If you are operating a tax-exempt organization, or you’re doing the accounting and bookkeeping, you don’t have to file a standard tax return showing your income and expenses. However, you most likely will have to file the Form 990 with the IRS. To help you understand this better, our nonprofit accounting software consulting team is walking you through the various iterations of the 990 and how you can better be better prepared for it.
What Is the Form 990?
Form 990 is an annual form that must be submitted by tax exempt organizations, charitable trusts, and nonprofit political organizations. In the form, the organization must provide the following financial and structural information:
- Voting members of the governing body
- Number of employees and volunteers
- Revenue from contributions, investment, and program service
- Expenses related to benefits, salaries, and fundraising fees, along with additional expenses.
- Total assets, liabilities, and fund balances.
In addition to the financial and structural information, they must also disclose the purpose and accomplishments of the organization, including:
- A description of the nonprofit’s mission
- Any changes or additions to their program services
- Financial accomplishments, including grants and allocations to other organizations or individuals.
Finally, there is a checklist with multiple sections of yes or no questions and answers so you can accurately fill out your form with the essential information related to:
- Policies and procedures
- Governing bodies
- Key employees, officers, and directors,
- Statement of revenue,
- Statement of expenses
- Balance sheet
The form not only provides the IRS with the information necessary to determine whether or not to maintain the organization’s tax-exempt status, it also is made public so people can find out accurate information.
Nonprofits who are required to file must do so on the 15th day of the 5th month after their fiscal year. For example, if your fiscal year is from April 1st – March 31st, your form is due August 15th.
Who Files Form 990?
The outline above is the standard form, but there are several types of Form 990 and several types of nonprofits are exempt from filing.
Exemptions from Filing Form 990
- Faith-based organizations, including churches, missions, or parochial schools.
- Subsidiaries of larger nonprofit organizations
- Government corporations
- Essential state bodies
Types of Form 990
Most nonprofit, tax-exempt organizations with gross receipts of over $50,000 will file Form 990 or the 990-EZ, which is significantly shorter. Smaller nonprofits who have gross receipts below $50,000 are able to file Form 990-N, a “postcard” form that is very abbreviated compared to the standard and even the EZ. Private foundations are required to file Form 990-PF.
Choosing the Right Accounting Software for the Form 990
While many nonprofits work with a tax professional to assist them with their 990 information, the right nonprofit accounting software can do much of the work for you. Using a program specifically designed for a nonprofit, you’re able to easily keep track of information including:
- Payroll and human resources
- Grant management
- Donations and fundraising
The right accounting software for nonprofits also allows you to run comprehensive reports that make it easy to pull the data you need when you need it. On the chance you get audited, you would want the ability to pull FASB-compliant or GASB-compliant financial statements to show your revenue and expenses clearly.
Contact Us to Learn Which Nonprofit Accounting Software Is Right for You
If you want to reduce your accounting time and ensure your Form 990 is completed quickly and accurately, you need the right software to help you. Free accounting software or trying to use traditional accounting programs won’t give you the complete financial management you need.