Setting up a nonprofit

adowds · ‎April 09, 2019

My nonprofit client wants to use QuickBooks to track four levels of revenue and expense:

> Category - restricted vs. unrestricted (e.g., this is a GAAP requirement; grant revenue typically comes with expense restrictions; operating revenue typically doesn't)

> Source - by specific source of funds (e.g., by specific grant) vs. fundraising project (e.g., brownie sales)

> State - where applicable, the nonprofit wants to monitor profitability by fundraising event (e.g., how much revenue came from an event held in a particular state vs. the costs of hosting the event)

> Service - where applicable, the nonprofit wants to monitor profitability by type of service provided (e.g., they offer various levels of educational training: pre-K; K; G1)

Is this level of tracking/reporting possible using a combination of QuickBooks (nonprofit?) software's Customers, Jobs, Parent accounts, Classes, etc. features?

Ideally, the nonprofit wants to print/download their aggregate income statement by one or more of those four levels: category, source, state and service.

Thank you, Allan Dowds

Angelyn_T · ‎April 09, 2019

Hello there, @adowds.

I'd be glad to help you today so you'll be able to use QuickBooks to track the four levels of revenue and expense.

If you're using QuickBooks Online (QBO), and run a non-profit organization, you may need to edit your QBO account to better fit your needs. You can make necessary changes to ensure your account uses terms commonly used by non-profit organizations.

For additional guidance, you may check it here: Configure an account for a non-profit organization.

On the other hand, to use QuickBooks to track the four levels of revenue and expense, for the Category, you must set up accounts in the Chart of Accounts following the GAAP requirement or the correct category.

To track Sources, you must turn on class and location tracking feature in QuickBooks.

For the State, you can create the state as the name of the customer and create a project under that specific state.

Lastly, for the Service, you can turn on, create and use the products and services list.

You can always run reports in QBO and make the necessary customization to track and check your revenue and expense.

To learn more about non-profit accounting basics, you may check this article: How to Customize QuickBooks for Your Needs.

Please feel free to add a post/comment below if you have any other QuickBooks questions, I'll be always here to help you. Have a great day ahead!

View solution in original post

Angelyn_T · ‎April 09, 2019

Hello there, @adowds.

I'd be glad to help you today so you'll be able to use QuickBooks to track the four levels of revenue and expense.

If you're using QuickBooks Online (QBO), and run a non-profit organization, you may need to edit your QBO account to better fit your needs. You can make necessary changes to ensure your account uses terms commonly used by non-profit organizations.

For additional guidance, you may check it here: Configure an account for a non-profit organization.

On the other hand, to use QuickBooks to track the four levels of revenue and expense, for the Category, you must set up accounts in the Chart of Accounts following the GAAP requirement or the correct category.

To track Sources, you must turn on class and location tracking feature in QuickBooks.

For the State, you can create the state as the name of the customer and create a project under that specific state.

Lastly, for the Service, you can turn on, create and use the products and services list.

You can always run reports in QBO and make the necessary customization to track and check your revenue and expense.

To learn more about non-profit accounting basics, you may check this article: How to Customize QuickBooks for Your Needs.

Please feel free to add a post/comment below if you have any other QuickBooks questions, I'll be always here to help you. Have a great day ahead!

adowds · ‎April 09, 2019

Thank you so much Angelyn! That's really helpful! I sent you an email outlining my understanding of the actual mechanics to capture the four levels of detail. Please review and respond when you have a moment.

Very appreciatively, Allan

AldrinS · ‎April 09, 2019

Hey there, Allan.

I'm happy to know that you're set on the right path thanks to my colleague Angelyn_T.

On her behalf, I'd love to provide the clarification you're looking for. However, we're unable to receive and view the email that you sent. If possible, I'd recommend that you post your reply here in the Community. Doing so will help to ensure that I provide the right answer to you in a timely manner.

Please feel free to post any other questions you have below, I'm here to ensure your success. Thanks for coming to the Community, I'll keep an eye out for your response.

adowds · ‎April 09, 2019

Thank you again Angelyn! [Here's the text of my clarifying email]

I drafted the following memo to the nonprofits' management team based on your note. I tweaked the data entry/coding process: using QB's "Project" feature, rather than its "Product/Service" feature to capture our Service data, since it seems like QB's Project feature is intended to capture profitability, and I've suggested using QB's "Class" and "Location" designations to capture our Source and State/Region profitability, since they can be used together, and are designed to capture both revenues and expenses.

Would you mind reviewing the following and letting me know if it should work?

Thank you in advance!!

Management,

The accounting software features mentioned herein are available on “QuickBooks Online Plus”, “QuickBooks Advanced”, and “QuickBooks Accountant”.

