Eight steps you need to take to build a solid legal foundation for your new church plant in the Evangelical Free Church of America.
1. District Approval
The first step in building a solid legal foundation as a church plant is to obtain your district’s approval as an official EFCA church plant. To find out which district your church plant is in, view our district map.
2. Name Reservation
Before you file any legal documents with the state or federal government, you should check on the availability of the church name you want to use. If another church in your state has the same name or a very similar name, the state will not allow you to incorporate using that name.
The process of checking name availability varies with each state. Many states have an online database you can search to see if the name you want to use is already taken. Generally you can find that by doing an online web search typing in your state’s name and the words “corporation business search.”
3. Obtain an EIN (Employer Identification Number)
Step three is to secure your EIN (sometimes called a FEIN – Federal Employer Identification Number) using the name under which you’ll be incorporating. The EIN is to a church what a social security number is to a person; the EIN is used to identify an entity. Regardless of whether or not the church has paid employees, you will need to get an EIN in order to conduct any business transactions such as opening a bank account.
You can apply online and get your EIN in about ten minutes. If you have questions or would like help with obtaining this form, please contact Laura Brice or Sarah Fergus at the EFCA national office: (800) 745-2202.
4. Obtain 501(c)(3) Federal Tax Status
We recommend filing with the EFCA to be included under the 501(c)(3) federal group exemption granted by the IRS to the EFCA. Please contact Laura Brice or Sarah Fergus, and they would be happy to send you the EFCA’s internal documents to get the church added to the group exemption roster, pending district approval.
5. Incorporate Your Ministry
The next step to becoming an EFCA church is to incorporate as a nonprofit (or not-for-profit) with the state where the church will be located. In some districts this is done very early in the process and is encouraged to be started right after step 2 (above); check with your EFCA district office. Your district may have links to state forms as well as an incorporation template that you could obtain free of charge. If your district does not have links to state incorporation forms, you can check with Laura Brice or Stacey Anderson. If your district does not have an incorporation template, then you could visit the Start Church website where you may purchase guidelines for any of the 50 states.*
Because you will be filing to be a nonprofit corporation, you will need to have a dissolution clause as part of your Articles of Incorporation. This is because no individual should personally profit from the assets of a nonprofit. If you have signed documents to have your church come under the 501(c)(3) group exemption of the EFCA, in many cases you can use statement 7 of the Request for Inclusion form as the corporation’s dissolution clause.
* Some states require a Registered Agent. Check your state’s guidelines.
6. Write Your Bylaws
Bylaws are created as a set of rules or guidelines for the operations of the corporation and should reflect the size of your church body, leaving provisions to grow as the church body grows.
7. State Sales Tax Exemption
Do not confuse the federal 501(c)(3) tax status with a state sales tax exemption. As a purchaser of goods and services, you are obligated to pay state sales tax at the point of purchase unless you complete that state’s sales tax exemption paperwork. Each state is different. Not all states charge a sales tax. Not all states charging a sales tax exempt churches from their sales tax. If your state exempts qualifying purchases by a church, you can obtain links to the proper forms through the EFCA office by contacting Laura Brice or Sarah Fergus.
8. Credentialing and Ordination
Most EFCA districts require the planter to begin the credentialing process before the plant is approved.
The planter needs to be diligent to complete credentialing in a timely manner. A document titled Steps to Credentialing describes the requirements for ministerial credentials, types of ministerial credentials, and the procedures to apply for them. You also need to check with your district office regarding the district’s procedures for writing your paper and scheduling your credentialing council.