Legal Filing Requirements
This is a legal document that needs to be filed with the state or province that the organization operates and resides in. Most states in the U.S. require filing Articles of Incorporation, and most provinces in Canada require filing Articles of Association. The name of these documents may vary based on your state or province to form certain legal entities, such as a corporation.
It is important to note that this is a document that your church should keep permanently.
Make sure your Articles of Incorporation meet all the state and provincial requirements for a non-profit. Many churches hire attorneys to draft the Articles of Incorporation. If you are unsure of your requirements as an organization, we encourage you to consult a CPA or attorney for further guidance.
As a newly incorporated entity you must file with the Internal Revenue Service or Canadian Revenue Agency to obtain an Identification Number. This is needed to set up payroll (as this establishes your payroll tax account), to open bank accounts, and to file tax returns if necessary.
Filing for an identification number can be done online or by paper filing.
After filing for the identification number, you will receive an IRS or CRA Determination Letter. It is important to thoroughly review this document to make sure the organization stays compliant with all non-profit guidelines.
Along with a Federal Employer Identification Number, you may also be required to obtain a State Employer Identification Number in any state that you have payroll in. This will allow you to withhold taxes from your employees to forward to the state taxing agencies. Application methods vary by state. If you are unsure of your requirements consulting a CPA may give you the answers you need.
Although the name of this document and submission methods may vary state to state, a document naming the officers and executives of the organization must be filed with the state that the organization operates and resides in. The officers should include at least a CEO, a Treasurer, and a Secretary. The titles of your officers may also vary state by state. For example, State A may require you to list a CEO, while State B may require you to have a President.
These are two names for the document that is adopted at the time that the corporation is incorporated. This usually happens at the first board meeting. The document outlines important subjects such as how the corporation will handle important events such as board/member meetings, how executives are hired/fired, what kinds of executive positions are available, the calendar year, etc. Make sure your Bylaws/Articles of Association are in line with how you operate your church. It is important to note that this is a document that your church should keep permanently. However, it is good business practice to review the bylaws at least once every 3 years, or any time major operational changes are made. If you are unsure of your requirements you may want to consult an attorney in your state or province as requirements may vary based on where you are operating.
Churches should operate and hold meetings as specified in their bylaws. While the legal requirements to have meetings varies based on your state, province and organization type, it is generally considered best practice to hold at least one annual meeting per year. At the meeting the church has the opportunity to conduct business such as presenting and approving pastors, elders, and other officers. It is also a time to present the budget for the following year, approve the prior year’s financials, and take care of any other business that must be approved by either the congregation or elder board.
Here are some of the Best Practices for scheduling Annual Meetings:
- Inform the congregation well in advance—your Bylaws will usually specify how far in advance they must be notified;
- Create an agenda;
- Have handouts;
- Prepare minutes after the meeting and make them available for the congregation to confirm the business conducted at the meeting.
Board Members and officers have many duties, and a few to consider are listed below:
Fiduciary Obligation: Board Members and Officers have an obligation to operate in the interest of the organization they are employed by and may have to legally prove they operated in the interest of the organization if a lawsuit or investigation were to ever occur.
Duty of Care: Board Members must prove that sufficient due diligence is performed when making corporate decisions. Due diligence may consist of getting multiple bids for projects and making sure decisions are discussed and a consensus is reached before moving forward with a decision. Making sure all decisions are documented in board minutes is important in case a certain decision ever comes into question.
Duty of Loyalty: Decisions must be made that place the interests of the ministry first.
Duty of Obedience: Board members must ensure that the organization is fulfilling its purpose and mission.
As an organization you have legal requirements for keeping sufficient documentation. The types of documents that need to be kept range from legal entity documents to payroll documents and accounting records. It is important to have a federal, state, and provincially-compliant record retention schedule and to follow it.
Most Legal Entity Documentation should be kept permanently in a safe location that is easy to access, preferably in both paper and electronic form. A few examples of “Legal Entity Documentation” include:
- Articles of Incorporation
- Bylaws/Articles of Association
- EIN/BIN Paperwork
- IRS/CRA and State Non-Profit acceptance forms
- Organizational Mission and Value Statements
- Board Meeting Minutes
If you are unsure of what legal documentation you must keep on file speaking with a qualified attorney is encouraged.
Examples of Human Resources documents include:
- Employment offers and termination letters
- Federal, State, and Provincial Payroll Documentation
- Payroll Records
- Insurance and other benefit documentation
- Employee/Employer Correspondence
- Pay Rate Records
- Records of employee complaints, or injuries.
Human Resources documentation has varying retention periods that depend on the type of document. Some can range for the time that someone is employed, some can range from 3-7 years after termination, and some are required to be kept permanently. It is important to keep updated with Federal, State, and Provincial regulations for these requirements.
Examples of Accounting Documentation include:
- Bank Statements, Credit Card Statements, Mortgage Statements, and Investment Account Statements for all organizational accounts.
- Receipts that are correctly classified and noted as to their related business purpose, organized by order of occurrence. They should tie into the bank statements.
- Proof of reconciled bank accounts.
- Regularly prepared financial statements that consist of Profit and Loss, Balance Sheet, and Cash Flow Statements
- Itemized Records of donations that should tie out to amount of donation receipts issued.
Accounting Documentation record retention requirements can range from 1 year to permanent. This paperwork is important to have in good order as any audits by state or federal organizations will most likely require you to furnish your records.
Listed above are the most common types of documents. However, there may be other important documentation that is not listed above and should be retained. It is important to work with your board to set the standards for record retention and to make sure they are followed. Examples of general documentation that may be important:
- Joint Venture Agreements
- Long term leases
- Strategic planning decisions
- Organizational policies and procedures manuals.