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Annual Tax Reporting For A Tax-Exempt Organization

Even though a tax-exempt organization does not pay income tax on its revenue, it still must file an annual return with the IRS. Officials of tax-exempt entities can ensure that their organizations maintain their exempt status by filing the appropriate form each year.

Depending on the level of receipts, tax-exempt organizations are required to file only one out of three different IRS forms. The lengthy form required of a large national organization is very different from the short form required of a local animal rescue operation. For organizations of medium size, there is an applicable form. The three options are Form 990-N, Form 990-EZ, and Form 990.

Form 990-N

Organizations with revenue of up to $50,000 may file Form 990-N, which is a very short form. Form 990-N is not even available on paper and must be electronically filed. Perhaps due to its brevity, Form 990-N is also referred to by the IRS as an e-Postcard.

Exempt organizations with over $50,000 in revenue cannot file the short e-Postcard. For larger organizations, your selection of form depends on both revenue and the amount of assets owned by the organization.

Form 990-EZ

Exempt organizations that are not eligible for the e-Postcard must file Form 990-EZ if total assets are less than $500,000 and revenue is under $200,000. Form 990-EZ requires a greater amount of detailed information about revenue, expenses, and assets.

Form 990-EZ also includes a form section for listing key officials of the organization, along with their respective amounts of compensation received. Questions are also included on Form 990-EZ concerning the activities of the organization.

Form 990

Form 990 must be filed by exempt organizations with revenue of $200,000 or greater. Form 990 is also required if assets total $500,000 or more. Form 990 is quite detailed and is filed by the largest exempt organizations.

Maintaining your tax-exempt status is essential to ensure that contributions to your organization are tax-deductible to the donor. The IRS maintains a useful lookup tool that lists organizations eligible to receive tax-deductible donations. Smaller churches with receipts of $50,000 or less are automatically eligible to receive tax-deductible donations, but they are not required to file an e-Postcard.

An organization will lose tax-exempt status for itself and for donors if it fails to file the required information return for three consecutive years. Contact an accounting firm, such as Herman & Cormany, for more information about the filing requirement for your exempt organization.

About Me

financial bookkeeping tips for contractors

As a renovation contractor, I have a lot of things to worry about each day. I have to think about my customers, my business, the insurance I need and even the employees that I have working for me. All of these things keep me busy enough without having to worry about keeping up with my financial bookkeeping each day. How do you keep up with the financial bookkeeping so that you don't make any errors that could cost you a whole lot of money? I have worked with my accountant to develop a process that has helped me and I have shared the tips he has taught me right here on my blog to help you.

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