Nonprofit Guide
Nonprofit accounting and Form 990, explained.
What boards and executive directors need to know about fund accounting, annual IRS filings, and audits — from a CPA firm in Rio Rancho, New Mexico that serves nonprofits nationwide.
Which IRS return does your nonprofit file?
Most tax-exempt organizations file an annual return. Which one depends on your size. Churches and certain other organizations have special rules.
| Return | Who files it | Notes |
|---|---|---|
| Form 990-N (e-Postcard) | Gross receipts normally $50,000 or less | A short electronic notice filed with the IRS each year. |
| Form 990-EZ | Gross receipts under $200,000 and total assets under $500,000 | A shorter version of the full return. |
| Form 990 | Gross receipts of $200,000 or more, or total assets of $500,000 or more | The full annual information return, including governance and program details. |
| Form 990-PF | Private foundations, regardless of size | Has its own rules for investment income and distributions. |
Thresholds are set by the IRS and can change. Confirm the current rules or ask us before you file.
What good nonprofit accounting includes
Fund accounting
Nonprofits track money by purpose, not just by account. Net assets are split into those with donor restrictions and those without, so every grant and restricted gift can be traced to how it was spent. Clean fund tracking is what lets you answer a funder’s or auditor’s questions quickly.
Grant and restricted-gift reporting
Funders often want expense reports that match their budget categories. Setting up classes or funds for each grant from the start makes those reports a few clicks instead of a scramble at deadline.
Functional expenses
The Form 990 asks you to split expenses into program services, management and general, and fundraising. Reasonable, documented allocation methods keep those percentages defensible.
Board-ready financials
Boards need a statement of financial position, a statement of activities, and a budget-to-actual comparison they can read in a few minutes — not a raw ledger export.
A nonprofit CPA in Rio Rancho, serving New Mexico and beyond
C3CPA works with nonprofit organizations in Rio Rancho, Albuquerque and across New Mexico, and with mission-driven groups nationwide. We handle the accounting your board and funders depend on, so staff can stay focused on programs.
Nonprofit accounting and Form 990 preparation
Fund accounting, grant reporting and annual IRS filings.
Audit, review and compilation services
Independent financial statements for funders, lenders and boards.
Fractional CFO for nonprofits
Budgeting, cash-flow forecasting and board reporting on a flexible basis.
Nonprofit accounting FAQ
- When is Form 990 due?
- Form 990, 990-EZ and 990-N are due by the 15th day of the fifth month after your fiscal year ends — May 15 for a calendar-year organization. Forms 990 and 990-EZ can be extended by six months by filing Form 8868 before the original due date.
- What happens if a nonprofit doesn’t file its Form 990?
- The IRS can assess daily penalties for late returns, and an organization that fails to file for three consecutive years automatically loses its tax-exempt status. Reinstating it takes time and paperwork, so it’s far easier to stay current.
- Does my nonprofit need an audit?
- Not always. Requirements come from funders, lenders, state rules, and federal grants. Organizations that spend $1,000,000 or more in federal awards in a fiscal year (for years beginning on or after October 1, 2024) generally need a Single Audit. Some funders also require a reviewed or audited financial statement at lower amounts.
- What’s the difference between nonprofit bookkeeping and nonprofit accounting?
- Bookkeeping records day-to-day transactions. Nonprofit accounting adds fund and grant tracking, functional expense allocation, financial statements for your board, and year-end support for the Form 990 and any audit.
- When should we hire a nonprofit CPA?
- Common triggers are a first large grant, passing the $200,000 revenue mark, a funder that asks for audited or reviewed statements, a board that wants clearer reporting, or a missed filing. A CPA who works with nonprofits can set up your books correctly before problems show up.
- What is fund accounting?
- Fund accounting tracks money by purpose and donor restriction rather than only by account. It lets a nonprofit show exactly how restricted grants and gifts were spent, and it feeds the net-asset classes reported on your financial statements and Form 990.
- Can you help with grant reporting and Form 990 preparation?
- Yes. C3CPA sets up grant-level tracking, prepares funder expense reports, and prepares the annual Form 990 series return and related state filings for nonprofits in New Mexico and nationwide.
- What do we need to get started with a nonprofit CPA?
- Typically your most recent Form 990, your latest financial statements or bookkeeping file, and copies of major grant agreements. Do not send Social Security or bank account numbers through the website; we will arrange secure delivery after your consultation.
- Does C3CPA work with nonprofits outside New Mexico?
- Yes. C3CPA is based in Rio Rancho, New Mexico, and serves nonprofit organizations nationwide.
This guide is general information, not tax or legal advice for your situation. More tools: nonprofit compliance calendar and our general FAQ.