The purpose of this memo is to describe logistically how QB may be used to track and report four levels of revenue, expense and profitability:

CATEGORY – this is a GAAP requirement that nonprofit revenue be tracked and reported based on sourcing restrictions; grant revenue typically comes with expense restrictions; operating revenue typically doesn't. In QuickBooks (“QB”), the distinction between restricted and unrestricted revenues will be made directly in the CHART OF ACCOUNTS; specifically, all revenue accounts will be designated as either “restricted” or “unrestricted” [note: we don’t anticipate receipt of any “permanently restricted” revenues].

SOURCE – this is a necessary designation to track the use of restricted revenues for compliance purposes. QB will track revenue and expenses by specific source (e.g., by individual grant, and/or specific source of other income) utilizing QB’s CLASS function, designed to monitor income and expenses and run reports for different lines of business.

REGION – this designation will be used to monitor and report profitability by regional training center (“RTC”); specifically, revenues and expenses will be coded using QB’s LOCATION function, which is designed to monitor income and expenses and run reports for different business locations.

Note: the above designations are captured at the time revenue and expense transactions are initially entered in QB. Once the data has been entered, the following sub-classification designation requires a secondary coding process (i.e., the following reports should be reconciled to the trial balance to verify accuracy).

SERIES - this designation will be used to monitor and report profitability by program Series (e.g., Pre-K year 1, K year 2) using QB’s PROJECT function. This requires creating a “Customer” and corresponding “Project” for each training program or Series - and then assigning revenues and expenses that have previously been entered in the accounting system to the Project.

This memo is based on information received from QB dtd 4/9/19.

Allan Dowds

HoneyLynn_G · ‎April 09, 2019

Hello there, adowds.

I appreciate you checking the recommendations given by my colleague. I'm here to provide additional insights about setting up and running a non-profit organization.

CATEGORY – You can utilize the Chart of Accounts feature to create and track your expense and income accounts. Some accounts are automatically created once you configure your company file as a non-profit organization. In case you need to set up and add other accounts, I recommend reaching out to your accountant for guidance.

Some of the available reports you can run and customize are Account List, Profit and Loss, and Balance Sheet.

SOURCE – To easily track the sources, you can use the Class feature. Once this is turned on, automatically there are designated fields when you create transactions. Make sure to fill-out the necessary field so this will flow on the reports.

The available reports to track classes are Class List, Profit and Loss by Class, Purchase by Class, and Sales by Class.

REGION – Location tracking is used to categorize data from different locations, offices, regions, outlets, or departments of the same company. Same with classes, there will be a field for regions/locations too. Make sure to select the correct information.

You can pull up the Location List, Profit and Loss by Location, Purchase by Location, and Sales by Locations reports to get the needed data.

SERIES – You can set up and use the Project functionality to assign customers to program series.

You can go to the left menu and choose the Project tab. It will show you the list of projects and its status (in progress, completed, or cancelled). It will also visualize the current income and costs.

That should give you additional information, Allan. If there's anything else you need help with, just keep me posted. I'm still here to assist you more. Have a good one.

adowds · ‎April 10, 2019

Thank you HoneyLynn,

What reports are available for Projects? Ideally, we'd like to print/edit/export revenues, expenses and profit or loss by Project.

Best, Allan

Adrian_A · ‎April 10, 2019

We have two available reports for projects, Allan.

You can either run the Project Profitability report and filter the project's transaction list to show all expenses or run the Transaction Detail by Account report.

To pull up the report from the Projects tab:

On the left panel, click Projects.
Select the project where you need the data.
Go to the Project Reports tab.
Select Project profitability.
From there, you have the option to customize, print, export, and edit the report.

To get the report from the Reports tab:

Click Reports on the left panel.
Type Transactions Detail by Account in the search box.
Click the Customize button in the upper right-hand corner.
Maximize the Filter section.
Check the Customer box, and select the project name.
Check the Transaction type box, then select Expense.
Click Run report.

I'm just a post away if you have further concerns. Have a good day!

RAYMOND UG · ‎March 22, 2020

How would you set up the income accounts in the chart of accounts if the donor budgets only have

@Angelyn_T wrote:
Hello there, @adowds.

I'd be glad to help you today so you'll be able to use QuickBooks to track the four levels of revenue and expense.

If you're using QuickBooks Online (QBO), and run a non-profit organization, you may need to edit your QBO account to better fit your needs. You can make necessary changes to ensure your account uses terms commonly used by non-profit organizations.

For additional guidance, you may check it here: Configure an account for a non-profit organization.

On the other hand, to use QuickBooks to track the four levels of revenue and expense, for the Category, you must set up accounts in the Chart of Accounts following the GAAP requirement or the correct category.

To track Sources, you must turn on class and location tracking feature in QuickBooks.

For the State, you can create the state as the name of the customer and create a project under that specific state.

Lastly, for the Service, you can turn on, create and use the products and services list.

You can always run reports in QBO and make the necessary customization to track and check your revenue and expense.

To learn more about non-profit accounting basics, you may check this article: How to Customize QuickBooks for Your Needs.

Please feel free to add a post/comment below if you have any other QuickBooks questions, I'll be always here to help you. Have a great day ahead!

expense accounts with no income accounts to receive the funds?

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