Record donations and charitable contributions in QuickBooks Online

Learn how to record donations or charitable contributions in QuickBooks Online .

When you make donations or charitable contributions, how you record them depends on the type of donation you've made. Recording a cash donation is different from recording the donation of products or services that you normally sell.

Check out QuickBooks Payments rates and apply. Then, you can automatically process payments, deposit funds and record transactions in your books.

Here’s how you record either type of donation.

Record cash donations

To donate cash, you can set up the charitable organization you're donating to as a vendor. So when you make a donation, you can record it as a check or a bill and payment. It’s the same as you would for any other payment to a vendor.

Make sure that the expense account you select from the Category dropdown list in the Category details section is a dedicated expense account for tax-deductible contributions that isn't used for any other expense. This will make things easier for your accountant or tax preparer.

If you don't already have an expense account for donations, you can add one when you record the donation. Select + Add new from the dropdown list in the Category column to do so.

Record donation of products or services you sell

Here’s how you can record a product and services donation:

Step 1: Create an invoice

To record a donation, you must create an invoice for the product or service so you can record the income.

1. Sign in to your QuickBooks Online account.
2. Select + Create, then select Invoice. Or, from the Create actions section, select Create invoice.
3. Select your customer from the Add customer ▼ dropdown.
4. Select the terms, invoice date, and due date.
5. Enter the invoice details, customer payment details, notes, and add attachments if you need to.
6. Select Save.

Note: Don't skip this step or your balances will be off after you perform the other steps in the process.

Step 2: Create an account for charitable contributions

Create an account to use to record charitable contributions.

1. Go to All apps , then Accounting, then Chart of accounts (Take me there).
2. Select New account.
3. Enter the Account name.
4. Select Expenses from the Account Type dropdown list.
5. Select Charitable Contributions from the Detail Type dropdown list.
   Tip: You can select the Make this a subaccount checkbox according to your preference. You can also add a description of your charitable contribution.
6. Select Save.

Step 3: Create a charitable contributions product/service item

Create a product/service item for charitable contributions.

1. Go to All apps , then Sales & Get Paid, then Products & services (Take me there).
2. Select New.
3. In the Product/Service information panel, select the type of product or service.
4. Enter a Name for the item (for example, Charitable Contributions).
5. Select the I sell this product/service to my customers checkbox.
   Note: This checkbox is only available in QuickBooks Online Plus, QuickBooks Online Advanced, and IES.
6. Select the charitable contributions account you created from the dropdown list in the Income account field.
7. Select Save and close.

Now that you have created an account and a product/service item, the next step is to issue a credit memo for the value of your donation.

Step 4: Issue a credit memo

To issue a credit memo for the value of the products or services you're donating.

1. Select + Create, then from the Customers column, select Credit memo.
2. Enter or select the customer from the Customer ▼ dropdown.
3. In the PRODUCT/SERVICE field, select the charitable contributions item.
4. In the DESCRIPTION field, enter “Donation” or “Charitable Contribution”.
5. Enter the amount of your donation as a positive number in the AMOUNT column.
6. Select Save and close from the Save and send ▼ dropdown.

The credit memo reflects the amount of your donation. The next step is to verify that it was applied to the invoice you created.

Step 5: Verify the credit memo was applied to the invoice

Verify that QuickBooks applied the credit memo to the invoice you created for the donated items.

1. Go to All apps , then Customer Hub, then Customers (Take me there).
2. Select the customer you donated the product or service to from the list.
3. On the Transaction List tab, the invoice transaction you created at the beginning of the process should have a “Paid” status.
4. Confirm that QuickBooks noted the credit memo transaction you created as “Closed” in the STATUS column.
5. Confirm that QuickBooks listed a new payment transaction with US $0.00 in the Total column, and “Closed” noted in the STATUS column.

The donation is now recorded.