I’ll be the primary to confess that QuickBooks and accounting, typically, is just not my favourite a part of operating a corporation. I additionally acknowledge that it’s an space of enchancment for many nonprofits. For this motive, I sought out somebody who makes a speciality of serving to nonprofits efficiently leverage Quickbooks.
Gregg Bossen is a working towards CPA with a full-service accounting agency positioned in Atlanta, Georgia that makes a speciality of Nonprofits utilizing QuickBooks.
Since 2000, Gregg has been educating QuickBooks seminars across the nation and is taken into account to be the Nation’s skilled in relation to Nonprofits that use QuickBooks. Gregg’s educating type is humorous and entertaining. His vitality and data of Nonprofits make his courses a novel expertise. Gregg has taught new customers in addition to different CPAs, who’re themselves thought of consultants within the software program. In complete, Gregg has taught over 3,500 seminars to greater than 55,000 college students.
For anybody that’s curious about getting QuickBooks coaching for Nonprofits, Gregg kindly supplied a reduction code so that you can use (this isn’t a paid plug, however merely a value-add for individuals who have an interest).
Craig Van Korlaar (TopNonprofits) Q1: Should nonprofits use the default expense classes in QuickBooks, or do you advocate nonprofits begin with a special set?
Gregg Bossen, CPA (QuickBooks Made Easy): I disagree with lots of the defaults. Here’s the way it works. In the desktop version, once you create a brand new firm it asks you to point its trade. If you choose nonprofit, it generates a set of revenue and expense accounts. Same goes for the web model; solely it’s much more generic.
Part of the accounts which are wanted aren’t there within the default views and can must be added. The different job is eradicating accounts that the default set included that you just don’t need.
QuickBooks has one account that it offers you within the default known as “payroll bills.” Instead of that, you’re going to wish to have one for salaries and wages and one for payroll taxes. These needs to be separated out, and the quantity that goes to salaries and wages is the gross pay. Then the quantity that goes to payroll taxes is the employer share of FICA and Medicare. As nicely as state unemployment taxes owed. QuickBooks lumps them collectively, however they shouldn’t be proven that manner. They needs to be separated out.
So you would both change “payroll bills” to “salaries and wages” after which create a brand new account for “payroll taxes”, or you would delete “payroll bills” altogether after which merely create the 2 new accounts.
QuickBooks additionally likes to start out you out with guardian accounts. You don’t want or need these. For instance, you may even see within the QuickBooks default account checklist a guardian account known as “enterprise bills.” You don’t want this. In reality, on this specific guardian account, you received’t want any of the sub-accounts both. You can delete QuickBooks default guardian accounts for “contracted companies,” “amenities and tools,” one other for “operations” and yet another that claims “others.” Get rid of all of them.
Nobody even is aware of what ‘operations’ means. It means various things to totally different folks. What you wish to have in your accounts is what I name the “pure class of bills.” By pure, I imply what anyone would consider as a pure expense – journey, provides, salaries, hire, payroll taxes, tools rental, postage, printing. Just a pure mind-set about bills. Keep issues comparatively high-level and don’t make the error of placing any of the names of your applications within the bills (extra on this later) and ensure to not have an expense account known as “fundraising.” That’s not what try to be doing.
Q2: You talked about not having project-based accounts. How ought to nonprofits deal with donations or bills that must be earmarked for and reported as being a part of a specific program?
Gregg: Right, you’ll wish to use what is named a Class List in QuickBooks. You can consider courses as how an everyday for-profit enterprise would categorize departments or divisions, however that isn’t how we’re going to use them. Nonprofits sometimes use it to trace their varied program, fundraising, and admin prices. Houses of worship additionally use them to trace funds.
To use courses, you’ll first need to activate this function. In the desktop model, you go below Edit Preferences and go to the accounting desire, inner and sophistication monitoring. Turn them on.
In the web version, you go to the account and settings once more. Then you go to Advanced, and it’s below an space known as Categories, Track Classes. Turn them on.
Then every considered one of your funds or initiatives or applications might be listed as a category.
In the desktop version, you arrange courses by going below Lists after which click on Class List after which you possibly can add your courses there.
In the web version, you go to the gear and click on All Lists, click on on Classes, after which add your courses there.
Now, once you enter transactions, you possibly can level it to an account, after which it’s also possible to level it to a category. That manner, you don’t need to have “provides” for Fund A and “provides” for Fund B within the chart of accounts checklist. You simply have one account known as “provides,” after which you might have a special checklist that may present a breakdown by fund A and fund B.
Q3: So what ought to revenue/income classes appear like?
Gregg: On the revenue/income aspect, QuickBooks by default breaks up unearned income (cash given to you through donations or grants) into direct public help and an oblique public help. Get rid of it. It’s finally not useful to most readers. Instead, I might exchange it with one for Individual Donations, one for Corporate Donations, one for Foundations, and one for Government Grants. That’s a way more logical manner to have a look at it. It’s the way you’ll need to report it on the audited monetary statements, and it’s a better manner for the board to have the ability to perceive the place the cash is coming from.
If you might have earned revenue from issues like membership dues, tuition revenue, or ticket gross sales, you wish to have revenue accounts for these as nicely. Don’t get too granular in your revenue accounts. In different phrases, if in case you have several types of members like affiliate members or retired members, don’t have a separate account for every a kind of. There’s a special checklist for that.
So in closing to query one, the concept is to not have many revenue or expense accounts in order that once you print out a revenue loss in comparison with price range for the board, it’s going to match on one web page and the board will be capable of learn it. If you might have too many accounts; say two, three, or 4 pages, the board received’t learn the monetary statements.
This autumn: Can you rapidly run us by means of tips on how to use class lists for revenue accounts?
Gregg: You’d assign them to your revenue transactions in the identical manner as you probably did for bills. Unrestricted presents needs to be pointed to the fundraising class. When it involves coming into a donation or grant that’s earmarked for a particular program, undertaking or fund, for instance, you’d designate the account after which choose the category from the dropdown. This manner, we all know that it’s for that program, undertaking or fund. You must also level bills which are being paid for out of that program, undertaking or fund to that very same class. This manner, if it’s a program or undertaking, you possibly can run a P&L for that class and see whether or not this system or undertaking is paying for itself. If you’re utilizing the Class checklist to trace funds, you understand how a lot cash is left within the fund at any given time by operating a P&L for that particular person class. This is assuming that every one fund bills are pointed to expense accounts.
This article sources data from Top Nonprofits
This article sources data from Donors.Today