Some Say Don't Incorporate! WHY?
Some Would Say “Don't Incorporate!” WHY?
The primary reason we incorporate, is to protect the people [both the Members and Leadership] from the devastating effects of a civil lawsuit. If a “judgment” is decreed by the court, assigning financial liability to a church member or leader, that liability will endure until every penny is paid, or death occurs. There is no law, state or federal, requiring the church to incorporate, and we are certainly not required to incorporate for the church to be exempt from Federal Taxes. Remember, members of an unincorporated church will share any action or issue of liability – equally!
Yes, I am aware of the “Free Church” concept and concerns: Essentially, the proponents of the ‘Free Church’ movement argue that to allow “Caesar’’ into our church by incorporating, or to take the steps to be 501(c)(3) compliant, will “give ‘Caesar’ control over the church.”
Should the IRS ever want to ‘take a look’ at the church records, there is a process they must follow, and there are restrictions on church inquiries and examinations. See the following reprint from the IRS Reg's.. Click on: http://www.admin-assist.com/blog_detail/34_IRS_Inquiries_and_Audit_Restrictions
We are not required to take steps to qualify for the 501(c)(3). But why in the world would we not choose to do so and, “play their game,” in order to: 1. Not pay taxes on the church’s income; 2. Not pay property taxes on our church’ property; 3. Allow the pastor to receive certain benefits, and pay no tax on portions of the ministers income; AND 4. Enable our church members to reduce their tax burden, to the degree they contribute to the work of the church - - the dissemination of the Gospel of our Lord Jesus Christ?
I think I know all the arguments against “Going 501c3.” But I personally found it most difficult to do what God called me to do, as opposed to what some think is so important in ‘bucking’ the ‘system.’ I got tired of trying to “out-figure the system.” Instead, I will ‘use’ the system, and I will avoid paying taxes [legally] by understanding the tax laws, and utilizing every provision made available by the IRS regulations and law. I will do what God has called me to do, without having the constant anxiety of wondering when, or if I am about to be ‘nailed’ by the IRS. I personally came to the point, more that 30 years ago, that my first and primary calling is to propagate the Gospel. I cannot walk in balance, with my mind and concern fixed on both. We are to be aware of the political climate that affects the church; But not so concerned that we lose our effectiveness in our calling from the Lord.
I am as conservative [in both my theology and politics] as anyone you will ever find! We all know that one day we will have to walk away from any/and all church assets in order to freely proclaim the Gospel. But In The Meantime, I choose to use the tax ‘system’ as it is written, to keep every penny circulating within the Kingdom of God, to promote our Lord Jesus Christ? And I do not at all feel like I am compromising my principles in doing so.
Some would say they are seriously concerned with the restrictions that nonprofit corporations and federal regulations put on the Church. There is ONLY one restriction that is put on the church by being 501(c)(3). The ONE restriction is that we cannot speak against [or in favor] of any candidate running for political office, during the election. We CAN say what “positions” the various candidates have taken on those issues. OR the candidates political voting record – so long as we talk about ALL the candidates equally. Read the on-line Article I wrote on this subject:
By the way, here is a serious question: If a group has expenses inherent to conducting church – eg: Rent; Utility bills; Advertizing etc. etc., how will the church receive and accumulate monies to pay these expenses? One way – I guess – is by doing everything “Under the table,” by receiving members contributions, and not receipting them. Remember, to even open a Church Bank Checking Account will necessitate giving them a personal Social Security Number. Whose number - the pastors?. Someone better be keeping good financial records, because in all likelihood, should the IRS ever take look at the church’s finances, and the leadership of this “church activity,” it will likely be classified as a “Sole proprietary” endeavor by the pastor. In other words pastor, all church income will be ascribed to you, and added to your tax return. Hopefully your churches good records will offset some of that income, with allowable church business expenses,
As I said, we don’t have to incorporate, but to be exempt of federal tax, we must have By-Laws, and Minutes in our Minute Book, [Many states have similar requirements to be exempt from state taxes], demonstrating that all business decisions have been conducted according to the By-Laws. By-the-way, to be tax exempt, those By-Laws must contain the four [4] points as proscribed by the IRS. This church would then be treated as an “Unincorporated Organization,” with all the benefits accorded them, as the incorporated church enjoys.
SUMMARY –I see no reason why we shouldn’t use a non-profit corporation to shield us [and our unsuspecting members] from civil lawsuits, any more than using an Umbrella in a pouring down rainstorm;
Please read my On-Line Article What is the 501(c)(3) http://www.admin-assist.com/blog_detail/1_What_is_501_c_3
The above information is provided as a service to the Body of Christ by
ADMINISTRATIVE ASSISTANCE Rev. Don L Buckel Director.
8419 Vista del Cajon Pl. Lakeside, CA. 92040 Don@admin-assist.com
If you would like more information about similar church administration issues, please consider purchasing "The Church Administration 'How To' Manual", A Disc is included with the purchase of this manual This Manual, is endorsed by three CPA's, an EA and two attorneys, and was updated in January, 2010, for the 11th time, since its original publication in 1991.
Please feel free to call for further dialog on this subject, or any other church admin issue, but do keep the ‘timing’ of any call in mind, as we are on the west coast – San Diego area.
Blessings,
Don
619-443-5221
© Copyright 2010 By Administrative Assistance – Rev. Don L. Buckel – Director
The primary reason we incorporate, is to protect the people [both the Members and Leadership] from the devastating effects of a civil lawsuit. If a “judgment” is decreed by the court, assigning financial liability to a church member or leader, that liability will endure until every penny is paid, or death occurs. There is no law, state or federal, requiring the church to incorporate, and we are certainly not required to incorporate for the church to be exempt from Federal Taxes. Remember, members of an unincorporated church will share any action or issue of liability – equally!
