Set up and record in-kind donations in QuickBooks Online

Learn how to set up and record in-kind donations in QuickBooks Online.

An in-kind donation is a service or asset donated to an organisation. This can be printing services, office supplies, leased space, or professional services. This prepares you to record in-kind donations and other charitable contributions.

Note: Double-check with your accountant if a donation should be recorded as in-kind.

Set up in-kind donations

In QuickBooks Online, you can create an income and clearing account in your chart of accounts.

Step 1: Check to see if you already have an in-kind donations account

Make sure you don’t already have an in-kind donation account in your chart of accounts to avoid duplicates.

1. Go to Settings ⚙ and select Chart of accounts (Take me there).
2. In the Filter by name or number field, enter In-kind donations.
3. If no account appears, you can now create an in-kind donations account.
   Note: If you see an account named “In-kind donations”, your chart of accounts is already set up.

Step 2: Create an in-kind donations account

If you already have an in-kind donations account, you no longer need to create one. You can skip this step and proceed to step 3.

1. Go to Settings ⚙ and select Chart of accounts (Take me there).
2. Select New.
3. In the Account Type ▼ dropdown, select Income.
4. In the Detail Type ▼ dropdown, select Non-Profit Income.
5. In the Name field, enter In-kind donations.
6. Select Save and Close.

Step 3: Create a clearing account

To keep track of your in-kind donations, create a clearing account. This helps you to record your in-kind donations’ sales receipts or bill payments.

1. Go to Settings ⚙ and select Chart of accounts (Take me there).
2. Select New.
3. In the Account Type ▼ dropdown, select Cash and cash equivalents.
4. In the Detail Type ▼ dropdown, select Transaction.
5. In the Name field, enter In-kind Clearing.
6. In the Balance field, enter the opening balance amount. Then, select the starting date in the as of field.
   Note: The balance can be A$0.
7. Select Save and Close.

Step 4: Create a product or service item

Create a product or service item for each in-kind donation you receive and accurately track what you have. This allows you to record in-kind donation items to your books for a more detailed financial report. 

1. Go to Settings ⚙ and select Products & services (Take me there).
2. Select New and then select Service.
3. In the Product/Service information panel, add a Name and Description suitable for sales, pledges, or donation receipts.
4. From the Income account ▼ dropdown menu, select the In-kind donations income account you created.
5. Under Purchasing information, tick the I purchase this product/service from a supplier box.
6. Select Save and close.

Record in-kind donations

To record in-kind donations, you can create a sales receipt and a bill, then mark it as cleared.

Note: If you receive fixed assets like vehicles, computers, or land, use an expense or fixed asset account on the bill. You can consult with your accountant if you’re unsure whether an item is a fixed asset.

Step 1: Create a sales receipt

1. Go to + New and select Sales receipt.
2. From the Customer ▼ dropdown, select a customer.
   Note: If you haven’t set up your customer yet, select + Add new.
3. In the Sales Receipt date field, enter the date of the donation.
4. From the Deposit to ▼ dropdown menu, select the In-Kind Clearing bank account you created.
5. From the Product/Service ▼ dropdown, select the in-kind donation item. Then, add a description in the Description field.
6. In the Amount field, enter the fair market value (FMV) of the donation.
   Note: If you’re not sure about the fair market value of the donation, consult with your accountant.
7. Select Save and close.

Step 2: Create a bill

1. Go to + New and select Bill.
2. From the Supplier ▼ dropdown, select the donor’s name.
   Note: If you haven’t set up your donor’s name in the supplier list, select + Add new.
3. In the Item details section, select the in-kind donation item from the Product/Service ▼ dropdown.
4. In the Amount field, enter the fair market value (FMV) of the donation.
   Note: If you’re not sure about the fair market value of the donation, consult with your accountant.
5. Select Save and close.

Step 3: Mark the bill as cleared

1. Go to + New and select Pay bills.
2. From the Payment account ▼ dropdown, select In-kind Clearing.
3. Tick the box of the bill you entered.
4. Select Save and close.