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A Tale of Two Pastors
Please join me as I take a few moments to share with you the tale of two men who pastored churches in different states. Though they lived almost 1,000 miles apart, they had very similar circumstances. If it was not for the one thing that distinguished their ministries, one would think they were one and the same person. Pastor Winners Let…
Read Full Article | CommentsNo Minutes? Then No Meeting!
Does Your Ministry Keep Minutes? I recently had a conversation with an administrator who had just joined the staff of his church. He mentioned that in the three months he had been there, he had found no trace of any board meeting records for the last decade. He asked what could happen if he could not find any minutes. My reply was…
Read Full Article | CommentsEmbezzlement In the Church!
Embezzlement In the Church! Did you know that the most common crime committed in the church is embezzlement? It happens more often than we are willing to admit. When we think of embezzlement, we often think of a sneaky treasurer or deacon taking money from the offering plate. Surprisingly, this is not how it typically happens. Below is a…
Read Full Article | CommentsProtect Your Church or Ministry's Assets!
Every Year Thousands of Churches Lose Assets Unnecessarily! Starting a ministry is one thing, but managing a ministry is a completely different matter! It is my experience that many ministries have a much more difficult time managing their ministries than they do starting them. Don't you know that the call to preach is also the call to stewardship…
Read Full Article | CommentsWhat Tax Forms Does My Ministry Have to Prepare in January?
January is often times busier than December! January is the time of year that many leaders make an effort to keep a resolution of better managing their ministries. Though it be a noble resolution, January may be the most challenging month of the year to keep such goals. It is the month that the ministry must prepare and file tax and informational…
Read Full Article | CommentsBecome Ordained Before the Year Ends!
Do not let the Christmas season distract you from time sensitive tax issues! This time of year, pastors and leaders get caught up in the wonderful Christmas season and enjoy weeks of celebrations, plays and time with family. I personally love Christmas and make every effort to create precious memories with my wife and children. I love to…
Read Full Article | CommentsHow to Go on Salary at the Church or Ministry!
Why Receive a Salary? In my 18 years of ministry experience, I have come to the conclusion that churches and ministries that have pastors and leaders on full time salary are much more effective in their outreach than pastors who are working full time jobs in other places. The dilemma we run into when our pastors are working outside jobs is that…
Read Full Article | CommentsCommon Mistakes Made By Ministers that May Take their Churches Down!, Part 3!
A Three-Part Series on Common Mistakes Made by Ministers! Welcome to part three of our series titled "Common Mistakes Made By Ministers." Congress has tightened its grip on the legislation that governs the way nonprofits, including churches and ministries, handle their finances. This gives us good reason to understand the new rules and regulations…
Read Full Article | CommentsCommon Mistakes Made By Ministers, Part 2!
A Three-Part Series on Common Mistakes Made by Ministers! Last week I wrote on two common mistakes made by ministers. Most ministers fail to set up the housing allowance and self employment tax exemption correctly and in a timely manner. They believe that because they are not drawing a salary at the church, they do not need the allowance…
Read Full Article | CommentsCommon Mistakes Made By Ministers, Part 1!
I am not on salary at my church, should I still set up a housing allowance and opt out of self employment tax? This is the time of year when ministers begin to think about going on salary at the church. They wonder about setting up a housing allowance and opting out of self employment tax. When it comes to tax compliance, the most common mistake I…
Read Full Article | CommentsPastors Do Not Own Their Own Sermons!
Most Pastors Are Unaware That They Do Not Own Their Sermons! Many pastors have their sermons recorded on Sundays. They are normally saved in church archives and later used to create sermon series that the pastor sells when he travels. However, they are not aware that it is very likely that the pastor does not own these sermons, nor does…
Read Full Article | CommentsIRS Requires 30% Withholding on Love offerings to Foreign Guest Speakers!
Churches Must Withhold 30% on Love Offerings Paid to Foreign Guest Speakers! Most churches support missions and often times have foreign nationals speak at their church. Whether it be a missions conference or a special service, the love offering, or honorarium paid to the foreign guest speaker, is subject to a Non-Resident Alien withholding of…
Read Full Article | CommentsSpecial Tax Requirements for California Churches and Ministries!
