I love QuickBooks (QB)! I use it for my small business and it does everything I need and more.
I have set up churches in QB and have found it works well for them as well...with a little adjustments.
Let me lay a little ground work here first...
If you are a start up church or a small church...without many assets and liabilities...
single entry bookkeeping...such as my accounting spreadsheets may work for fine for you.
However, double entry bookkeeping is always the best option...if possible. See this page on basic accounting for the difference between single and double entry bookkeeping.
For those who do have it in their budget for accounting software, I recommend doing some extensive research before choosing your software.
See this page for some tips to help you decide which software is the best accounting software for your church or nonprofit.
Like I stated above...I have set up several churches in the desktop and online version of QuickBooks and like the extensive reporting capabilities among other things with the software.
Here is some of the things I have discovered while working with this accounting software.
It is built for "for-profits"! So...if not set up properly for fund accounting...it can turn into a nightmare!
If you are going to use QB Pro or QB Online (QBO) to its fullest potential do one of these 2:
In a nutshell, I believe QBDT and QBO can be affordable options for many small churches and nonprofits. Once it is set up PROPERLY -- volunteers with little or no accounting knowledge can easily use it...especially if you get it set up and have someone like me to train your staff how to use it. (NOTE: Vickeys Bookkeeping only offers QBO training and bookkeeping as we are not currently have the capability to work in your desktop versions.)
The difficult part is setting it up correctly. If your church can afford it, I highly recommend using someone (like me=) that is very familiar in church or nonprofit accounting to set it up for you AND train you how to use it effectively. That way it will be done correctly and saves possible headaches down the road.
However, if hiring someone to set up your QB or QBO is not an option due to a limited budget. There is still a way for you to set it up and enjoy all the benefits of this very effective accounting software.
Purchase Lisa London's QuickBooks for Churches. Lisa is a CPA and has written this book that is a must for anyone setting up or even maintaining a QB file for churches.
Lisa will walk you through DESKTOP QuickBooks from start to finish, complete with examples, terminology, and everything a busy church administrator or bookkeeper needs to know.
The book is written for beginner and advanced church bookkeepers alike, in a friendly and easy-to-understand style. It includes:
Lisa has now written a book just for setting up and using QB for nonprofits.
Using QuickBooks® for Nonprofit Organizations, Associations & Clubs shows the reader how to set up and use QB in a nonprofit environment.
Geared toward people with or without QB experience.
Not only does Lisa take you through how to set up QB and utilize it more efficiently for your organization, but she also covers everything you need to know to implement controls and procedures to ensure that your money is always protected.
The step-by-step instructions and hundreds of screen shots explain how to:
Using QB for Nonprofit Organizations, Associations, & Clubs includes sample charts of accounts for associations, PTAs, private schools, scouting troops, and civic groups.
I had a client that sent thru a donor's check twice and it bounced both times. They requested that I deduct the amount from the donor's giving record (they were not going to try to deposit it again, nor were they going to attempt to collect the amount from the donor) and properly handle all of the transactions that occurred with the event.
This is how you take that donation back out of the donor's giving record and handle the returned check:
Go to the Quick Create (Plus Sign) ----> CLIENTS ---> Refund Receipt.
If you are rolling in your bank transactions, you will simply match the above transaction to the returned check. You can assign the returned check charge (if applicable) to Bank Fees/Charges.
If you track and record donations in QBO, you must record the full donation and give the donor full credit for their donations...even though your online payment processor may take a processing fee out before depositing it into your bank account.
Here is a way to do that...
Record the full donation in a Sales Receipt.
Click the Quick Create Button (see image above). Click Sales Receipt. Enter the full donation...
1. Enter the donor's name (if it is a new donor ... click Add and add their information in "Details")
2. Enter the date of the online donation.
3. On Payment method...I Add "EFT"...but you can name it what you want or leave it blank.
4. On Reference no. I usually add the transaction ID from the online processor.
5. Make sure you deposit to: "Undeposited Funds"!
6. Choose your Product/Service
7. Enter the full donation amount and class ... if using classes to track designated funds.
8. Click Save and New if you have more donations to enter or Save and Close if you don't have any more donations to add.
Now let's take those "undeposited funds to the bank and subtract the online processing fees...if applicable...
Click the Quick Create Button and then Bank Deposit. I like to have my online giving app open at this point or a report printed out that shows what donations are included in each deposit and how much the online fees were...
1. Select the bank account the funds were or will be deposited in.
2. Select the date of the deposit.
3. Select the donations that were included in that deposit.
4. Under "Add New Deposits" select the expense account you use to track your online processing fees.
5. Put the amount of the fees in as a NEGATIVE number!
6. Make sure the amount in the top right corner equals your actual deposit.
7. Click Save and New if you have more deposits to enter or Save and Close if you don't have any more deposits to add.
One last tip...if you have a large number of donations (online and onsite) to enter, use an app such as SaasAnt to import multiple transactions into sales receipts.
I am going to include some tips on handling specific donations in QBO in the next few months.
The first one is how to handle Pass Through donations (donations received for other organizations).
There are a couple of ways to handle these types of donations. Which method you choose depends on your accounting requirements...or how you prefer to track the donations.
First method: Track pass through donations using accrued liability accounts.
Go to Accounting: Chart of Accounts.
Click on the green "New" button in the top right corner.
Category Type: Other Current Liabilities
Detail Type: Other Current Liabilities
Account Name: Pass-Through or whatever you what to title it
Add a appropriate number and description if desired.
Do not put a balance in! You can add in any beginning balances in through a journal entry.
You can add more accounts as sub accounts to track specific pass throughs. Just repeat that above steps and click the little box to indicate it is a subaccount of your original account.
If the pass through donation is eligible for a donation receipt ...then you will need to set up a Product/Service, so you can track the donation for a contribution receipt. See more below.
If no donation receipt is required, you can just create a bank deposit and assign your new liability account. When you pay the organization that the donation was collected for, you will assign the same liability account when you create the check or expenditure. That will zero out the liability account.
Second method: Using income accounts
If you need to track the pass through donation for a contribution receipt OR if you just want to track those donations for management purposes, you can set up the pass thru donations as product/service items.
Go to the gear wheel at the top right (see image above). Then under the Lists column, go to "Product and Services".
Click on the green "New" button in the top right corner.
Choose the type: Service
Name it Pass Through Donations (or something similar) then choose which Income account you want to link to (Outreach or Pass Through Funding, or something similar?). Note: if you are using the accrued liability method, you can use that account.
"If you are receiving the donations through a fundraiser or cash not from a particular donor, set up a Customer named for the other organization (i.e. Food Bank). If the money is received from a donor, use their name instead.
Enter the donations as you normally would, but set the product/service item to the Pass Through Donation. If you are collecting for several different organizations, set up sub-product/service items to track by organizations. After all of the donations for are entered, run a Sales by product/service report for the time period of the donations to see the total dollars owed to the receiving organization.
You will now set up a product/service item with Service as the type called Pass Through Payments linked to an Expense Account-Payments of Donations to Others or Pass Through Donation. Set up any sub-items for any multiple organization to match the ones you set up above.
Next, go to the Vendor Center and set up the receiving organization as a Vendor.It cannot be the same as the Customer name, so simply add a "v" after the organization's name. Enter a bill for the amount of the donations (from the Sales by Item report) and charge it to the Pass Through Payments item or related sub-item. The check can then be printed as usual". (excerpt from the Accountant Beside You)
Check with your accountant to see which method you should use to record the pass through donations.
Do you have a question or comment regarding using QuickBooks? Share it!
The following comments, tips, and Q/A were provided by FreeChurchAccounting's generous readers:
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