sole (a corporation of the corporate sole) as a 501c3, but I wouldn't have to actually create bylaws, boards, etc, to get started legally. The ministry would be mine, occupied by me, and I can appoint other officers/offices as needed.
Poimen
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"I wish a buck was still silver, it was back when the country was strong." -- The Hag

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dolfan
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Postby dolfan » July 29th, 2013, 7:34 am

Poimen wrote:Tim, I'd love to get together with you and figure this out better. Maybe we could arrange to meet for lunch, on me of course, and you can get me pointed in the right direction?

Btw, I've been looking through online services ot help ... legalzoom, startchurch, corporatesole, etc.

I'm not sure it's even still allowed in Alabama, but is Corporate sole or Corporate aggregate a viable option as well? As I understand the corporate sole would be under a different 501, but would still allow for tax exempt status. And I would still need to incorporate the financial arm of the corporate sole (a corporation of the corporate sole) as a 501c3, but I wouldn't have to actually create bylaws, boards, etc, to get started legally. The ministry would be mine, occupied by me, and I can appoint other officers/offices as needed.


Don't outsmart yourself. And, get your terminology straight, too. First, I think you're complicating life for yourself if you try to act as a corporation sole. You have a burden to show that you are bishop appointed by a diocese in order to meet the barest threshhold for that. You will have to create an entity over yourself (a diocese). Just too many layers. Corporation soles are almost unheard of anymore. In fact, I find only one listed in the Alabama Secretary of State's website, the archbishop of Mobile. A cursory search of Alabama case law in the last 50 years reveals only the Archbishop of Mobile as a party in a recorded appellate case involving a corporation sole. The attorneys' fees for doing it right --- and the tax consequences of doing it wrong --- are both so high that you don't really want to go there, in spite of what ANY website says.

Secondly, under Alabama's business entities act, a corporation sole is not listed as a non-profit corporation type, which means you'll have to bear more administrative burdens of proving the non-profit nature of the entity in order to even incorporate as a non-profit.

And, this brings me to my point about terminology. There is no such thing, truly, as "incorporating as a 501(c)(3)". You can incorporate as a non-profit corporation, but 501(c)(3) is an IRS determination of tax exempt status. 501(c)(3) does not equal non-profit. Non-profit is non-profit, and may or may not be tax exempt under 501(c). Churches, however, which are easy enough to create on paper for corporation purposes, are always exempt from taxation**, without the need for applying for tax-exempt status under 501(c)(3), pursuant to 508(c)(1)(A). A corporation sole is not necessarily such an entity. Repeat: A corporation sole is not necessarily such an entity. You can be a corporation sole but not qualify as a church for 508(c)(1)(A) (meaning you'd still have to apply for 501(c)(3) treatment, unlike a church corporation that is automatically 501(c)(3) exempt). The way the IRS treats the corporation may be counterintuitive to the way you think it should simply because a corporation sole can "dba" as a "church" under state law. I'm telling you, brother ---- avoid the corporation sole. They are used in only 16 states, and they are the topic of tax advice scams and have become used by a growing but still small number of people the IRS aims to get. Don't be that guy.

Do it straight up, do it like every other church does it. Don't reinvent something. Spend your innovation on winning people and growing them. Don't outsmart yourself on forming the basic organization of this.

**"Always" is overbroad. Churches may be exempt, but not all INCOME type are tax exempt. Churches, although 501(c)(3) entities, may still generate taxable income. Churches must still file Form 990s each year to report income and type so that the IRS can see if a church has a tax liability although it is tax exempt.
Human government bears the same relation to hell as the church bears to heaven. (David Lipscomb, On Civil Government, 72).


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