For Form 990 preparation, nonprofits should keep several key records to ensure compliance and accuracy:
1. Financial Statements: These include balance sheets, income statements, and statements of functional expenses.
2. Bank and Investment Statements: Regular statements from bank and investment accounts help verify the income and expenses recorded in your financial statements.
3. Receipts and Invoices: These documents support the transactions recorded in your ledgers and financial statements, ensuring that all expenditures and income are accounted for and legitimate.
4. Donation Records: Detailed records of all donations received, including date, amount, donor information, and any restrictions on the funds.
5. Grant Documentation: If your nonprofit receives grants, keep detailed records including grant agreements, reports, and correspondence to demonstrate compliance with grant conditions.
6. Payroll Records: These should detail all payments to employees, including wages, benefits, and taxes withheld, to ensure accurate reporting of compensation.
7. Minutes from Board Meetings and Bylaws: These documents are important for demonstrating governance practices and decision-making processes.
8. Conflict of Interest Policy and Documentation: This includes records of annual disclosures and how any potential conflicts have been managed.
9. Program and Service Documentation: Keep descriptions, outcomes, and other relevant details of your programs and services to illustrate your organization's mission-related activities.
10. IRS Letters and Legal Documents: This includes your IRS determination letter (confirming tax-exempt status) and any other legal documents related to the organization's status, structure, and operations.
These records are crucial for preparing a thorough and accurate Form 990, ensuring compliance with IRS requirements, and demonstrating transparency and accountability to stakeholders.
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