Forming a new organization is a big task and the steps can seem like a crazy maze. To help you through that process, we’ve developed a checklist. Not all these items apply to every church or organization, but they are a good starting point. (see the attached PDF file)
In addition, there are some common mistakes everyone can fall into when forming a church or nonprofit:
Understanding the difference between articles, EIN, nonprofit status, etc. If you haven’t started a company or something similar before, the basic vocabulary can be daunting. Here’s a little guide:
- Articles of Incorporation These are filed with the state you operate in and form the basic legal existence for your organization. Some people use an attorney or legal service to do this, which can be helpful, but not necessary. The Secretary of States’ website usually has samples and clear instructions. Just make sure you file as they type of entity you want to be – usually a nonprofit or nonprofit religious organization.
- Your EIN or TIN Your Employer Identification Number or Taxpayer Identification Number is obtained from the IRS. This is like your Social Security number for your organization and can be done online at IRS.gov. It’s important to make sure your articles have been approved and that you file the name EXACTLY as it is on our articles. It will ask you to indicate what type of organization you are and church or nonprofit is an option. There is no such thing as a nonprofit number for individual organizations (church associations sometimes get a group number so they can grant tax exempt status to their member churches).
- Tax exempt versus nonprofit once you have done these things, and have bylaws, you are officially a nonprofit. But you are not tax exempt. For that, you will need to file the IRS 1023 application which can be found on the IRS.gov website. Some will use an attorney for this but if funds are tight, the application can be reasonably navigated by a detail-oriented person.
Establish donor tracking and record keeping early. Keep every receipt, record every donation and check the IRS website for the required receipt language. Take small steps each week towards implementing an efficient system that serves your needs and keeps you compliant without too many headaches.