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Level 1

How to setup tuition and payments

I am new to Quickbooks.  We have the Non-profit version.  We will be invoicing parents for the student's tuition.    A portion of the fees each month will be paid from a grant , and the remainder will be out of pocket from the parents.    I will need to be able to send an end of the year statement to the parent for the amount of money that was paid out of pocket, and excludes the amount coming from the grant.    Since we are starting out new what is the best way to do this from the start up?      Thanks!

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Best answer 08-15-2017

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Level 3

How to setup tuition and payments

As with any accounting answer, there are a few ways to attack this. The exact answer that will work best for your organization will depend on a few factors though...

 

Will you receive the full grant up front? Will it be received monthly as a fixed amount? Will it be received at the end of the school year? Will you have to submit invoices to receive payments from the grant? Is the grant based on actual costs incurred per student? Or is it a fixed amount that you are dividing up among all of the students enrolled?

 

One suggestion that I would make for the invoices to the parents would be to create a Discount item for the Grant so that they can see how much of the tuition was paid by the grant and how much is remaining for them to pay. This gives them full transparency and the statement reporting would still be accurate. The proper set up of the Discount item would depend on your answers to the above questions though.

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Highlighted
Level 3

How to setup tuition and payments

@Marci wrote:

This will be a monthly charge.    The parent will enter the hours each month that they plan on their child attending class.  A portion of the tuition will be covered by assistance (grant) the reminder is out of pocket.   This is deteremined by what they qualify for, so can be different for each person.   The grant part will be deposited into our bank the day following after the parent calls in.    If the parent doesn't pay their out of pocket portion I will have to invoice them at the end of the month.   Also, at the end of the year  I will need to be able to give them a statement to show what they have paid out of pocket for tax purposes.   

 

I spoke to someone who recommended I set everything up using "Donation", but it just didn't make sense to me as I will need to be able to invoice too.


Thanks for the additional info. Since you are a non-profit, you will need to record your separate sources of income, and provide details on how the grant funds were used.

 

To do this, you'll need to set up the following (if not already set up):

  • A revenue account for Grant Revenue
  • A revenue account for Tuition Revenue
  • An expense account for Grant Expense
  • A discount item for Grant Discount, applied to the Grant Expense account
  • A service item for Tuition, applied to the Tuition Revenue account

 

When grant funds are received in your bank, you'll record the deposit received as Grant Revenue.

 

Each month, when you know what the total tuition will be for each family, and how much of a grant they will receive, you'll create an invoice per family. Each invoice will include a charge for the full cost of Tuition, and a Grant Discount applied for the amount received for that family. The remaining balance due on the invoice will be the family's out of pocket portion. 

 

You don't have to print the invoices if you don't want to, but they are there to print as needed.

 

When the family pays their portion of the tuition, you simply receive it as a payment against the invoice and deposit it to your bank account.

 

If you need to prepare a statement for the family at the end of a month, quarter, or year, the statement will show the balance due from the family only since the Grant Discounts would have already been applied on the invoices.

 

When it comes to tax time, you'll be able to show how much you received in grant funds, and how much was used for tuition, and even show a report of how much grant funds were received for each family (in case you ever need to provide reporting back on the grant, or to reconcile against reports received from the grant).  A non-profit entity has to report their various sources of income, and how that income was spent, especially when it receives grants or donations. It's good that you are looking into setting this up right away, rather than waiting until later when it is more difficult to figure out and fix. I hope that you have a qualified person working on your tax return too. 

 

Good luck!

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Anonymous
Not applicable

How to setup tuition and payments

Hi Marcy, 

 

That is a really good question. I am not an accountant myself, so I strongly recommend that you reach out to one as you set up your chart of accounts and billing structure. 

 

In the past, I worked with someone with a similar concern. What they did was track the grant balance in a GL account. They created the invoice but then used a journal entry to partially pay it before sending it to the client. 

