How to Start a Church: Formation, Governance, and Tax-Exempt Status
Key Takeaways
Starting a church begins with defining its religious mission, establishing leadership, and choosing an organizational structure.
Churches may incorporate as nonprofit corporations under state law, but incorporation is not required to qualify for federal 501(c)(3) tax exemption.
Bylaws help establish how a church operates and makes decisions. Specific legal requirements depend on its structure and state law.
Churches that meet IRS requirements under section 501(c)(3) generally qualify for federal tax exemption without applying for formal recognition. Churches seeking formal recognition as churches must use Form 1023, not Form 1023-EZ.
State and local requirements vary, and qualifying churches are generally exempt from filing annual IRS Form 990-series returns or notices.
Learn how to start a church, establish leadership and governance, understand state incorporation requirements, and navigate federal 501(c)(3) tax-exempt status.
Starting a church is a meaningful step toward building a faith community. Whether you're establishing a new congregation or organizing an existing group, understanding the legal and organizational requirements can help you move forward with confidence.
This guide explains how to start a church, establish leadership, choose a legal structure, prepare governing documents, and understand federal tax-exempt status. Churches have special rules under the Internal Revenue Code, so the process differs from forming many other nonprofit organizations. If you're new to nonprofit formation, our guide, How to Form a Nonprofit Organization in 8 Steps, provides a broader overview.
How Do You Start a Church?
Quick Answer
To start a church, define your religious mission, establish a leadership and governance structure, decide whether to incorporate under state law, and obtain an Employer Identification Number (EIN) when needed for banking or tax purposes. You'll also need to review applicable state and local requirements. Churches that meet IRS requirements under section 501(c)(3) generally qualify for federal tax exemption without applying for formal recognition, although they may choose to request an IRS determination letter.
How to Start a Church: Step-by-Step Guide
Starting a church involves decisions about your mission, leadership, organizational structure, and legal responsibilities. These seven steps explain how to establish your church and prepare for ongoing operations.
Step 1: Define Your Mission and Organizational Structure
Start by defining your church's religious purpose, the community it will serve, and how it will operate. A clear mission can guide decisions about leadership, worship activities, community outreach, and the organization's responsibilities.
Write a mission statement that describes your church's purpose and the people it intends to serve. Decide whether your church will operate independently or affiliate with an established denomination. Some denominations provide governance guidelines and bylaws that can help you organize your church.
It also helps to consider how your congregation will gather and practice its faith. The IRS evaluates several characteristics when determining whether an organization qualifies as a church, including its form of worship, religious leadership, and regular congregation or religious membership group. Not every characteristic is required, and the IRS evaluates each organization based on its circumstances.
Step 2: Choose a Legal Structure
Churches may organize as nonprofit corporations, unincorporated associations, or other structures permitted under applicable law. Many founders choose nonprofit incorporation because it establishes a separate legal entity and may provide liability protections under state law.
Incorporation is not required for a church to qualify for federal tax exemption under section 501(c)(3). An unincorporated church may also qualify if it meets applicable IRS requirements.
However, your organizational structure can affect governance, liability, property ownership, banking, and other responsibilities. Before choosing a structure, review your state's requirements and consider how your church will manage its property, finances, leadership, and operations.
Step 3: Incorporate Your Church if Appropriate
If you decide to form a nonprofit corporation, you'll generally file Articles of Incorporation or similar formation documents with your state's designated filing office. The requirements and fees vary by state, and some states have separate laws governing religious corporations.
Depending on your state's requirements, your formation documents may need to include:
- Your church's legal name
- A statement of religious purpose
- Initial director or trustee information
- Registered agent information
- Provisions addressing the distribution of assets if the organization dissolves
If your church wants to qualify under section 501(c)(3), its governing documents should also meet applicable IRS organizational requirements.
Once the state approves your filing, your church is established as a nonprofit corporation under state law. State incorporation and federal tax-exempt status are separate matters, so incorporation alone does not establish federal tax exemption.
If you decide to incorporate your church, Beacon Nonprofit's religious organization formation services can help you navigate the state formation process.
Step 4: Draft Your Bylaws
Bylaws explain how your church operates, how decisions are made, and how leadership responsibilities are assigned. Clear governing rules can help prevent confusion, establish accountability, and provide continuity as your congregation grows.
Your church's bylaws may address:
- The church's name, purpose, and governance structure
- Leadership roles and responsibilities
- How leaders are selected or removed
- Meetings, voting, and decision-making procedures
- How bylaws can be amended
- Procedures for addressing conflicts of interest
Whether bylaws are legally required depends on your church's organizational structure and applicable state law. If your church applies for formal 501(c)(3) recognition using IRS Form 1023, the IRS requires a copy of its bylaws if they have been adopted.
For a more detailed explanation, see How to Write Nonprofit Bylaws: What to Include. Our guide on Nonprofit Management 101 also covers governance, financial oversight, and leadership responsibilities.
