NFPs: How to Complete Form 990 Avoiding Common Mistakes?
It is imperative for not-for-profit
organizations to diligently choose the appropriate Form 990 return each year to
steer clear of incurring hefty penalties for noncompliance. An incomplete or
erroneous recovery may lead to rejection by the IRS, particularly when filing
electronically. Thoroughly reviewing and correcting common filing errors
reported by the IRS is vital to ensure precise preparation and review of IRS
Form 990 returns before submission.
The most common cause of IRS 990
return rejection is incomplete or absent schedules. It is crucial to use the
proper return for the corresponding tax period and remember that specific
non-profit organizations are barred from filing Form 990-EZ and 990-N.
How to complete Form 990 without committing any mistakes?
Sell your firm’s purpose: Providing comprehensive details regarding
your organization’s programs and ongoing efforts toward accomplishing the
not-for-profit’s original goal is essential. State that your organization is
deeply committed to serving the needs of your community by implementing a wide
range of programs that fulfill specific requirements.
1. Report all the income and revenue: For an accurate and factual representation of your company’s financial standing or situation, a thorough review of Part VIII of Form 990 is vital. This section decently offers a comprehensive and detailed account of your revenues and income, which serve as the basis for the “revenue” summary in Part I. By carefully examining this section, we can ensure that our financial reports prepared for you are reliable and transparent.
2. Showcase
formal job descriptions: It is
crucial to establish a comprehensive board policy that clearly outlines the
individuals influencing the organization’s governance before completing the
first Form 990. When listing the individuals on Form 990, it is essential to
note that each person can only be designated one of the following titles unless
they are both an officer and a trustee or director:
·
Former
·
Highest
compensated employee
·
Key employee
·
Officer
·
Institutional
trustee
·
Individual
trustee or director
By adhering to these guidelines and
ensuring that each individual is designated the appropriate title, the report
of your organization’s leadership and governance structure is accurately and
transparently prepared
The Bottom-Line
For non-profit organizations, completing an accurate Form 990 every year is essential regardless of whether they choose to e-file or submit a paper return. It is where our accounting specialists’ expertise can prove invaluable.
Prudent Accountants, one of the finest
CPA firms in Minneapolis, can
assist organizations in navigating the complexities of Form 990 and ensure that
all necessary information is included to avoid costly errors or omissions. With
our years of experience and knowledge of non-profit accounting and compliance,
we can help minimize the potential risks of errors and ensure that your
organization’s Form 990 is completed promptly and accurately in Minnesota.
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