Set up and record in-kind donations in QuickBooks Online

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

Step 1: Check if you already have an in-kind donation 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 ⚙, then 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 donation 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 ⚙, then select Chart of accounts (Take me there).
2. Select New.
3. In the Account name field, enter In-kind donations.
4. In the Account type ▼ dropdown, select Income.
5. In the Detail type ▼ dropdown, select Non-Profit Income.
6. Select Save.

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 ⚙, then select Chart of accounts (Take me there).
2. Select New.
3. In the Account name field, enter In-kind Clearing.
4. In the Account type ▼ dropdown, select Bank.
5. In the Detail type ▼ dropdown, select Checking.
6. In the Opening balance field, enter the opening balance amount. Then, select the starting date in the Date field.
   Note: The opening balance can be $0.
7. Select Save.

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 ⚙, then selectProducts and Services.
2. Select New, then select Service.
3. In the Basic info section, enter the name, item type, and category of the item.
4. In the Sales section, select In-kind donations in the Income account ▼ dropdown.
5. In the Purchasing section, select I purchase this service from a vendor.
   Note: You can add your product description or purchase cost as needed.
6. Select Create new.

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, then 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, select the In-kind Clearing bank account that 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, then select Bill.
2. From the Vendor ▼ dropdown, select the donor’s name.
   Note: If you haven’t set up your donor’s name in the vendor 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, then select Pay bills.
2. From the Payment account ▼ dropdown, select In-kind Clearing.
3. Select the checkbox of the bill you entered.
4. Select Save and close.