 

I hope that helps. You will need a real accountant to tell you what kind of account to use and how to format the journal entry properly, but this should get you started.  If you don't have an accountant, there are a few here who might pop in and give you advice, or you can go to the Find a ProAdvisor site to match your needs to the person with the right skillset. 

 

-John

 

Highlighted
Level 3

How to setup tuition and payments

As with any accounting answer, there are a few ways to attack this. The exact answer that will work best for your organization will depend on a few factors though...

 

Will you receive the full grant up front? Will it be received monthly as a fixed amount? Will it be received at the end of the school year? Will you have to submit invoices to receive payments from the grant? Is the grant based on actual costs incurred per student? Or is it a fixed amount that you are dividing up among all of the students enrolled?

 

One suggestion that I would make for the invoices to the parents would be to create a Discount item for the Grant so that they can see how much of the tuition was paid by the grant and how much is remaining for them to pay. This gives them full transparency and the statement reporting would still be accurate. The proper set up of the Discount item would depend on your answers to the above questions though.

View solution in original post

Highlighted
Level 1

How to setup tuition and payments

This will be a monthly charge.    The parent will enter the hours each month that they plan on their child attending class.  A portion of the tuition will be covered by assistance (grant) the reminder is out of pocket.   This is deteremined by what they qualify for, so can be different for each person.   The grant part will be deposited into our bank the day following after the parent calls in.    If the parent doesn't pay their out of pocket portion I will have to invoice them at the end of the month.   Also, at the end of the year  I will need to be able to give them a statement to show what they have paid out of pocket for tax purposes.   

 

I spoke to someone who recommended I set everything up using "Donation", but it just didn't make sense to me as I will need to be able to invoice too.

Highlighted
Level 1

How to setup tuition and payments

Thank you!

Highlighted
Level 3

How to setup tuition and payments

@Marci wrote:

This will be a monthly charge.    The parent will enter the hours each month that they plan on their child attending class.  A portion of the tuition will be covered by assistance (grant) the reminder is out of pocket.   This is deteremined by what they qualify for, so can be different for each person.   The grant part will be deposited into our bank the day following after the parent calls in.    If the parent doesn't pay their out of pocket portion I will have to invoice them at the end of the month.   Also, at the end of the year  I will need to be able to give them a statement to show what they have paid out of pocket for tax purposes.   

 

I spoke to someone who recommended I set everything up using "Donation", but it just didn't make sense to me as I will need to be able to invoice too.


Thanks for the additional info. Since you are a non-profit, you will need to record your separate sources of income, and provide details on how the grant funds were used.

 

To do this, you'll need to set up the following (if not already set up):

  • A revenue account for Grant Revenue
  • A revenue account for Tuition Revenue
  • An expense account for Grant Expense
  • A discount item for Grant Discount, applied to the Grant Expense account
  • A service item for Tuition, applied to the Tuition Revenue account

 

When grant funds are received in your bank, you'll record the deposit received as Grant Revenue.

 

Each month, when you know what the total tuition will be for each family, and how much of a grant they will receive, you'll create an invoice per family. Each invoice will include a charge for the full cost of Tuition, and a Grant Discount applied for the amount received for that family. The remaining balance due on the invoice will be the family's out of pocket portion. 

 

You don't have to print the invoices if you don't want to, but they are there to print as needed.

 

When the family pays their portion of the tuition, you simply receive it as a payment against the invoice and deposit it to your bank account.

 

If you need to prepare a statement for the family at the end of a month, quarter, or year, the statement will show the balance due from the family only since the Grant Discounts would have already been applied on the invoices.

 

When it comes to tax time, you'll be able to show how much you received in grant funds, and how much was used for tuition, and even show a report of how much grant funds were received for each family (in case you ever need to provide reporting back on the grant, or to reconcile against reports received from the grant).  A non-profit entity has to report their various sources of income, and how that income was spent, especially when it receives grants or donations. It's good that you are looking into setting this up right away, rather than waiting until later when it is more difficult to figure out and fix. I hope that you have a qualified person working on your tax return too. 

 

Good luck!

View solution in original post

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