Forming a religious corporation in New York is an exciting prospect. Whether you want to form a church, synagogue, temple, mosque, or another place of worship, New York’s culture of inclusion and faith is on your side.
If you are seeking to form a religious corporation in New York, you must comply with New York State Religious Corporation Law and Not-for-Profit Corporation Law (NPCL). Complying with these sets of policies allows your religious corporation to secure and maintain its tax-exempt status, which is an integral component of being a not-for-profit corporation.
Forming Your Religious Corporation in New York
As you embark on the exciting process of forming a religious corporation, consider these policies to which you must adhere. Luckily, having a real estate attorney who also practices in the area of Religious Corporation Law on your side can make this potentially complex process into a smooth rather than arduous one.
For a free consultation with the team at Berger, Fischoff, Shumer, Wexler & Goodman, LLP, contact us today.
First Steps To Becoming A 501(c)(3) In New York
Your non-profit corporation should be classified as a 501(c)(3) organization, but it takes a few initial actions to secure this status.
1. Choose directors
To qualify as a non-profit in New York, you must choose three individuals over the age of 18 to serve as directors. The process of becoming a 501(c)(3) also requires some thought as to your corporate structure. How many individuals will be on the board? How many directors will there be? We’ll discuss bylaws later on, but it’s worth mentioning that forming a corporation means forming its structure, as well.
2. Choose a name
This is a fun part of the process, but you’ll be surprised to learn how complicated it can be. That’s because New York has all sorts of religious corporations that exist already — finding a unique, distinguishable name is the challenge. Your name must be distinct from any other corporation, limited liability company, partnership, etc., that is already on-file with the New York Department of State.
To get a sense of whether your proposed name is eligible, you can use the Department of State Corporations, State, Records, and UCC website. Enter your “Business Entity Name” and search the database. Take note that this database search might not provide a comprehensive list of all corporations, LLCs, and limited partnerships. Rather, you might have to perform a written request to the Division of Corporations for these results.
Additionally, you’ll want to take note of certain phrases that are disallowed or restricted. Look at the Restricted or Prohibited Words and Phrases database for reference.
3. Create compliant bylaws
You must create bylaws that comply with New York state law. In general, the purpose of bylaws is to provide rules and procedures that will govern the internal operations of your corporation. How you elect new board members, how you hold meetings, and how you manage corporate formalities are all dictated by bylaws.
4. File the appropriate documents
To officially begin the process of creating a non-profit in New York, you need to file a certificate of incorporation with the office of the county clerk of the county in which the place of worship or office of such corporation is or is intended to be located. This process requires you to list basic information pertaining to your religious corporation. Here is a list of information you should expect to provide, albeit not comprehensive:
- Religious corporation name
- Non-profit type
- Names and address of initial three directors
- Duration (for short-term formations)
- Registered agent, if applicable
- Distribution of assets upon dissolution
Filing For New York and Federal Tax Exemptions
Once you’ve gone through the Certificate of Incorporation process, you must solidify your status as a tax-exempt organization for the purposes of federal and state taxes.
1. IRS Form 1023
Form 1023, or Application for Recognition of Exemption Under Section 501(c)(3), is the form you must fill out with the Internal Revenue Service (IRS) to be recognized as a tax-exempt organization.
While just a singular form, this tax form is incredibly detailed and organization-intensive. Here, it really helps to work with a real estate attorney who has an understanding of 501(c)(3) corporations and tax law. A real estate attorney can provide guidance for filing these forms, including whether your religious corporation might be eligible for a Form 1023-EZ, which is much simpler, rather than the Form 1023.
2. New York Tax Exemptions
Form 1023 (or 1023-EZ, in some cases) covers exemption from federal taxes. You must still file for state tax exemption through the New York Department of Taxation and Finance.
Your religious corporation might qualify for some tax exemptions and not others, so it behooves you to speak with a real estate lawyer who can provide guidance as to your specific exemptions.
Conflict of Interest Policies
The lists we’ve compiled above are not comprehensive; rather, they’re meant to illustrate the general legal process for forming a religious corporation and becoming eligible for tax-exempt status.
There are other formalities and processes required by the state. For instance, New York requires that non-profit organizations fill out a Conflicts of Interest Policy. This policy ensures that directors, executives, and other stakeholders make decisions in the best interest of the corporation — and not for the interests of other parties.
Another key aspect of forming a religious corporation is anticipating liability. Where might your corporation be susceptible and what can you do now to minimize this risk? Common liabilities for religious corporations generally arise from:
- Use of land and property ownership
- Organization structure
- Acts of negligence
Reducing liability requires strategic, big-picture thinking — which is where a real estate law firm proves to be especially valuable.
New York State Religious Corporation Law
As we mentioned, the actions you take to form a religious corporation are pursuant to the New York State Religious Corporation Law. There are specific guidelines you must follow to qualify for and maintain religious corporation status.
The best way to ensure that you’re compliant is to work with a real estate attorney who also practices in the area of Religious Corporation Law as your partner as they understand the nuances of New York State Religious Corporation Law and can advise you thereon.
Working With Berger, Fischoff, Shumer, Wexler & Goodman, LLP
Our law firm, Berger, Fischoff, Shumer, Wexler & Goodman, LLP, has a dedicated religious corporation team.
In addition to assisting with the formation process, our real estate attorneys can also provide services related to:
- Selling, financing, or leasing a religious corporation property
- Dissolving a religious corporation
- Resolving religious corporation disputes
When it comes to corporate litigation prosecution and defense, dispute resolution counseling, and strategic planning, our attorneys take a pragmatic, customer service-first approach. Plus, we offer a concierge service to make working with us as convenient and cost-effective as possible. Check out our testimonials to see what clients have to say about Berger, Fischoff, Shumer, Wexler & Goodman, LLP.
For more information about our religious corporation legal services, contact a law firm team member today. We have offices on Long Island and in New York City, so we’re available for counsel throughout the state.