Record donations and charitable contributions in QuickBooks Online

Learn how to record donations or charitable contributions in QuickBooks Online .

When you make donations or charitable contributions, how you record them depends on the type of donation you've made. Recording a cash donation is different from recording the donation of products or services that you normally sell.

Here’s how you record either type of donation.

Record cash donations

To donate cash, you can set up the charitable organisation you're donating to as a supplier so that, when you make a donation, you can record it as a cheque or a bill and payment, just as you would for any other payment to a supplier.

Make sure that the expense account you select from the Category ▼ dropdown in the Category details section is a dedicated expense account for tax-deductible contributions that isn't used for any other expense. This will make things easier for your accountant or tax preparer.

If you don't already have an expense account for donations, you can add one when you record the donation. Select + Add new from the Category ▼ dropdown column to do so.

Record donation of products or services you sell

Here’s how you can record a product and services donation:

Prerequisite

Before you start, check if the automatically apply credits settings is turned on to automatically apply credits to the unpaid invoices. You can create and apply credit notes or delayed credits.

Step 1: Create an invoice

To record a donation, you must create an invoice for the product or service so you can record the income.

1. Select + New or + Create.
2. Select Invoice.
3. Select your customer from the Add customer ▼ dropdown.
4. Select the terms, invoice date, and due date.
5. Enter the invoice details, customer payment details, notes, and add attachments if you need to.
6. Select Save.

Step 2: Create an account for charitable contributions

Create an account to use to record charitable contributions.

1. Follow this link to complete the steps in product
2. Select New account.
3. Enter the Account name (for example, Charitable Contributions).
4. Select Expenses from the Account type ▼ dropdown.
5. Select Charitable Contributions from the Detail type ▼ dropdown.
   Tip: You can select the Make this a subaccount checkbox according to your preference. You can also add a description of your charitable contribution.
6. Select Save.

Step 3: Create a charitable contributions product/service item

Create a product/service item for charitable contributions.

1. Follow this link to complete the steps in product
2. From the New ▼ dropdown, select the type of product or service.
3. Enter a Name for the product (for example, Charitable Contributions).
4. Select the I sell this product/service to my customers checkbox.
   Note: This checkbox is only available in QuickBooks Online Plus and QuickBooks Online Advanced.
5. Select Charitable Contributions account you have created, from the Income account ▼ dropdown.
6. Select Save and close.

Now that you have created an account and a product/service item, the next step is to issue a credit note for the value of your donation.

Step 4: Issue a credit note

To issue a credit note for the value of the products or services you're donating.

1. Select + New or + Create.
2. Under Customers, select Credit note.
3. From the Customer ▼ dropdown, select your customer you donated the product or service to.
4. In the Product/Service column, select the Charitable Contributions item and enter the Amount of your donation as a positive number.
5. In the Description field, enter Donation or Charitable Contribution, if not already added while creating an invoice.
6. Select Save and close.

The credit note reflects the amount of your donation. The next step is to verify that it was applied to the invoice you created.

Step 5: Verify the credit note was applied to the invoice

Verify that QuickBooks applied the credit note to the invoice you created for the donated items.

1. Follow this link to complete the steps in product
2. Select the customer you donated the product or service to from the list.
3. On the Transaction List tab, confirm that the Invoice transaction you created at the beginning of the process has a Status of Paid.
4. Confirm that the Credit note transaction you created is noted as Closed in the Status column.
5. Confirm that a new Payment transaction is listed, with R0.00 listed in the Total column, and Closed noted in the Status column.

The donation is now recorded.