The state of California has been increasing its tax compliance efforts in an attempt to raise tax revenues. Because of these increased efforts by the state, we urge churches in California to become educated about the specific tax rules and registrations that are unique to California. Below is a quick list. Franchise Tax: Every church or…
Read Full Article | CommentsEcclesiastical Authority of the Pastor!
Protecting Your Ministry is of Absolute Importance! A few days ago I had a conversation with a pastor who was ousted from his own church by the church membership because they did not like the way he was running the church. After 19 years of ministry experience, I have come to learn that when church government empowers the members to vote in and…
Read Full Article | CommentsIRS Loses Against Church!
Church In Minnesota Avoids an Audit ... At Least For Now! In February of 2009, the IRS suffered a setback in its ability to audit churches. That setback came as a result of two federal court rulings which prohibited the IRS from auditing a church in Minneapolis, Minnesota. In 2007, the IRS began an inquiry into the church's records. …
Read Full Article | Comments5 Things to Consider Before the Year Ends!
1. The $250.00 Dollar Rule for Tax Deductions Did you know that there are special rules issued in IRC 170 that specifically delegate how your church or ministry should treat donations that exceed $250.00 in value? One of the greatest blessings to your church are members who tithe and give offerings faithfully. Your church depends…
Read Full Article | CommentsCan Our Church Own a Business?
I recently received an email from one of our readers asking if their church could own a business. Someone wanted to donate a business to the church, but the reader didn't know if the church was even allowed to own and operate a business that would bring the church income. In short, the answer is yes. The church is allowed to own a business…
Read Full Article | CommentsYour Church and the Internet
What's the Big Deal with Internet Use in My Church? Technology has revolutionized the way churches connect with the community. In fact, I often wonder how we ever did church without using the Internet. My wife and I began our church when the Internet was in its infancy, and no one knew exactly where it would lead. Today, we use church…
Read Full Article | CommentsWhy I Started a New Non Profit Organization (CDC)
Outreach! Last week's article, "The Biggest Part of Receiving a Blessing is Being Ready When it Comes!," received quite a response from our readers. Many of you wanted to know why we incorporated our outreach as a separate, nonprofit corporation. Simply put, our old ideas were not working. My wife and I had big dreams for our outreach ministry. We…
Read Full Article | CommentsThe Biggest Part of Receiving a Blessing is Being Ready When it Comes!
An Outreach to Our City In 1999, my wife and I were traveling home to South Florida from a trip to Tampa. During our three hour ride home we were brainstorming outreach ideas that would help increase our church's presence in the community. We were determined to do something much bigger than ourselves. We wanted to do something that…
Read Full Article | CommentsLegislation that Makes it Mandatory for You Purchase Health Insurance
Yesterday, the House of Representatives agreed on a 1,000 page plan that completely overrides health care as we know it. The new Bill will force every American to buy health insurance. If insurance is not purchased, Americans will have to pay fines worth 2.5% of their income. Additionally, employers will be forced to provide health…
Read Full Article | CommentsGod's Provision for the Journey!
A journey of sacrifice During the 19 years that I have been in ministry, my admiration for pastors and ministry leaders continues to grow. They have chosen a life of self sacrifice, service and intercession so that others may come to know the true riches of God the Father, through His Son Jesus Christ. This journey of sacrifice often requires…
Read Full Article | CommentsGet Ready for an IRS Audit!
What are the chances of an IRS audit against my ministry? Good question! Historically, chances have been low...maybe too low. It is a well documented fact that more than 85% of churches have compliance issues. Issues that need resolution. Now that the post-denominational era has been well established, and the majority of church…
Read Full Article | CommentsThe Church Benevolence Program and the Law!
The Need for Benevolence! In the late 1990's I was pastor over a small church in South Florida. We were located in a small agricultural town; population 5,000. Most members of the church were of Mexican descent and many of them came from broken homes and had poor educations. Despite the adversity, our church did well. We had grown from 25 members…
Read Full Article | CommentsBeing a Father in the Faith
In the last 10 to 15 years the Father's heart has been awakened in men and women across the world. God the Father is raising up His people to be father's in the faith. This outpouring of the Father's heart is incredible, but just because you have a large staff of eager leaders does not mean that you are a "father in the faith." Nowhere in…
Read Full Article | CommentsCompensation for past years!
