account types to track designated funds for a church?

I recommend using classes to track the designated funds and expenditures.  You can then pull a P&L by class at any time and get a report with full detail for that designated fund. 

I was thinking classes but how would I have a starting balance then?  Would having the designated funds as sub accounts to my checking account be better?

Hello AngG,

I'll chime in this thread to help you enter the account's starting balance.

If the bank has a running balance, you can enter it as an opening balance when you first set it up.

Here's how:

1. Choose the Gear icon at the top.
2. Select Chart of Accounts.
3. At the top right, select New.
4. Choose the account type, then from the Detail Type drop-down, choose Checking.
5. In the Name field, enter the name of the account.
6. Enter in the appropriate information for the opening balance and the date as of (see the screenshot below).
7. Select Save and close.
   
   

As for your other question, you have the option to add a sub-account on your checking account. Please note that everything in your sub-accounts roll up to the parent account.

Check out this article for the detailed steps: How to create a new parent account or sub-account.

That's it. Let me know if there's anything else you need, I'll be around. Have a great day.

My designated funds are held in the checking acount. I realize I can track the income and expense by using class list. But how do I get a running balance for a designated fund when those funds are in the checking account?

Hello there, Gotmilk.

You can run a quick report for the checking account. Then, filter it to show the designated funds account only. This will help you track the running balance.

Just follow these easy steps:

1. Click Accounting.
2. Choose Chart of Accounts. 
3. Look for the checking account.
4. Click the View register drop-down arrow, then choose Run report.
5. Click Customize, then click Filter.
6. Click the Account drop-down arrow, then choose the account for designated funds.
7. Click Run report. 

Don't hesitate to get back to this thread if you have further questions. 

How do you keep track if you don't use classes and locations?  I am helping with a clean up and they use a spread sheet to keep track of them.  I was thinking to do a JE to allocate to the correct expense and income accounts for these different funds/groups.

What do you think?

Thanks for joining this conversation, @K-M-SVirtual.

Since the organization you're working with doesn't use classes and locations feature to track designated funds/groups, then yes! You can use Journal Entry (JE) to allocate them to the correct expense and income accounts.

Before doing so, I highly suggest consulting your accountant or accounting professional for guidance on which account receives the debit and credit side of the transaction.

Here's to create a JE:

1. Go to the +New icon at the top left to get to the Journal Entry. 
2. Enter the necessary information, then hit Save and close.

I'll add this article for more information: Create a journal entry.

After that, pull up the Transaction Detail by Account and filter it by JE to track the entries you've recorded. Here's how:

1. Go to the Reports menu at the left pane to get to the Standard reports tab. 
2. Type Transaction Detail by Account in the search bar then hit enter. 
3. Click the Customize option at the top right. 
4. On the Filter section, pick Journal Entry in the Transaction Type drop-down.
5. Select Run report. 

Just in case, I'll add these articles for future reference:

• Run reports.
• Customize your reports in QuickBooks Online.

Reach out to me in the comment section below if you have any other issues or concerns, and I'll get back to you right away. I'll be here to assist. Have a wonderful day!

I'll second the suggestion to track these funds by class...it will make it easier at the end of the year to adjust any restricted equity accounts so you have a permanent record of how much each fund balance is. 

This is how I handle fund accounting in QBO. If your different funds just need to be tracked separately, I just set up a class for each, and make sure to designate the class each time activity occurs.

If you're needing your books to adhere to GAAP accounting (i.e. separate treatment between Unrestricted and Restricted) I still use the classes mentioned above, but I'll also set up an Other Income account called "net assets released" or something similar, and each month/period make an entry to this account to zero out my net income for all the restricted activity, with the offset being the restricted equity account matching that fund on the balance sheet. This way, your P&L is appropriately tracking both the inflows and outflows of your restricted activity on your P&L, and your equity section of the balance sheet shows the correct balance of each fund. 

Ang - I recommend leaving the bank accounts as-is, and handling any "balance" stuff by adjusting your equity accounts for each fund. I made another comment detailing how I do this, but please let me know if this doesn't make sense.

I just started doing the bookkeeping for a church and they have their designated funds set up as sub accounts of their checking account. That way, in the chart of accounts, it is easy to see the running balance of each designated fund and what part of the checking account is already designated to something specific.

Can you think of a reason that this wouldnt work??

The other church I do bookkeeping for has their designated funds set up as equity accounts. But in order to keep the profit and loss correct the designated income has to be entered in as Miscellaneous income and then using a general journal entry to expense them into the equity account. Its kind of messy. And takes time at the end of each month to make sure none of the journal entries are missing.

I dont like using classes because if you get in a hurry and forget to add the class to a transaction, it would be difficult to know that it was missed, at all. How would you reconcile the classes to be sure they were accurate.

Is this available only online?  I have pro plus desktop and trying to find out how to handle designated accounts for a church.

I noticed your reply refers  t o QB on line,  I use QB desktop.  Is classes still your recommendation ?

Hi there, @justme70.

