PAYING ATTENTION TO THE DETAILS-ANNUAL FILINGS
Administrative work isn’t fun, but ignore it at your peril
Small and mid-size nonprofits are usually short on staff and often don’t understand or put off (at their peril) important reports that must be filed. We will discuss the most important reports that need to be filed annually by all nonprofit organizations.
Annual report with the Illinois Secretary of State: The Illinois Not For Profit Corporation Act requires each corporation to file a report annually listing its officers, directors and registered agent. You must list at least 3 directors on the report, and they can be officers as well. If you do not list at least three directors they will reject it and send it back to you. If you do not file it on a timely basis the organization will be dissolved which means that it will no longer have the legal protections of a Corporation.
Form 990 with the IRS: The second filing is form 990 with the Internal Revenue Service. The form is required to be filed 5 1/2 months after the close of your fiscal year. Your fiscal year could end either on December 31 or on the last day of some other month such as June 30. There are three different types of form 990 and your assets and income will determine which report you file.
If you have annual receipts of less than $50,000 you file a form 990-N which is often referred to as the electronic postcard. It is a series of 8 to 10 questions which ask about your gross income, business address and other basic items.
The next form is form 990 EZ. You must file this form if you have more than $50,000 of annual gross income but less than $200,000 of annual gross income and less than $500,000 in assets. You will need an accountant experienced in working with nonprofit organizations to file this correctly.
If you have more than $200,000 in gross income or more than $500,000 in assets you will need to file the full form 990. This is by far the most detailed form which asks about assets liabilities income and expenses and is intended to be as transparent a document as possible. You will need an accountant experienced again in the not-for-profit field in order to have it prepared correctly and filed.
You must file these forms 990 on an annual basis. If you do not file them for three years in a row your tax-exempt status will be revoked and you will not be able to solicit tax-deductible contributions. The IRS has outlined procedures for reinstating your tax exempt status, but it takes time and money.
Annual report with the Illinois Attorney General: The final form that is required is the annual report with the Illinois Atty. Gen.’s office. It is a summary of income and expenses and you must file either a financial statement or your form 990 with the form. If you do not file they will revoke your registration with the state and you will not be able to solicit funds in Illinois until you have fixed it.
These administrative duties may require significant amounts time and therefore you must have records ready when the time comes to prepare the forms. If you don’t file them, you will spend unnecessary time and expense filing the forms. You will incur penalties if you file late, and use funds that could be better used for your mission. If you need assistance, please give us a call.