Last week we briefly covered the issue of compensating pastors for previous, un-paid years of service, and that it is perfectly legal to do so. This stems from a court case involving a church who paid a pastor and his [missionary] son in lump sums for the years of work they performed for the church without pay. The church decided to sell its building…
Read Full Article | CommentsOur church has made a few mistakes. What can we do about them?
What to do about past mistakes! Many churches that we serve have made mistakes in the the past and are wondering what they can do to correct them. These errors range from years worth of unreported love offerings, to missing W-9's and 1099-Misc forms, to lost board meeting minutes. Some mistakes, like misplaced W-9's, can easiliy be fixed, while…
Read Full Article | CommentsCan the church pay for the pastor's cell phone bill?
Most churches pay for the pastor's cell phone bill! Is that really allowed? A common practice that I see going on in many churches today is the church paying the pastor or founder's cell phone bill. Most churches do it by paying the bill directly on behalf of the pastor. Every month the pastor turns in the cell phone bill and the church writes…
Read Full Article | CommentsProtect the Pastor's Spouse!
What if something happens to the pastor? Not long ago, I had a conversation with a pastor on salary at a church. He explained how he had recently begun thinking about his wife who has been serving faithfully at the church with him for over 20 years, but without any salary. What began as a passing thought grew into a real concern: if something ever…
Read Full Article | CommentsA Lesson on the Housing Allowance! Part 2
Setting up the Housing Allowance After reading part 1 of this series you may feel a little lost. Although Congress made changes to the Housing Allowance which made it more complicated, it was forced to make these decisions because of a court case that was taking place in the Ninth Circuit Federal Court of Appeals in California. This case was an appeal…
Read Full Article | CommentsA Lesson on the Housing Allowance! Part One
The Housing Allowance is one of the best tax saving benefits that exists for pastors. Every pastor in America, whether or not he or she is on salary at the church, needs to have a housing allowance designation set up at the church. By having an allowance set up at the church, the minister will be able to save thousands of dollars every year in taxes.…
Read Full Article | CommentsAre You Really Legally Ordained
We, at StartCHURCH, have always encouraged every church in America to have its own licensing and ordination program. Whether your church has been around for many years or is a brand new start up, we believe that part of the stewardship of running a ministry is the proper (legal) ordination of those whom the Lord sets apart for the ministry. Because…
Read Full Article | CommentsHow to Decrease the Chance of a Personal Lawsuit Against the Pastor and Board!
We are living in a time and era when lawsuits against churches have increased over 2,000 percent since 1992. Litigating attorneys have found it convenient to sue churches because most churches operate under a great deal of trust. We all know that the times have changed, and it is prudent to make changes in our church operating procedures…
Read Full Article | CommentsChurch Loses Property Over Bake Sales!
Beth-El, an African-American church in the Chicago neighborhood of Englewood, purchased some property on 63rd Street in 1976. The church rehabilitated the property and established itself there. During the years that the church quietly enjoyed its existence on the property, the community improved and the church continued to grow. However, the county…
Read Full Article | CommentsA Board Meeting Without Any Board Members Present
State laws concerning board meetings require that certain criteria be met in order for a board meeting to become legally valid. At a minimum, the board members need to receive "proper notice." Every state has a provision regarding proper notice. By definition, proper notice is the number of days prior to a board meeting wherein each board member receives…
Read Full Article | CommentsTax Court Rules a Pastor's Pass Through Gifts as Taxable Income!
The IRS told a pastor that the love offerings given to him by members of the church were taxable. In disagreement, he sued the IRS in tax court stating that they were voluntary gifts given by members of the church. The tax court disputed with the pastor stating that the members were motivated to give the love offerings because they believed him to…
Read Full Article | CommentsPastor Almost Loses Church
A Washington court ruled that a church's board members were not board members because the church did not follow state law in selecting them. Moreover, because the church never officially adopted bylaws in their organizational board meeting (or at any other board meeting), the procedures followed in the church's bylaws were trumped by state law. Though…
Read Full Article | CommentsHousing Allowance Rules Most Pastors Do Not Know About!
