I personally encourage all churches to incorporate. The main reason is a liability issue. If someone were to sue a church and win, if the church is incorporated, they can only go after the assets of the corporation.

If the church is not incorporated, they can go after the assets of not only the pastor and board members, but also the individual members of the church. There is an example of a church in Texas that had an award against them for about 5 million dollars but the liability insurance only covered 1 million. They were going after the individual members for the other 4 million dollars. I have looked for the specifics of the case but have been unable to recall where I saw this information.

Reporting requirements for incorporated churches are the same as unincorporated. They both still operate the same way. I have checked with a couple of my CPA friends and they are in agreement with me. I hope this helps you in some way.

Last update on 10/4/06
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