Incorporating a Not-for-Profit

Question:
Our church has been meeting for 3 years. When should we incorporate ourselves?

Answer:
The short answer is you should have incorporated 3 years ago. Please talk to an attorney ASAP and file immediately. It will vary by state but should take about a week and cost around $500. After that you need to file for your not-for-proft status immediately also. This will take about 3-6 months to receive a response back from the IRS.

I can not stress the importance of correcting this situation enough. If you are not incorporated and have your not-for-profit status you are in a very vulnerable spot. First all the contributions you have received are not tax deductible for your congregants. Second those contributions are income to the church and I am not sure who would be respsonsible for paying taxes on them. Third, I am guessing that you are probably not handling payroll properly either by filing the correct payroll returns and year-end documents. Finally, in the event of an audit the tax consequences will be severe but not nearly as bad as the penalties they will tack on.