Choosing an E-File Provider for Your Nonprofit Taxes

Mathew Tooker • Dec 21, 2021

Filing your taxes is one of the most important and most dreaded tasks for any nonprofit. After all, filing Form 990 correctly and on time is what helps your nonprofit keep its tax-exempt status — and helps you avoid paying unnecessary fees. 


Because your
taxes matter so much, it’s crucial to prioritize them during tax season and throughout the year by keeping your finances well organized. Doing this will help you avoid mistakes like incorrectly filling out forms or even filling out the wrong form! 


However, correctly filing your taxes is no simple task. Even experienced nonprofit professionals struggle with the process. For example, you might be wondering: Should I be filing a
990-N or a 990-EZ? What about my different chapters around the country? Do I file for them or do they do it themselves? How do I make sure that they all file correctly? There are so many questions when it comes to filing your nonprofit’s taxes that you may not know where to start. 


Even if you’re not a first-time filer, the process can be time-consuming and can still be confusing if the IRS changes certain rules and regulations. Even if you're only filing the Form 990 postcard, also known as the Form 990-N, you may be wasting time and energy on an ineffective filing process.


Fortunately, investing in an e-file provider can not only save you time, but it can also ensure that you don’t make avoidable mistakes like filing late or submitting incorrect or incomplete forms. The last thing you want to do is pay hefty fines or have to redo the entire filing process. Doing it right the first time with a reputable e-file provider will make tax season a breeze this year. 


To help you make the right choice, we’ll dive into why you need an e-filer and the four features you should make sure your e-file provider has:

  • Do you really need an e-filer for your nonprofit taxes?
  • The 4 features your e-filer needs

1. Security

2. Reminders

3. Component filing

4. Easy Tracking


Ready to find the perfect
Form 990 software for your organization? Let’s get started!



Do you really need an e-filer for your nonprofit taxes?


Like many available services, it’s possible to do it yourself. Especially if you’re a smaller nonprofit with less data to report on, you may be inclined to try and take on the tax filing process yourself. 


However, even the simplest Form 990-N filing process can be bungled by common human errors and cause repercussions far beyond what you might expect. For instance, the IRS will not only fine organizations that have failed to properly file their taxes, but it can even revoke your tax-exempt status after three years of failing to file your forms correctly. 


And even if you do catch your mistakes, it might take you multiple attempts to complete your forms and you will likely waste hours at a time trying to figure out the correct forms, gather all of your necessary data, and actually fill out and submit the forms correctly. 


The reason to get an e-filer is not that you are incapable of doing it yourself but that an excellent e-filer can significantly simplify the process and take a burden off of your shoulders. 


Because Form 990 software can be very affordable and can save you hours of your precious (and likely already spread too thin) time, it’s often more worth it to invest in an e-file provider than to spend time doing it yourself. 



The four features your e-filer needs


Once you’ve committed to investing in an e-filer, your next step should be finding an efficient, reliable provider that suits your organization’s needs. Not all e-filing systems are the same, and the last thing you want is to end up with inadequate software that actually creates more work for you. 


While there are many different aspects to consider in choosing your e-filer, these four fundamental features provide a strong litmus test for the strength of your e-file provider. If you make sure your e-file provider has these four features, you’ll be set to have your smoothest tax season yet. 


Security

Above all else, your e-file provider should always be secure. Despite the fact that some financial information about nonprofits is publicly available, more detailed information and sensitive data may be used to inform your tax filing. For this reason, it’s important for security to be a prominent feature in any accounting software you choose. 


The number one thing you can do to ensure the security of your choice of software is to check that it’s an IRS authorized e-filer. Any software that is IRS-authorized will send your information directly to the IRS and nowhere else. 


For maximum protection, you’ll also want to look for a software provider with bank-level security. Even when you’re not actually making money transfers, your financial information should always be protected.


Reminders

One of File990’s top tips for not missing the deadline is using a credible e-filer that provides reminders. And it’s no wonder why — as we’ve seen, the IRS doesn’t take kindly to organizations that don’t submit their forms on time.


While it’s surprisingly easy to let that annual deadline sneak up on you,  making that mistake comes with fines that you definitely do not want to spend your organization’s money on. That’s why having reminders built into your e-filer solution isn’t just a helpful feature, but a necessity for your organization.


Additionally, getting automated reminders can help you
get ready for tax season well ahead of time. We all know how busy this time of year always ends up being — any way to avoid adding to the chaos is well worth it in our book. 


If your organization has different chapters, you can also set up automated reminders to be sent to all of your components, enabling them to instantly file their forms. With certain software, they won’t even need to provide their EIN number — they’ll simply review and verify the information and submit!


Component filing

Even if you’re only filing the Form 990 postcard, the process can still become cumbersome if you’re filing on behalf of several different chapters. That’s why it’s important to look for tax software that automatically tracks the filing status of each component and sends you reminders when it’s time to file. 


An effective e-file provider will enable you to see all your component tax filings in real-time, sorted by year or by organization when you import your EIN number. Some software will also allow you to filter all of your components to specifically view those that are at risk for losing their tax-exempt status this year, allowing you to focus on the most urgent filing processes first. 


Most importantly, you can file for all of your 990-N component groups at once with a group-filing tool. This takes out the most cumbersome and complicated step of the process, giving you back hours of your time that can be better spent furthering your organization’s work. 


Easy tracking

In addition to security, reminders, and group filing, one of the biggest benefits of using an efficient e-file provider is that you can keep track of the entire process without any extra work on your part. This isn’t just a big time-saver for your team, but it allows you to get a clearer and more insightful picture of your organization’s accounting process.


Be on the lookout for an e-filer that will allow you to easily track:

  • Which chapters or components are at risk for losing tax-exempt status
  • Which chapters or components have filed
  • What documents or information you already have 
  • What documents or information you still need in order to file
  • The status of your Form 990 after submission
  • Which (if any) forms need to be redone due to errors
  • Which (if any) forms are late


Being able to track your
financial data within your filing software and the progress of filing your taxes will help you avoid any unnecessary mistakes and get everything in on time. With the right e-filing solution, you’ll no longer dread the prospect of having to prepare your nonprofit’s financial data for the IRS.


Your organization likely sees the benefits of investing in fundraising software to optimize and expedite many of your important functions. So why not consider an investment that will help you maintain your tax-exempt status? 


The world of
nonprofit accounting and tax reportage is a complicated, tricky sector of your organization that you shouldn't have to face alone. Considering how much your nonprofit already invests in fundraising and marketing software, why not invest in a tool that will broaden your understanding of your nonprofit's finances, protect you from the IRS, and maintain your tax-exempt status. 


Excellent tax filing software can save you money and time, and not to mention relieve a lot of the stress that comes along with tax season. Keep our tips for finding a reputable e-file provider in mind and you can help improve tax season for your organization.


About the Author

Mathew Tooker


Mathew's expertise is in sales forecasting, goal setting, client growth initiatives and business development and analytics. When he is not laser focused on moving organizations forward, you can find him spending time with his wife, Lauren, and two dogs, Reagan and Teddy, running marathons and watching the Atlanta Braves and Auburn sports.



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