The IRS requires nonprofit organizations to keep certain records to remain in compliance. It’s important to keep all records in both hard and online copies in case you experience an IRS audit and for your auditors. For your records keep the following:
- Financial records
- Income: Cash register receipts, bank deposit slips, receipt books, invoices, credit card slips, 1099-MISC and keep for a minimum of 3 years
- Expenses: Account statements, canceled checks, cash register receipts, and invoices and keep for a minimum of 3 years
- Employment Tax Records: Salaries, Wages, Benefits paid, taxes withheld and keep for at least 4 years
- Asset Records: Assets including investments, buildings, and furniture including documentation such as purchase and sales invoices, real estate closing statements, cancelled checks and account statements and keep for at least 3 years
- Form 1023 application
- Articles of Incorporation with the 5 clauses of a nonprofit organization
- Determination Letter
- Board of Director Meeting Minutes
- Descriptions of your organization’s programs
- The IRS requires you track income and expenses for operations, each program and each fundraiser separately.
- Annual 990s and all related filing documentation
- You MUST file a 990 even if your nonprofit made $0 that year. Once you have your 501c3 tax exempt status, the way to stay compliant and keep it is to file every year regardless of the income you made in a year.
Public Inspection rules apply to most of your documents. This means you must make available, for free, your documentation to the public. Many organizations put their 1023 and 990s online for easy access. You are not required to share your donors information.
By following the IRS recordkeeping and tracking requirements you will be in compliance with the IRS laws and rules and keep your tax exempt status.