Step 5: Obtain an Employer Identification Number (EIN)
An Employer Identification Number (EIN) is a federal tax identification number issued by the IRS. Your church will generally need one to open a bank account, hire employees, or handle certain federal tax responsibilities. An EIN is also required if your church chooses to apply for formal 501(c)(3) recognition.
You can apply for an EIN directly through the IRS at no cost. Eligible applicants who complete the online application may receive their EIN immediately, while other application methods may take longer.
An EIN does not, by itself, establish federal tax-exempt status. It simply identifies your church for federal tax purposes.
Step 6: Understand 501(c)(3) Tax-Exempt Status
Churches that meet the requirements of section 501(c)(3) are generally considered federally tax-exempt without filing an application with the IRS. This means a qualifying church does not need an IRS determination letter to receive federal tax exemption or for eligible donors to make tax-deductible contributions.
To qualify, a church must satisfy applicable IRS requirements. These include operating for recognized exempt purposes, avoiding improper private benefits, and following federal restrictions on political campaign activity and lobbying.
Although formal IRS recognition is not required, some churches choose to apply for a determination letter. This provides written confirmation that the IRS recognizes the organization as tax-exempt, which may be helpful when working with donors, financial institutions, and grantmakers.
If your church chooses to seek formal recognition as a church, it must use IRS Form 1023, not Form 1023-EZ. Churches applying for recognition as churches are not eligible to use Form 1023-EZ.
Before submitting Form 1023, you'll generally need to:
- Obtain an Employer Identification Number (EIN)
- Prepare your organizing documents and information about your religious activities
- Gather the financial and governance information required by the application
- Submit Form 1023 electronically through Pay.gov with the required IRS filing fee
Our guide on How to Apply for 501(c)(3) Tax-Exempt Status explains the broader application process. You can also review What Is a 501(c)(3)? for more information about federal tax-exempt status.
Federal tax exemption does not eliminate every tax obligation. Some income or activities may still be taxable, and employment-related tax requirements can apply. Our guide on Do Nonprofits Pay Taxes? explains these distinctions.
Step 7: Review State and Local Requirements
Federal tax-exempt status is only one part of establishing and operating a church. Depending on its organizational structure, activities, and location, your church may need to meet additional state and local requirements.
These may include:
- Charitable solicitation registration or an applicable religious exemption
- State or local tax exemption applications
- Zoning, building, and occupancy requirements for places of worship
- State annual reports or other required filings
- Employment-related registrations and tax obligations
Many states provide charitable solicitation registration exemptions for qualifying religious organizations. However, the conditions and any required documentation vary. Some churches may also be exempt from certain state reporting requirements.
Check with your state's designated filing agencies and relevant local authorities to understand which requirements apply to your church.
Churches also have a special federal annual filing exception. According to the IRS annual filing requirements, organizations that qualify as churches under IRS rules are generally not required to file Form 990, Form 990-EZ, or Form 990-N. However, they may still have other tax and reporting obligations, including certain employment tax filings.
Ready to Start Your Church?
Starting a church involves more than establishing a place of worship. Clear leadership, sound governance, and an understanding of your legal responsibilities can help create a strong foundation for your congregation.
If you decide to incorporate, Beacon Nonprofit can help you form your religious nonprofit. Beacon also offers 501(c)(3) application assistance for eligible organizations seeking formal IRS recognition.
- IRS. Instructions for Form 1023, including Schedule A for Churches.
- IRS. Instructions for Form 1023-EZ and Eligibility Requirements.
- IRS. Churches, Integrated Auxiliaries, and Conventions or Associations of Churches.
- IRS. Get an Employer Identification Number.
- IRS. Charitable Solicitation State Requirements.
Frequently Asked Questions
No. Churches that meet IRS requirements under section 501(c)(3) generally qualify for federal tax exemption without filing an application. Eligible donations to these churches may also be tax-deductible without an IRS determination letter. However, a church may voluntarily submit Form 1023 to obtain formal recognition from the IRS.
The timeline depends on your church's organizational structure and state requirements. Establishing leadership, preparing governing documents, and organizing your congregation can take several weeks or longer. If you choose to incorporate, state processing times vary. Qualifying churches generally do not need to wait for IRS recognition to be considered federally tax-exempt.
It depends on the church's legal structure and state law. Incorporated churches generally must follow state requirements for directors, trustees, or other governing bodies. Unincorporated churches may use different leadership structures. Regardless of structure, clear governance helps establish responsibility and accountability.
Yes. Churches can pay pastors and employees reasonable compensation for legitimate services. Payments must follow applicable tax laws and should be consistent with the church's governing policies. Special tax rules may apply to ministers, including rules governing housing allowances and Social Security taxes.
A church is a type of religious organization. The IRS considers factors such as regular worship services, an established congregation, religious leadership, and a recognized form of worship when determining church status. Churches that meet section 501(c)(3) requirements generally qualify for federal tax exemption without applying, while other religious organizations may need to request IRS recognition unless another exception applies.
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