How do I record the purchase of an item to donate to a nonprofit?

Nice to have you in the Community space, @jgallc. I'll make sure you can enter your donations seamlessly in QuickBooks Online (QBO).

When recording an in-kind donation, you'll have to set up a clearing account for charitable contributions. Then create a product or service item for the donations. Beforehand, ensure you don’t have a non-profit account yet to track in-kind donations to avoid duplicates. Follow these steps to check if you already have one:

1. Go to Settings ⚙ and select Chart of Accounts.
2. In the Filter by name field, search for In-kind donations.
3. If there's a result named In-kind donations, then it's already ready to set up.

If there's none, we'll proceed to create an in-kind donation account. Follow these steps to proceed:

1. Go to the Gear icon and then Chart of Accounts.
2. Select New. If you see the New category window instead of the Account window, switch to the Account view to continue.
3. Choose Income or Revenue from the Account Type dropdown menu.
4. From the Detail Type dropdown, select Non-Profit Income or Non-Profit Revenue.
5. In the Name field, enter "In-kind donations."
6. Click Save.

After that, we can create a clearing account:

1. Go to the Gear icon and then Chart of Accounts.
2. Select New. 
3. Depending on your account, you’ll see a window labeled either Account or New category. Follow the steps below for which window you have.

• In the Account window
  
  
  1. From the Account Type dropdown, select Bank.
  2. From the Detail Type dropdown, select Checking.
  3. Enter a name, such as In-Kind Clearing, for the account.
  4. Select a starting date and opening balance for the account. The opening balance can be $0.
  5. When you're done, select Save and Close.

• In the New category window
  
  
  1. Enter a name, such as In-Kind Clearing, for the account in the Category name field.
  2. In the Select category, select Bank & credit cards, then choose Select.
  3. From the Account Type dropdown, select Checking.
  4. In Starting date and opening balance, select a starting date and opening balance for the account. The opening balance can be $0.
  5. When you're done, select Save.

After setting up the accounts and creating the product or service item, it is possible to begin recording in-kind contributions. For the detailed steps, refer to this article and proceed to step 4: Set up and record in-kind donations. It also includes instructions on how to record the donated goods and services you receive.

You can check out this link for the steps on how you can track fund donations you receive via credit card, bank transfer, or cash in QBO: Track funds you receive from donors in QuickBooks Online.

Please don't hesitate to ask if you have any further inquiries about entering donations into QBO. We are always available to assist you. Have a pleasant day ahead!

"how to record donated goods and services you receive" -- this is the opposite of what I need, as my company is the donor, not the recipient. How would I go about recording the purchase of an item that my company later donates to a nonprofit? Thanks!

Thanks for clarifying the issue, jga. 

You'll have to perform a series of steps to record donations in QuickBooks Online (QBO). I'll guide you through the steps below.

When you make a product donation to a nonprofit organization, you'll first ensure you add them as your customer. Then, please note that if the amount you're writing off as a contribution will significantly affect your gross sales amount, consult your accountant before making donation entries.

Once you're ready to record your donation or charitable contributions, perform these steps in order:

1. Create an invoice for the products you donated.
2. Create an account for charitable contributions.
3. Create a product item called Charitable Contributions.
4. Issue a credit memo for the value of the products you're donating.
5. Verify the credit memo was applied to the invoice.

For the step-by-step guide, please see the Donation of products or services you usually sell section in this article: How to record donations or charitable contributions.

Additionally, you can pull up a variety of financial reports to help you manage your business income and expenses. You may want to check out this article to learn more about this feature and how you can do complete this process in QBO: Run reports in QuickBooks Online.

I'm all ears if you need further assistance recording product donations in QBO. Add your reply below, and I'll get back to help you.