Who Should Prepare a Nonprofit's Form 990?

A nonprofit’s Form 990 should be prepared by someone who understands both tax-exempt organization reporting and the organization itself.

That may be an experienced internal finance professional, CPA, tax professional, or nonprofit tax specialist.

For many organizations, especially those with significant grants, multiple programs, complex compensation arrangements, related entities, fundraising activity, or other reporting complexity, working with a tax professional who regularly prepares nonprofit returns can reduce risk and improve the quality of the filing.

Form 990 is more than a tax return.

It is also a public-facing financial and governance document.

Why Form 990 Matters Beyond Tax Compliance

Form 990 provides information about an organization's:

• revenue and expenses;

• assets and liabilities;

• programs and mission;

• executive compensation;

• governance;

• fundraising;

• grants;

• related organizations;

• transactions with insiders; and

• other activities.

With limited exceptions for certain information, Form 990 is subject to public inspection. That means donors, grantmakers, journalists, regulators, prospective board members, employees, and other stakeholders may review it.

For that reason, the filing should be approached as both a compliance document and an important public representation of the organization.

Can a Nonprofit Prepare Its Own Form 990?

Yes.

There is no general requirement that a CPA prepare Form 990.

An organization with experienced internal staff may choose to prepare the return itself.

The more important question is whether the person preparing the return understands:

• nonprofit tax rules;

• the Form 990 instructions;

• required schedules;

• public support calculations;

• compensation reporting;

• governance disclosures;

• related-party transactions;

• fundraising disclosures;

• unrelated business activity; and

• the organization’s underlying accounting records.

A technically simple organization may be able to handle the filing internally.

As complexity grows, the risk of incorrect or incomplete reporting generally increases.

When Should a Nonprofit Consider Using a CPA or Tax Professional?

Outside expertise may be particularly valuable when the organization has:

• significant annual revenue;

• multiple programs;

• numerous grants;

• federal funding;

• complex restricted contributions;

• related organizations;

• substantial fundraising activity;

• lobbying or political activity;

• unusual compensation arrangements;

• transactions with officers or board members;

• foreign activities;

• investment income;

• unrelated business activity;

• significant noncash contributions; or

• major changes during the year.

Organizations undergoing their first audit or experiencing rapid growth may also benefit from closer coordination between the financial statements and Form 990.

Not Every Tax Preparer Specializes in Nonprofits

A preparer may be highly competent with individual or business tax returns without routinely working with tax-exempt organizations.

Nonprofit leaders should ask prospective preparers:

• How many Forms 990 do you prepare each year?

• What types and sizes of nonprofits do you serve?

• Do you regularly prepare the schedules relevant to our organization?

• How do you reconcile Form 990 to the financial statements?

• Who will actually prepare and review our return?

• How are technical questions handled?

• How do you identify governance or reporting issues before filing?

Experience with nonprofit organizations matters because Form 990 contains questions that extend well beyond traditional taxable-income calculations.

Form 990 Should Reconcile to the Financial Records

Before filing, the organization should understand how the return connects to its accounting records and financial statements.

That may include reconciling:

• revenue;

• expenses;

• assets;

• liabilities;

• net assets;

• functional expenses;

• compensation;

• grants;

• fundraising activity; and

• other significant amounts.

Differences may be legitimate, but they should be understood.

The tax preparer should not be handed a trial balance with no context and expected to reconstruct the organization's financial story independently.

Management Still Owns the Return

Using an outside CPA or tax preparer does not transfer responsibility for the return away from the nonprofit.

Management is responsible for providing accurate and complete information and should understand the significant positions and disclosures included in the filing.

An authorized officer must sign Form 990. The IRS instructions specify that the return must be signed by an authorized current officer, such as the president, vice president, treasurer, assistant treasurer, chief accounting officer, or another authorized corporate officer.

The preparer can provide expertise.

The organization remains responsible for the information being reported.

Should the Board Review Form 990?

A board review is a strong governance practice for many organizations, although federal tax law does not require the governing body to review Form 990 before filing. The IRS does, however, ask organizations to disclose whether a complete copy of the final Form 990 was provided to voting members of the governing body before filing and to describe the review process, if any.

That makes the review process visible on the return itself.

A practical approach may include:

1. Management reviews the draft.

2. The preparer resolves questions and updates the return.

3. The finance or audit committee reviews significant disclosures.

4. The final return is provided to the board before filing.

5. An authorized officer signs the return.

The exact process should fit the organization's governance structure.

What Should the Board Focus On?

Board members do not need to independently recalculate every tax form line.

They should understand the sections that communicate important information about the organization.

That may include:

• mission and program descriptions;

• significant revenue sources;

• executive compensation;

• governance disclosures;

• related-party transactions;

• fundraising activity;

• major grants;

• public support;

• financial results; and

• significant changes from the prior year.

The board should also ask whether the Form 990 tells a story that is consistent with what it understands about the organization.

Pay Particular Attention to the Program Service Descriptions

Form 990 asks organizations to describe their significant program services.

These narratives can be some of the most visible portions of the return.

They should accurately explain:

• what the organization does;

• whom it serves;

• significant accomplishments; and

• how major programs support the mission.

This should not be treated as generic boilerplate carried forward indefinitely.