Yes, I am aware of the “Free Church” concept and concerns: Essentially, the proponents of the ‘Free Church’ movement argue that to allow “Caesar’’ into our church by incorporating, or to take the steps to be 501(c)(3) compliant, will “give ‘Caesar’ control over the church.”
Should the IRS ever want to ‘take a look’ at the church records, there is a process they must follow, and there are restrictions on church inquiries and examinations. See the following reprint from the IRS Reg's.. Click on: http://www.admin-assist.com/blog_detail/34_IRS_Inquiries_and_Audit_Restrictions
We are not required to take steps to qualify for the 501(c)(3). But why in the world would we not choose to do so and, “play their game,” in order to: 1. Not pay taxes on the church’s income; 2. Not pay property taxes on our church’ property; 3. Allow the pastor to receive certain benefits, and pay no tax on portions of the ministers income; AND 4. Enable our church members to reduce their tax burden, to the degree they contribute to the work of the church - - the dissemination of the Gospel of our Lord Jesus Christ?
I think I know all the arguments against “Going 501c3.” But I personally found it most difficult to do what God called me to do, as opposed to what some think is so important in ‘bucking’ the ‘system.’ I got tired of trying to “out-figure the system.” Instead, I will ‘use’ the system, and I will avoid paying taxes [legally] by understanding the tax laws, and utilizing every provision made available by the IRS regulations and law. I will do what God has called me to do, without having the constant anxiety of wondering when, or if I am about to be ‘nailed’ by the IRS. I personally came to the point, more that 30 years ago, that my first and primary calling is to propagate the Gospel. I cannot walk in balance, with my mind and concern fixed on both. We are to be aware of the political climate that affects the church; But not so concerned that we lose our effectiveness in our calling from the Lord.
I am as conservative [in both my theology and politics] as anyone you will ever find! We all know that one day we will have to walk away from any/and all church assets in order to freely proclaim the Gospel. But In The Meantime, I choose to use the tax ‘system’ as it is written, to keep every penny circulating within the Kingdom of God, to promote our Lord Jesus Christ? And I do not at all feel like I am compromising my principles in doing so.
Some would say they are seriously concerned with the restrictions that nonprofit corporations and federal regulations put on the Church. There is ONLY one restriction that is put on the church by being 501(c)(3). The ONE restriction is that we cannot speak against [or in favor] of any candidate running for political office, during the election. We CAN say what “positions” the various candidates have taken on those issues. OR the candidates political voting record – so long as we talk about ALL the candidates equally. Read the on-line Article I wrote on this subject:
http://www.admin-assist.com//blog_detail/18_What_Can_Churches_Do_During_An_Election
There is also NO restriction in regards to talking about current issues; We can teach our people what the Bible has to say about those issues. We can talk about; preach about; pay for newspaper advertisements; print placards; hire buses to transport the protesters to the front steps of the capitol; and shout to the rooftops in our neighborhoods about ungodly legislation under consideration. In short we can STILL be salt and light in our world, as we are commanded by the Lord.
By the way, here is a serious question: If a group has expenses inherent to conducting church – eg: Rent; Utility bills; Advertizing etc. etc., how will the church receive and accumulate monies to pay these expenses? One way – I guess – is by doing everything “Under the table,” by receiving members contributions, and not receipting them. Remember, to even open a Church Bank Checking Account will necessitate giving them a personal Social Security Number. Whose number - the pastors?. Someone better be keeping good financial records, because in all likelihood, should the IRS ever take look at the church’s finances, and the leadership of this “church activity,” it will likely be classified as a “Sole proprietary” endeavor by the pastor. In other words pastor, all church income will be ascribed to you, and added to your tax return. Hopefully your churches good records will offset some of that income, with allowable church business expenses,
As I said, we don’t have to incorporate, but to be exempt of federal tax, we must have By-Laws, and Minutes in our Minute Book, [Many states have similar requirements to be exempt from state taxes], demonstrating that all business decisions have been conducted according to the By-Laws. By-the-way, to be tax exempt, those By-Laws must contain the four [4] points as proscribed by the IRS. This church would then be treated as an “Unincorporated Organization,” with all the benefits accorded them, as the incorporated church enjoys.
SUMMARY –I see no reason why we shouldn’t use a non-profit corporation to shield us [and our unsuspecting members] from civil lawsuits, any more than using an Umbrella in a pouring down rainstorm;
Please read my On-Line Article What is the 501(c)(3) http://www.admin-assist.com/blog_detail/1_What_is_501_c_3
The above information is provided as a service to the Body of Christ by
ADMINISTRATIVE ASSISTANCE Rev. Don L Buckel Director.
8419 Vista del Cajon Pl. Lakeside, CA. 92040 Don@admin-assist.com
If you would like more information about similar church administration issues, please consider purchasing "The Church Administration 'How To' Manual", A Disc is included with the purchase of this manual This Manual, is endorsed by three CPA's, an EA and two attorneys, and was updated in January, 2010, for the 11th time, since its original publication in 1991.
Please feel free to call for further dialog on this subject, or any other church admin issue, but do keep the ‘timing’ of any call in mind, as we are on the west coast – San Diego area.
Blessings,
Don
619-443-5221
© Copyright 2010 By Administrative Assistance – Rev. Don L. Buckel – Director