Did you know that the 2002 Housing Allowance Clarification Act requires that every year you calculate three different scenarios to see which one will be used on your W-2? Most churches have not been following this new rule and may under an audit cause the pastor to owe back taxes. Here is how it plays out. The clarification act requires…
Read Full Article | CommentsEcclesiastical Authority and Accountability!
With increasing measure the IRS has made attempts to limit the authority of the pastor in the church. In 2006, regulation kicked in to require that the majority of the board be made up of mostly unrelated individuals. Later in that same year, regulation made it a requirement that a pastor on salary at the church not be able to vote on or set the salaries…
Read Full Article | CommentsIRS Watches Use of Church Debit Cards
Many churches allow the pastor to use the church debit card for necessary church expenses such as a car allowance, travel costs, lunches and many other things. Under the law, most of these allowances are illegal and can result in fines and back taxes for the minister. Improper use of the church debit card is of high priority on the IRS watch list,…
Read Full Article | CommentsAlabama Pastor Goes to Prison for Love Offerings!
A pastor in Alabama, Gregory Louis Clarke, was sentenced to 21 months in prison for assuming that the love offerings he received from his church were gifts to him. Over a period of several years he received many love offerings from the church for purposes such as car allowances, appreciation gifts and other offerings that he did not consider as normal…
Read Full Article | CommentsCan a Church Get in Trouble for Not Properly Handling Designated Offerings?
Often times, churches and ministries receive designated offerings for building campaigns, outreach programs or benevolence. You may be surprised to know that a large number of churches have trouble properly handling designated offerings. The main reason for this problem is that not many know what the proper procedure is for handling designated…
Read Full Article | CommentsWhat is Taxable Income for a Minister? Part 2
Yesterday you received part 1 of a series of emails titled "What is Taxable Income for a Minister?" Today we will discuss the benefits of income from book or sermon sales or the performance of weddings.Many ministers perform weddings, sell their sermons, books and other teachings in the church book store or as they travel and speak in other…
Read Full Article | CommentsWhat is Taxable Income for a Minister?
Many churches pay certain allowances as a benefit to their minister, such as a car allowance, light bills, water bills and much more. Under the law, most of these allowances are illegal and can result in fines and back taxes for the minister.When a church pays the minister allowances it does so thinking that it is allowed to pay for these items…
Read Full Article | CommentsCan Pastors Deduct Tithes as Business Expenses?
Pastors all across America work hard and are underpaid. Statistics show that the average pastor is severely underpaid; more than in any other profession. Many pastors have chosen not to opt out of having to pay social security taxes. Social security tax (otherwise known as self employment tax) is 15.3% of the pastor's income. This means that a pastor…
Read Full Article | CommentsThe IRS May Say That You Are On Salary At the Church, Even If You Believe You Are Not.
Because of the nature of our tax system, while most churches are focusing on outreach and other ministry functions of the church, many pastors and church treasurers fail to think about on taxes. Unfortunately, they miss the mark and often times under report the pastor's income.This happens because there are many pastors that are not on salary…
Read Full Article | CommentsEmbezzlement While Counting Tithes and Offerings!
Counting the church tithes and offerings is where most embezzlement of church occurs. Establishing a procedure of checks and balances is the only way to prevent it from happening. Regrettably, most pastors, though they think about it, never take the necessary measures to implement a procedure prevents this crime from happening. A church in Raleigh,…
Read Full Article | CommentsAll Ministers on Salary at Church Must Get a W-2 by January 31st
Should the Pastor Get a W-2 or 1099-Misc? Some churches give their pastors and other ministers a 1099-Misc each year for their taxes. This is not correct. A pastor must be given a W-2. Under the latest treasury regulations, a pastor is described as an employee for federal income tax purposes but as self employed for social security tax purposes. …
Read Full Article | CommentsCreating a W-2 is not an option!
Under the law, a church must issue a W-2 form to the pastor and any other employee of the church. A 1099-Misc is not the legal way to do it. Most churches do not issue a W-2 and instead give a 1099-misc to the pastor. This is not correct and greatly increases the chances of an audit of the pastor's tax return and also increases the chances of the church…
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