4 Compelling Reasons to Incorporate Your Church | Reynolds Law Group

In Virginia, churches were not allowed to incorporate until 2002 when the federal courts held that Virginia’s ban on the incorporation of churches was unconstitutional in Falwell v. Lynchburg and the Commonwealth of Virginia (W.D. Va. 2002). But, just because churches can incorporate, should they? Here are four reasons why your church should consider incorporation:

1. Incorporation Limits Potential Liability for Leaders and Members

While individuals are always liable for their own personal actions, incorporation substantially limits the personal liability of church leaders and members when someone brings a suit against the church. Incorporation provides a shield for the leaders and members, as the corporation is liable, rather than the individuals. This legal protection can be crucial in safeguarding the personal assets of those involved in church leadership and membership.

2. Decreased Government Interference in Property Matters

An unincorporated church in Virginia must obtain approval from the local circuit court to acquire, encumber, and transfer real property. This can be a costly and time-consuming process that involves petitioning the court for approval to buy, sell, or encumber real property. Incorporation eliminates that requirement, allowing the church to manage its property without unnecessary government interference. This can streamline operations and reduce administrative burdens.

3. Ease of Business Relationships

As an incorporated entity, the church is able to enter into business arrangements with banks, businesses, and other financial institutions. Often, such financial institutions require the church to be incorporated before they are willing to open an account or do business with them. Incorporation can facilitate smoother and more straightforward business transactions, which is essential for financial stability and growth.

4. Organizational Stability

The incorporated structure of the church creates organizational stability as members, directors, and leaders change over time. In addition, the incorporated church no longer has to inform the circuit court of changes in trustees and is better able to integrate its leadership structure into the new corporate, organizational structure. This stability can ensure the continuity of the church's mission and operations, regardless of changes in personnel.

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