501C3 set up for success

I appreciate you for providing on-point details about your concern, @LMB77. Yes, I'm here to ensure you're able to set up your friend's 501(c)(3) for success. 

First, you'll have to configure your friend's account to make sure it uses terms, reports, and forms used in nonprofit organizations. Then, change the customer labels to donors in the Advanced menu from Account and Settings. For more details, check out this article: Configure An Account For A Nonprofit Organization. Also, the workflows may vary from business to business, so I'd first suggest consulting your accountant to ensure their books are accurate. When you're ready, I'll lay out my recommendations to resolve all your concerns. 

Yes, you can set up your third-party distributors as customers or donors in QuickBooks Online (QBO). I'll guide you how. 

1. Go to Sales from the left menu and select Customers/Donors.
2. Select New Customer/Donor.
3. Enter your third-party distributor's info, such as iTunes. 
4. Click Save.
5. Repeat the process for the other distributors. 

Second, you can set up non-inventory items for book titles since the 501(c)(3) doesn't hold inventory or has any expenses related to COGS. Before that, you'll have to create classes for the various Christian authors to group them. Then, add a revenue account to track their fund donations from them. Once done, proceed with the steps below. 

1. Go to Sales from the left menu and select Products and services.
2. Click New.
3. Select Non-inventory.
4. Add a name for the book title. 
5. Choose the author from the Class drop-down list. 
6. Check the I sell this product/service to my customers/donors box. 
7. Select the revenue account you created from the Income account drop-down menu. 
8. Enter the necessary info. 
9. Click Save and Close. Repeat the process for the other book titles. 

The screenshot below shows you the last six steps. For the 50% royalty, add it as a Non-inventory or Service item to track this in the second line item of the sales transaction. For the detailed instructions, see this article: Add Product And Service Items In QBO. 

For your third concern, there isn't a need to set up the authors as locations or use custom fields since you've assigned them to classes. When you create a sales transaction, the author's name will auto-populate in the Class field on the book title line item. See the screenshot below for your reference. 

The Sales by Salesmen report isn't currently available in the program, but you can run the Sales by Class Detail instead. It helps you track your income, expenses, or profitability for each author. Just go to the Reports menu and enter its name in the Search box. Here's what it looks like: 

You can also run the Sales by Customer/Donor Detail report to track your income by the third-party distributors (see the screenshot below). 

To learn more about the process above, visit these two articles below: 

• Fund Accounting For Non-Profits
• Tracking Fund Donations

Additionally, there are three different types of 501(c)(3) non-profit organizations mandated by the IRS. You can click here for more information regarding your friend's setup. I want to make sure you're compliant with the federal agency. 

I'll be right here to help if you need further assistance. Keep safe always, @LMB77.

Thank you so much for such a detailed explanation. I truly appreciate the time you have taken to help me. 

Classes : Is there any work around to using the classes for the authors because i am already set to use the classes for the functional expenses which is required for non profit reporting purposes as per the form 990.

I'm using the classes for Admin , Fundraising and programs ( with sub categories under program for the various non profit programs) this  allows me to pull financial reports that are needed for the Form 990. 

Thank you so much for your help!  In the interim I will work through the rest of your reply to make sure i'm set up for success :) 

Thanks for coming back, @CHMM.

Currently, you can only use class for the authors as a workaround. Feel free to visit our blog site to keep you posted on the latest updates of the program.

Here's the link: The QuickBooks Blog.

As always, don't hesitate to swing by if you need help with anything else. We're here to lend a hand. Thanks for joining us today and I wish you have a nice day ahead.