Let me walk you through the steps to set up classes in your QuickBooks Desktop account. Yes, classes still recommended since it helps you handle designated accounts for a church and use Profit and Loss report to check the data. You can follow these steps on how to set up classes in your QuickBooks Desktop account:

Step 1: Turn on class tracking

1. Open your company file.
2. Go to the Edit menu, then select Preferences.
3. Choose Accounting, then go to the Company Preferences tab.
4. Click the checkbox beside the Use class tracking for transactions.
5. Select the Prompt to assign classes checkbox if you want a reminder when you haven't assigned a class yet.
6. Click OK.

Once done, you can refer to this article for the next step setting up classes in your QuickBooks Desktop account: Set up and use class tracking in QuickBooks Desktop.

Also, you can create separate accounts as what DeaB recommends so that you can track your balance in the Chart of Accounts.

In case you'll need help to generate reports to compare the balances across multiple classes, departments, or locations, refer to this article: Filter, sort, or total reports by Class.

If you have additional questions, feel free to leave a message in the comment section. I'll be happier to help. Take care and have a great day!

My designated funds accounts will have a beginning balance, will have deposits and withdrawals.  How can I input beginning balance and show  income and expenses on these designated accounts?  Can they be added to chart of accounts so that they are  included on my income/expenses vs budget report?  although their beginning balance is not part of the budget amounts.  These typically are donated funds that were given to be used for  specific thing.  Any suggestions? 

My designated accounts have a balance and will have deposits and withdrawals on the accounts occasionally.  Can I add them to my chart of accounts so that I can track the activity?  If so,  how do I get my beginning balance on there since they are not a budget item?  I need monthly reports on the designated accounts too.

Thanks for the additional details, @justme70.

Yes, you can add them to your Chart of Accounts (COA) in QuickBooks Desktop (QBDT). Here's how to create opening balances for the accounts:

1. Go to the Lists menu, and then choose Chart of Accounts.
2. Click the Account drop-down ▼, and then select New.
3. You can choose the Equity account since we're dealing with the opening balances, and then click Continue to confirm.
4. Enter an Account Name,Description, etc. You can also assign sub-account for the parent account.
5. Click the Enter Opening Balance button, and then type an opening balance amount. Then, select a date for this opening balance. 
6. Hit Save and Close.

You can refer to this article for more info about the steps above: Create opening balances for accounts in QBDT.

You'll see this amount as the opening balance upon reconciling your account. Feel free to check out this handy resource to learn more about reconciliation in QBDT: Reconciliation in QBDT.

You're also able to view the balances for each of your accounts. You can run the QuickReport to do this. Here's how:

1. Follow step 1 above.
2. Choose the account you've created, and then right-click on it.
3. Select QuickReport at the bottom.
4. You can select the Date, Report Basis, etc. you'd like. Then, hit Refresh to pull up the desired info.

Fill me in if you have more questions about managing your accounts or other QuickBooks-related concerns. I'll be here to help. Take care and have a nice day.

I'm curious about a donor report if you use classes. Will I be able to print a donor report that includes people giving to these designated funds? Those folks need to be able to have something that shows their charitable donations.

I'm here to ensure you can print a donor report that shows people giving to these designated funds in QuickBooks Online.

We can pull up the Transaction Detail by Account report and group it by Customer. I'll show you how:

1. Go to the Reports menu.
2. On the Search field, enter Transaction Detail by Account and click on it.
3. From the Group by dropdown, select Customer. 
   
   
    
4. Use the Customization feature to filter the information you need.
5. Tap Run report.

After pulling up the information you need, click the Printer icon. Adjust your print settings as needed, then press Print once ready.

Moreover, you can always save your current settings by clicking Save Customization. That way, you won’t have to go through the customization process again in case you need the same information in the future.

You can also visit this article to learn more about managing a wide range of reports in QBO: Run reports in QuickBooks Online

If you have additional questions when running and printing reports, let us know in the comments below. We'd be glad to answer them for you.

I think as long as the only things flowing in and out of the designated fund accounts are restricted activity, this will work great. My suggestion is more for folks who have only a general fund bank account, but need to track how much of that bank balance is actually donor-restricted/donor-directed. 

Another thing you will need to think of is how to keep the revenue and expense side of the bank activity separate. For GAAP accounting, restricted fund activity has no impact to the Net P&L - as Restricted Funds are used (expense), you would recognize the revenue at the same time, so the "net income" impact is 0 to P&L. That being said, if you're not doing GAAP, I'm not sure that matters as much. 

Sorry - this was in response to k8tfbc's comment.

I am in the same situation you were in four years ago.  Except I was not familiar with Quick Books at all when I took on the church financial duties.  How did you set this up for your designated funds? What types of accounts do you have them set up as.  And though my check register has the correct bank balance for the designated accounts, the funds that make up this account do not.  How do I find what else is linking to this bank account?

Thanks for any help you can give.

Can you walk me through adjusting equity accounts? It is a church and I am using classes but I setup qbo by journal entries that offset all starting balances in checking, money market, cds, and endowment…with equity funds for the three types of funds: general fund, temporary restricted funds, and permanent restricted funds. This was the only way I imagined of making balanced double accounting entries. All of my individual funds exist as classes, like individual memorial funds, mission accounts etc. when I set everything up assets=liabilities+equity……but as I make deposits the classes do a great job of tracking (though reports with classes leave a lot to be desired), but how to I adjust equity funds while still keeping revenue correct on p&l report, or is there another way to handle opening balances?

@lorendac