Opening A Church Bank Account: Everything You Need to Know
Opening a church bank account is one of the most important tasks when starting a church.4 min read
Updated October 27, 2020:
Important Factors to Consider Before Opening a Church
Before you can qualify to file for nonprofit status, the most important thing is to form a congregation of people who share the same religious beliefs as you. The IRS stipulates that you must have three founding members who have no blood or marriage relations with you.
Steps in Opening a Church
The following are the steps involved in opening a church.
Step 1: Church Bylaws
The first step when opening a church is to draft your Church Bylaws and Belief Statement.
Why Are Church Bylaws Important?
You must draft a set of corporate bylaws and a belief statement to accurately spell out the mission of the church, your core beliefs, and the structure of your corporation.
What Are the Contents of a Church Bylaws?
The church's bylaws will define the method of governing the church. When drafting your church bylaws, consider the following questions:
- Why are you establishing a church?
- Will the church be conducting weddings and funerals?
- Will the church be engaging in community outreach programs?
- Will you be running the church on a full-time or part-time basis?
- Will the church's activities include fundraising programs?
- Furthermore, you also have to prepare a board of directors and a list of officers for your church.
Step 2: The Name and Structure of the Church
When you are trying to start a church, you need to determine whether you will be starting a basic ministry or a formal church that requires new buildings.
What Are the Factors of Structuring A Church?
When you want to determine the structure of a church, you should consider the size of the congregation and the programs you intend to perform in the church. A small community space will be enough for your religious programs if you intend to establish a basic ministry. However, a formal church with a congregation numbering hundreds will require getting a dedicated church space, as well as workers to run the church on a daily basis.
Difference Between a Church and a Ministry
A church and a ministry are different in the eyes of the law. Typically, a ministry has a small number of members and conducts simple programs. On the other hand, a church has a more significant number of members, several benefits, and its legal requirements are more complicated.
Step 3: Getting an EIN From the IRS
The IRS requires you to have an EIN (Employer Identification Number) before your church can be legally incorporated.
How to Apply for an EIN
An EIN, also called a tax identification number or withholding number, is a nine-digit number issued by the IRS as identification for your tax account.
The EIN does not affect the tax-exempt status of the church, but it is a requirement for all entities withholding income and the employee's salary Social Security taxes.
Where to Apply for EIN?
To get your EIN, you need to apply to the IRS. The best method of application is via the Internal Revenue Service's online portal at www.irs.gov.
You can also download IRS Form SS-4 online, fill the form, and then send it back via fax or mail. You will get your EIN within four office days if you faxed your application, but mailed applications can take up to five weeks before being issued EINs. You can also apply on the phone and get your EIN issued immediately.
Before applying for your EIN, be sure that all the information is accurate, as filling inaccurate information can cause delays.
Step 4: Opening a Church Business Account
When you have an EIN, you are eligible to open a church bank account and employ workers for the church.
Why Is the Church Bank Account Important?
A church needs a bank account to receive offerings, safeguard donations, and cash realized through fundraisers, deposit tax withholdings, and also settle ongoing costs of running the church.
How to Open a Church Bank Account
You can open a bank account in the name of your church when you have been assigned an EIN.
Information Needed to Open a Church Bank Account
You will need the following to open a bank account in your church's name:
- The church's bylaws
- Statement of Beliefs
- Statement of Faith
- 501(c)(3) status certification to prove your church's tax-exempt status
- Money to fund the opening balance
It's advisable to contact a bank first to inquire about their requirements to open an account as banks have different documentation requirements.
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