How to Run QuickBooks in Nonprofits
Many small businesses use QuickBooks to track their finances, but the Intuit program also provides for nonprofits to use the accounting software to track donations and dues and expenses applied to grants and overhead. You may have to shift some terminology on forms, such as changing "Invoice" to "Pledge," but QuickBooks does much of the work for you.
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Instructions
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Setting up QuickBooks
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1
Verify with your accountant the tax form needed to report your income and expenses to the federal government. A nonprofit would normally file Form 990 or 990-EZ.
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2
Create a new company in QuickBooks using "New Company Setup Assistant." Enter company address and federal Tax I.D. number when asked, and then select your income tax reporting form. This prompts QuickBooks to set up a base list of income and expense accounts associated with nonprofits and assign an appropriate tax line for each account to report on the federal form.
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3
Select "Nonprofit Organization" when asked to "select your type of business." This gives you access to a help file for nonprofits that gives you specific information on using QuickBooks for your organization.
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Review the accounts automatically created, and make any changes or additions that may be necessary. You can also make changes later. Accounts include Campaign Income, Contributions Income, Grants, Legacies and Bequests, Membership Dues, and a variety of standard income and expense accounts.
Tracking Donors and Funds
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Use the "Customer:Job" list to identify donors, members, clients or sponsors who contribute to your organization. Use the invoice feature in QuickBooks to send to members and donors, but change the name of the form to Donations, Dues or Pledges.
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Associate different funds, such as grants or restricted funds you receive, to a "class" to identify and track income and expenses assigned to a specific fund. Open "Company Settings" in the Company menu, select "Transactions," and from the "Show" pop-up menu, be sure the "Use Class Tracking" line is checked.
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Select "Classes" from the "Lists" menu to create a class name for each fund. You can also create subclasses for funds that include restricted portions of their balance, calling the subclasses "restricted" and "unrestricted." Choose the appropriate class from the list in the class field when you enter checks, bills, sales or other transactions in QuickBooks.
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Run QuickBooks' "Profit and Loss Reports by Class" to see the activity and balance of specific funds. You can run the report, selected from the "Company and Financial" section of the "Reports" menu, as a summary, showing totals over a period of time, or as a detailed transaction report to see all activity.
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Use the "Profit and Loss Report by Class" to also identify expenses from the general fund as a percentage of expenses from other funds for a period of time. This allows you to report your overhead percentage to your funders.
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