How to Start a Church in California

California is the second state in the USA after Texas, with the largest number of congregations. There are over 23,558 religious congregations spread across the state.

These churches have been at the epicenter of massive Christian revival and growth in churches globally. Most megachurches in the USA were birthed and are located in California.

But they all had to start small like you’re about to do. So, what did they have to do to start and register their churches in California?

Dive in and learn.

How the IRS Defines A Church

You have to go through a legal process to have your church registered in the state of California. The process is very similar to registering a charitable organization with specific paperwork that you need to complete and file.

Typically, a church is defined as a community of individuals sharing spiritual beliefs and who come together to worship and fellowship. According to the IRS published Tax Guide for Churches and Religious Organizations, the following characteristics outline a church:

• Distinct and separate legal existence
• A recognized creed and form of worship
• Distinct religious history
• Established locations of worship
• Its own literature
• Regular congregations that attend services
• Organization of ministers who are selected and ordained and have completed set study courses
• Distinct and definite ecclesiastical government
• Regular services hosted for religious worship and fellowship
• Formal doctrinal and disciplinary code
• Schools offering religious instruction for the congregation’s youth
• Schools that prepare their ministers
• A membership that is not associated with other churches or denominations

What You Need to Start A Church

The process of starting a church in California is relatively straightforward. One of the early steps is to draft the statement of belief and church bylaws. The church bylaws describe its purpose and how it can be governed in financial, legal, and ethical affairs.

You can get forms for drafting your bylaws and church constitution on the internet or at any office supply store. 

Once the bylaws have been drafted, the church founders must incorporate the church. The incorporation process requires some paperwork, ending with the receipt of a certificate of formation.

The certificate of formation approves the church to operate in the state of California.

As you work on the church’s incorporation and draft its business plan, there are other aspects you need to consider. These include:

• Financial aims of the church – How much money will the church need, and how will it be collected?
• Time commitment – will you run the church full-time or part-time?
• Potential members – what expectations do you have about the size of your congregation? Have realistic expectations
• Location of the church – which location will make it easier for your congregants to gather and worship?

The state of California dictates that a religious organization must have bylaws that list a board of directors, membership, and officers, plus their responsibilities. These responsibilities include:

• Providing oversight over legal compliance, finances, officers, and activities
• Acting in the best interest of the organization and its members
• Acting with reasonable care

Naming the Church

Your church should also be given a name before incorporation. A name makes your church identifiable to your organization and makes addressing legal and financial documents easier. 

Your church’s name should therefore be unique, descriptive, and distinctive. The name should also describe how your church will contribute to the ministry and its niche. 

The state of California requires that your church’s name gets approval first before you start sharing it. The name is submitted as part of the filing process with the Secretary of State. Another church or organization should not have already registered it.

You can also reserve the church name for 60 days before submitting the registration paperwork. The Name Reservation Request form is used for this purpose. It allows you to spend ample time handling the registration paperwork without worrying about the security of your church’s name.

Forming a Non-Profit

You have to incorporate your church first before applying to become a non-profit organization. Otherwise, you can remain unincorporated.

An incorporated church and an unincorporated church differ significantly in structure. Also, the officeholders and members of an incorporated church are protected from personal liability for the church’s debt. 

Registering to become a non-profit requires several documents, the first of which is the certificate of formation. Some states refer to it as the articles of incorporation. It is used to organize the church you plan to start.

IRS Form 1023

Churches in California are exempted from paying tax, but they have to fill the IRS Form 1023 to be fully registered as a tax-exempt entity. 

To successfully fill this form, your church also needs an Employer Identification Number (EIN). This number is obtained after filling out IRS form SS4. 

An EIN allows you to open a checking account and pay your employees. The state of California may also require you to get a state EIN as well, but at their discretion. You can contact the Employment Development Department in your city to determine if you need to apply for a state EIN.

You’ll also need to fill out IRS form 3500 and submit it to the California Franchise Tax Board. California charges franchise and income taxes, and a church undergoing registration must apply for tax exemption for the same.

Once you’ve successfully applied, you get issued a determination letter recognizing the exemption.

The IRS Form 1023 can be filed online or mailed as a hard copy to the address listed on the form.

Registering for a Business License

Churches in California are exempted from paying both a gross receipts tax and a business license processing fee. However, they still require a business license. 

Still, they’re classified as non-profit “religious corporations” under section 501c3 of the Internal Revenue Code. Incorporated churches are known as “C Corporation” and are formed for churches and ministries.

Hold the First Meeting and Run Your Church

Once you’ve received the certificate of formation, you must call for a meeting with a majority of the board of directors or the incorporator. You should discuss two important subjects in this meeting: insurance and church management.

Talk to several insurance providers and agents and inquire about liability coverage and workers’ compensation coverage. You need workers’ compensation coverage even if you’re only paying the pastor.

Finally, get in touch with a qualified cloud-based church management software vendor to streamline your church management and make your congregation’s acquisition, contact, and management easier.