How Nonprofits Should Prepare Their First Form 990

Estimated reading time: 12 minute(s)

Filing your first Form 990 is a milestone. It means your organization has officially crossed into the world of IRS accountability. But for many new nonprofits, it also arrives with a wave of uncertainty. What do you actually need? When is it due? And what happens if you get it wrong?

The good news: preparation beats panic every time. If you start early and understand what the IRS is actually looking for, your first filing doesn’t have to be stressful.

1. First, Know Which Form 990 You’re Filing

 Not every nonprofit files the same version of Form 990. The IRS offers several variants based on your organization’s gross receipts and total assets:

2. Understand the Filing Deadline

Form 990 is due on the 15th day of the 5th month after your fiscal year ends. For organizations on a calendar year (January – December), that’s May 15. You can request an automatic 6-month extension using Form 8868. You don’t need to explain why, just file it before the original deadline.

3. Gather Your Financial Records First

The 990 is essentially a structured financial narrative, and the IRS expects accuracy. Before you open the form, collect:

• Income records – All revenue sources (donations, grants, program service revenue, fundraising income, investment income)
• Expense records – Program expenses, administrative costs, fundraising costs (the 990 requires you to break expenses into three categories)
• Bank and investment statements – Beginning and end-of-year balances 
• Payroll records – If you have employees, you’ll need compensation data; officers, directors, and key employees earning over $100,000 must be listed by name
• Grant records – Any government grants received and reported separately 
• List of board members – Names, titles, and hours worked per week

4. Don’t Skip the Narrative Sections 

Many first-time filers focus entirely on the financial schedules and overlook Part III, the Program Service Accomplishments section. This is arguably the most important part of the form. 

Here, you describe your three largest programs by expenditure: what they do, who they serve, and what outcomes were achieved. The IRS uses this to confirm your activities align with your exempt purpose. Donors and grant makers use it too. Form 990s are public documents, and many foundations review them before making grants.

Write these program descriptions clearly and specifically. Generic language (“we served the community”) raises flags. Concrete language (“we provided 4,200 meals to food-insecure households in [city] through our weekly distribution program”) builds credibility.

Common First-Year Mistakes to Avoid 

• Filing the wrong form – Double-check gross receipts before selecting your form type. Filing a 990-N when you should have filed a 990-EZ creates compliance problems down the road. 

• Inconsistent financials – The numbers on your 990 should reconcile with your audited financials (if applicable) and your bank statements. Discrepancies invite scrutiny.

• Missing schedules – Many activities trigger additional schedules, such as lobbying (Schedule C), foreign activities (Schedule F), compensation (Schedule J), transactions with interested persons (Schedule L). Review the schedule checklist in Part IV carefully.

• Leaving compensation fields blank – If you paid anyone, including yourself or board members, those figures need to be reported. “We’re all volunteers” doesn’t exempt you from the compensation section if anyone receives payment.

• Not filing at all – Some new nonprofits assume their small size exempts them. It doesn’t. Fail to file for three consecutive years and the IRS automatically revokes your tax-exempt status.

File with Tax990

Your first Form 990 sets the tone for your organization’s financial transparency and compliance culture. Tax990 makes that first filing straightforward: guided e-filing built specifically for nonprofits, with built-in error checks, IRS-approved transmission, and support for all 990 form types.

Start your return at Tax990.com and file with confidence from day one.