September 24, 2019
Getting Ahead of Form 990
Nobody likes filing taxes or paying them for that matter but don’t let that put your nonprofit at risk. While your organization may be federally tax-exempt, you are still required to file Form 990 with the IRS. This is the only way the federal government can ensure exempt organizations are conducting business in a way that is consistent with their public responsibilities. It also ensures your compliance and evaluates how your nonprofit is doing financially while allowing the public to see information about a nonprofit mission and programs.
The 990 provides a transparent glance into the organization and its accomplishments. Allowing the public to see, not only, the gross revenue generated but where the revenue came from. When individuals, donors or job seekers are trying to find out as much as possible about a nonprofit through their own research efforts, this is an excellent source of information since it serves as a tool to evaluate the best charities to support.
It’s important that you file and file on time. Your 990 is due by the 15th of the 5th month after your accounting period ends. For example, if your fiscal year ends on December 31st, your 990 would be due by May 15th of the following year. Which form you file depends on your gross receipts—you can determine which 990 form to file by visiting the IRS website to see which form category your nonprofit falls under. Take the time to complete this form and avoid losing your exempt status with the IRS—there is no appeal process. If you’re unsure of your status, check the IRS website and get back on track, you will thank yourself later.
Understanding the journey, planning ahead and being proactive, will save you time and make the filing process much easier. Following the below guidelines can help with that preparation:
- Review the audit requirements for your state. Be aware of requirements BEFORE you begin 990 prep.
- Determine ahead of time if you will need to file an extension. If you know you have an upcoming audit, keep in mind that the earliest most audits are schedules is in March or April and can last up to six weeks or longer. If this timeframe falls outside of your Form 990 due date, file an extension with the IRS as early as possible.
- Close your books. Your nonprofit has been doing this for some time now, regardless of whether or not you’ve been filing Form 990, so you undoubtedly already have a process in place for year-end accounting activities.
- Gather your documentation. Review your 990 from the previous year to get an idea of what you will need for the current year, including any schedules. You can check the IRS website to confirm which schedules you will need to file.
- Update any outdated non-financial information. Double check that your organization’s name, address, telephone number and board of directors list (names, titles and compensation) are current.
- Maintain a timeline. Provide ample time for completing the required paperwork as well as time for your board to review and provide feedback. While a board review is not required, it is strongly encouraged.
Since 990 forms are public documents and widely available, nonprofits should be diligent about filing them out correctly and filing them on time. Remember, a nonprofit’s 990 provides valuable information that speaks directly to your organizations status so the extra time spent preparing will pay off in the end. Don’t think of it as another menial task on your list of things to do but rather consider how it can affect those researching who you are—ultimately impacting the communities you serve.