BCWE Business Review!

We had an interesting question in the Sunday Business Seminar today dealing with what you do when a person who claims to be a Christian violates a trust and does you harm financially. I turned that question over to the class before answering myself to see what experiences the class had. Here is some good advice from several.

1. Do a background check or have references that you actually call for information regarding the person’s ability to do the job and their reliability to finish the work.
2. Don’t hire someone to do work that is outside their area of expertise, even if they convince you they know what they are doing.
3. Be sure that the terms of your agreement are in writing and that all the hard discussions happen before the work gets started.
4. Don’t expect that their claim of Christianity or even their faithful church attendance will be the sole determining factor in whether or not they will do what they say.

This is great advice and should be considered before doing business with anyone.

Corporations are all about protection from liability. Read about the LLC and then consider what the Bible says about our protection from our sin debt in Jesus Christ.

Limited Liability Companies: This is a great way for a business to be formed when only a small number of owners are contemplated. It is flexible and provides a limited level of liability to its owners. The members (shareholders) can be individuals, or other corporations.
1. Kinder gentler corporation: Even though they are companies and not corporations, they enjoy the similar benefits.
a. Lower requirements on the normal corporate structure such as less administrative paperwork and no requirements for shareholder or annual meetings. No board of directors is required.
b. The limit on liability means that the members or shareholders are protected from the liability and debts of the corporation.
c. Check the box taxation: The LLC can elect to be taxed as a sole proprietorship, C or S corp. or partnership.
d. Membership interests can be assigned. The profits and losses can be assigned to a third party without assigning the ownership.
2. Things to beware of: This relatively young form of doing business and as such, it does not have an abundance of testing in court.
a. Some states are beginning to levy a “franchise” or “margins tax” on LLCs as a way to charge them for the privilege of doing business.
b. Raising capital for an LLC can be more difficult because of its flexibility and looseness of structure. It can operate without an oversight board of directors and does not require annual shareholder meetings. It can actually run without an operating agreement.
c. It is often difficult to understand the management structure of and LLC, i.e. who is in charge.
We are protected from our largest debt in Jesus Christ

1. Justification happens through Jesus Christ. Justification is the act of God whereby our legal standing in heaven is changed and God declares us righteous.
a. Romans 3:21-31 Our faith in His work justifies us.
i. The righteousness of God is Jesus Christ. He is sinless and completely pure in every way.
ii. The righteousness of God by faith is the believer. He has been made pure and sinless in the eyes of God. He still sins (not as a practice but because of human frailty) but his sins are taken away in Jesus Christ.
b. We all share one common trait. Romans 3:23 We are sinners and we disobey the law of God. That creates a liability on our part. A massive debt that we have incurred. We operate with a free will.
c. Freely we can have this legal standing changed. Romans 3:24
d. The satisfaction, appeasement, or propitiation for that death comes through faith in His blood. The blood is the payment and the protection.
e. Romans 3:25 The declaration of His righteousness is for His work on the cross bearing the sin of all the world, dying willingly because it was all our sin and not His.
i. He took sin to Hell where it belongs and left it there.
ii. Rose from the grave victoriously over sin. He paid its full debt and penalty for all men. The declaration of His righteousness was ordained by God for us.
f. Now He is (Romans 3:26) just (righteous) and also the justifier of all them that believe.
i. He is righteous and He makes those that believe in Him righteous.
ii. Romans 4:5 our faith is counted for righteousness. (Romans 3:2 Not by our works.

From Richard Hammer (Church Law Today)

Advantages of incorporation

In general, a church can either be a corporation or an unincorporated association. In the past, incorporation had a number of advantages over the unincorporated form of organization, including the following:

a corporation, unlike an unincorporated association, can own or transfer property in its own name

a corporation, unlike an unincorporated association, can enter into contracts or other legal obligations

a corporation, unlike an unincorporated association, can sue or be sued

the members of a corporation, unlike the members of an unincorporated association, are not personally liable for the acts of other members

In recent years, many states have enacted laws that treat unincorporated associations similarly to corporations, at least in some respects. In many states, unincorporated churches can own property in the church’s name (instead of in the name of trustees), and they can enter into contracts and sue or be sued. In some states, these laws result in there being very little difference between incorporated and unincorporated churches.

The one advantage to corporation status is that it insures that individual members of a church cannot be personally liable for the debts and obligations of the church, or for the acts of other members. Of course, members can be personally liable for their own acts. But if a church is incorporated, a member cannot be personally liable for the acts of another member. To illustrate, assume that a member molests a child, and the child’s parents sue the offender and the church. A jury awards $1 million in damages. The church has no insurance or assets to cover this judgment. Can other members be personally liable? Not if the church is incorporated, since incorporation insulates members from personal liability for the acts of other members.