Running a non-profit organization comes with many responsibilities, particularly when it comes to financial reporting. While most non-profit leaders are aware of the annual IRS 990 report, not everyone knows there’s another critical filing that can have serious consequences if missed: the state report. In this blog post, we’ll explore both the federal and state reporting requirements for non-profit organizations and explain how to avoid penalties.

What Is the IRS 990 Report?

The IRS Form 990 is an annual information return that tax-exempt organizations, including charities and non-profits, must file with the Internal Revenue Service (IRS). This form helps the IRS ensure that organizations are operating within the tax-exempt laws and regulations, providing transparency to the public and government about their financial activities.

Key Points About IRS 990:

• Mandatory Filing: All non-profits with annual gross receipts of more than $50,000 are required to file Form 990 or one of its variations (990-EZ or 990-N).
• Financial Transparency: The form provides details on your organization’s income, expenses, programs, and governance.
• Public Accountability: It’s available for public inspection, making it a key document for donors, grant-makers, and stakeholders.

How to Stay Compliant and Avoid Penalties

Non-profit compliance is essential for your organization’s financial health and reputation. To ensure you’re up-to-date with both IRS and state requirements, follow these steps:

1. Understand Your State’s Filing Requirements

Each state has different reporting requirements for non-profits. Some states may require an annual report, charitable solicitation registration, or both. Make sure you’re familiar with your state’s specific requirements and deadlines. If you operate in multiple states, you may need to file in each state where you’re registered.

2. Timely Filing

Ensure you are filing both your federal Form 990 and any required state reports by their respective deadlines. Keep track of when each report is due to avoid late fees or penalties.

3. Consult with an Accountant

Non-profit accounting can be complex, and the stakes are high when it comes to compliance. Consulting with a professional accountant experienced in non-profit organizations, like our team at Rakoty Accountants, can help you navigate both IRS and state requirements with ease. We offer comprehensive services to ensure your non-profit remains in compliance with both federal and state regulations.

4. Keep Detailed Financial Records

Accurate and up-to-date financial records make it easier to complete your annual filings on time and with precision. Use accounting software and maintain proper documentation of your income, expenses, and charitable activities.

5. Stay Informed About Changes in the Law

Tax laws and reporting requirements can change. Stay informed about any updates to both IRS and state regulations that might affect your non-profit. Subscribing to newsletters from trusted accounting firms or non-profit associations can help keep you in the loop.

Why Work with Rakoty Accountants?

At Rakoty Accountants, we specialize in providing tailored accounting and reporting services for non-profits. Our team understands the nuances of both federal and state reporting requirements and can help your organization avoid costly penalties. Whether you need help with IRS Form 990, state reports, or general accounting support, we’re here to guide you every step of the way.

Final Thoughts

Filing your IRS 990 report is essential, but it’s just one part of the compliance picture for non-profits. Don’t overlook your state filing requirements—failure to file these reports can result in significant penalties. By staying on top of both federal and state filings, you can ensure that your non-profit remains compliant and focused on its mission.

Need assistance with your IRS or state reporting? Contact Rakoty Accountants today, and let us help you navigate the complexities of non-profit accounting.

Call us at (732) 338-8807 or visit our website at RakotyGroup.com to get started.