Nonprofits have to let the IRS and the public know about the way they use their resources and donations to stay tax-exempt. When nonprofits file Form 990, they have to complete a balance sheet.
The Form 990 balance sheet is a statement of financial position and is essential for transparency in the nonprofit sector. Here are your step-by-step instructions to balance the Form 990 balance sheet.
What is the Balance Sheet Portion of Form 990?
Part X of Form 990, which you can find on page 11, is the balance sheet. The balance sheet shows how much money or assets your organization had at the beginning of the year, any liabilities you owe, and the number of resources you have at the end of the year.
If your organization files Form 990-EZ, click here to find out more about the balance sheet portion. To find your organization’s fund balances, subtract your liabilities from your assets. The IRS Form 990 Balance Sheet has 3 parts.
What are your organization’s assets? The Form 990 balance sheet has 15 lines for reporting different types of assets. These lines include cash non-interest-bearing assets, investments, pledges and grants received, loans, and any land, buildings, or equipment your organization owns.
Pretty much any amount of money your organization received or any property you own is reported in this section. On line 16, you add together assets from lines 1-15 and report your total assets. For more information on reporting contributions from fundraising, click here.
Your organization’s liabilities are all your expenses. Lines 17-25 let you report all your nonprofit’s different types of assets. This is where you enter any grants you need to pay, deferred revenue, loans, other liabilities (such as income tax and payments to third parties), and mortgages.
On line 26, add together lines 17-25 to get your nonprofit’s total liabilities.
If your organization follows Financial Accounting Standards, FASB ASC 958, check the box and fill out 27, 28, 32, and 33. These lines let you report net assets with and without donor restrictions. Donor restrictions are when people make donations that can only be used for specific purposes.
If your organization doesn’t follow FASB ASC 958, there is a box for you to check as well. Your nonprofit can complete lines 29-33.
Regardless of their accounting methods, nonprofits use line 33 to report their total liabilities and net assets/fund balances.
How to Complete the Form 990 Balance Sheet
Form 990 balance sheets can be complicated, but filing online with an e-file provider is a great way to avoid mistakes. ExpressTaxExempt’s user-friendly filing system makes it easy to enter and edit amounts. Error checks and internal audits ensure that your net assets and fund balances are evenly matched.
Visit this blog for more information about IRS Form 990 filing requirements for charities. When it’s time to file Form 990, we’re here to support your organization.