Program descriptions should be reviewed each year to ensure they still accurately reflect the organization.

Review Governance Questions Carefully

Part VI of Form 990 includes questions related to governance practices, policies, and board oversight.

These questions address matters such as:

• board composition;

• independence;

• conflicts of interest;

• documentation of meetings;

• Form 990 review;

• compensation-setting processes; and

• certain governance policies.

Some of these practices may not be legally required simply because Form 990 asks about them.

But the answers are public and can provide stakeholders with insight into how the organization is governed.

Compensation Reporting Deserves Careful Review

Compensation reporting can become complex when an organization has:

• highly compensated employees;

• officers with multiple roles;

• related organizations;

• incentive compensation;

• retirement arrangements; or

• other reportable benefits.

Leadership should make sure the preparer has complete compensation information and understands which individuals must be reported.

The board should also understand how compensation-setting practices are described on the return.

Related-Party Transactions Can Trigger Additional Reporting

Transactions involving:

• officers;

• directors;

• key employees;

• substantial contributors; or

• related organizations

may trigger additional Form 990 disclosures.

Examples could include:

• loans;

• business transactions;

• grants;

• compensation arrangements; or

• transactions involving family members.

These areas warrant particular attention because they can raise both technical tax and governance considerations.

Coordinate Form 990 With the Financial Statement Audit

If the nonprofit has audited or reviewed financial statements, the tax preparer should generally have access to the final financial statements and relevant audit information.

That helps coordinate reporting of:

• revenue;

• expenses;

• net assets;

• functional expenses;

• grants;

• contributions; and

• other financial activity.

Form 990 and GAAP financial statements are not identical, so some differences are expected.

But unexplained differences can create confusion for management, the board, funders, or other readers.

What If the Organization Has Federal Funding?

Federal funding can create additional reporting complexity.

A nonprofit may need to coordinate:

• Form 990;

• audited financial statements;

• the Schedule of Expenditures of Federal Awards;

• Single Audit reporting;

• grant reports; and

• other compliance filings.

Those reports should be consistent where they are measuring the same underlying activity, even when different reporting frameworks create legitimate differences.

The Paid Preparer Has Responsibilities Too

When someone is paid to prepare Form 990, the IRS generally requires that preparer to sign the return, provide a preparer tax identification number, complete the paid-preparer section, and provide a copy of the return to the organization.

That is another reason organizations should know who is actually preparing the return, rather than evaluating only the name of the firm on the proposal.

Questions to Ask a Prospective Form 990 Preparer

Before selecting a preparer, consider asking:

• How much nonprofit tax work do you perform?

• How many Forms 990 do you prepare annually?

• Who will prepare our return?

• Who will review it?

• How do you handle complex nonprofit reporting questions?

• Do you reconcile the return to our financial statements?

• How do you communicate missing information?

• Will you identify governance or reporting issues you notice during preparation?

• What is your expected timeline?

• How do you securely collect supporting documents?

• What is included in the quoted fee?

The objective is to understand both technical experience and the process the preparer will use.

Common Form 990 Preparation Mistakes

Common problems can include:

• copying prior-year answers forward without reconsideration;

• outdated program descriptions;

• incomplete governance disclosures;

• incorrect compensation reporting;

• inconsistent financial information;

• missed related-party disclosures;

• incomplete schedules;

• misunderstanding donor or grant activity;

• failing to coordinate with audited financial statements; and

• allowing the board too little time to review the final return.

Many of these problems are easier to prevent when preparation begins early.

When Should Form 990 Preparation Begin?

Organizations should not wait until the filing deadline to start gathering information.

Preparation can begin shortly after year-end by assembling:

• final financial statements;

• trial balance;

• compensation information;

• board and officer listings;

• donor and grant information;

• related-party disclosures;

• governance information;

• program descriptions; and

• prior-year returns.

Starting earlier provides more time for management and board review.

The Bottom Line

There is no rule that every nonprofit must hire a CPA to prepare Form 990.

The right preparer is someone who understands:

nonprofit tax reporting

the organization's financial statements

its programs and funding environment

governance disclosures

and

the public nature of the return.

For simpler organizations, that expertise may exist internally.

For more complex nonprofits, using a CPA or tax professional with meaningful nonprofit experience can provide valuable technical support and an additional level of review.

Regardless of who prepares it, management and the board should treat Form 990 as more than an annual compliance exercise.

It is one of the most visible financial and governance documents the organization produces.

How Bilotta & Company Can Help

Bilotta & Company, CPAs, LLC provides Form 990 preparation and tax compliance services for nonprofit organizations, alongside financial statement audits, reviews, Single Audits, accounting, advisory, and ongoing financial stewardship.

Our approach connects the tax return to the broader financial picture rather than treating Form 990 as an isolated filing.

For organizations that need ongoing financial support beyond annual compliance, our Nonprofit Navigator® Financial Stewardship program can also provide accounting, controllership, board reporting, forecasting, compliance coordination, and fractional financial leadership.

Explore Nonprofit Tax Services →

Related Resource: What Financial Reports Should a Nonprofit Board Review? →

Visit the Nonprofit Financial Resource Center →

This article is provided for general educational purposes and should not be considered tax, accounting, legal, or governance advice for a specific organization.