5 More QuickBooks Tips for Nonprofits

Posted on Wednesday, April 04, 2018

A majority of nonprofit organizations use QuickBooks for their accounting needs.  In our previous post, 5 QuickBooks Tips for Nonprofits, we provided some basic tips for using the software.  Below are five more tips to efficiently use QuickBooks.

1. Use account numbers.  Account numbers make it easier to organize account information; however, QuickBooks does not require the use of account numbers and by default this setting is turned off.  In order to use account numbers, you must turn the preference on by selecting Edit – Preferences – Accounting – Company Preferences – Use account numbers.  When setting up account numbers, make sure they follow a logical sequence.  Normally assets start with 1xxxx, liabilities with 2xxxx, net assets with 3xxxx, revenue with 4xxxx and expenses with 5xxxx.
2. Don’t complicate the chart of accounts.  The chart of accounts categorizes all of your organization’s transactions by type into various “buckets” called accounts. When setting up accounts, keep it simple.  Make sure you have enough accounts to provide meaningful reporting, but not too many as to get caught up in details.  For example, when recording contributions revenue, one general ledger account called “Contributions” or a couple called “Contributions – Individuals” and “Contributions – Foundations” is sufficient versus having a separate account for each donor (i.e. “Contributions – Foellinger Foundation,” “Contributions – Community Foundation,” etc.).   The Classes and Jobs features in QuickBooks should be utilized for additional detail such as grantor, not the chart of accounts.  See our previous blog on using Classes and Jobs.
3. Use Form 990 as a reference.  At the end of the year, your organization will most likely be required to complete Form 990 so why not make it easier to complete the form by setting up your revenue and expense accounts to follow the amounts that must be reported to the IRS?  Use the line items from the statement of revenue and statement of functional expenses on the 990 to name your accounts in QuickBooks.  
4. Don’t delete transactions.  One negative feature of QuickBooks from an auditing perspective, is the ease at which activity that has been entered can be manipulated.  It is very easy to delete transactions or change activity in QuickBooks.  Because of this, it is best to make any corrections to previously entered transactions through journal entries or voids as opposed to deleting the transaction.  By entering an adjusting journal entry or voiding a transaction, an audit trail is created showing exactly what was changed.
5. Utilize memo/description fields.  When entering transactions make the most of the memo and description fields to provide additional information.  Of course, when you enter a journal entry, you should include a reason for the entry in the description field but you can also add detail to deposits and checks.  For example, if part of your deposit has money received for a specific purpose (restricted funds), enter the restriction in the memo field. 

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.