As you know QuickBooks is one of the best accounting software that helps organizations manage their finance and keep and track records. But QuickBooks also offers a variety of features to non-profit organizations. For this, users use QuickBooks for nonprofits which is a line of accounting software that is equipped with a nonprofit edition with donation tracking. Compared to other accounting software Quickbooks for nonprofits is easier to help with your accounting functions. If you are running a nonprofit organization then you have only the option to choose QuickBooks online for nonprofits or QuickBooks Premier desktop with a nonprofit edition. The term fund accounting is the method used by non-profits in which funds are allocated before spending. To know more about fund accounting in QuickBooks and how to set up fund accounting, stay with us till the end of the article. Here we’ll discuss all the details.
Table of Contents
What is Fund Accounting in QuickBooks?
Any organization that is exempted from tax and meets the USIRC’s (United States Internal Revenue Code) section 501. If your organization becomes a non-profit then it must categorize its financial data into several categories, or funds. They must also utilize standardized reports to report their funds. For funds accounting there are some guidelines that should be met by the nonprofit organization. The funds are used to track the income and expenses associated with specific activities. Funds that are received by the organization are responsible for the collection distribution and manage all money.
Fund Accounting and Municipalities
All the municipalities are governed by Governmental Accounting Standards Board (GASB) 34 regulations, which have just recently become applicable to several cities that are varying in size, in the last few years.
More thorough asset inventories are necessary due to these new restrictions. To achieve compliance with those rules, municipalities should think about using QuickBooks Premier Non-Profit Desktop. Non-profits without these stricter inventory requirements are better suited for QuickBooks Online.
QuickBooks Chart of Account Setting
If you are going to start the fund accounting within QuickBooks then firstly you have to set up a chart of accounts. Follow the steps below to begin.
- Firstly you have to go to the Transactions tab.
- Then next choose the Chart of Accounts menu.
- Now, a new window will appear, here you have to click on New.
- From the Account type dropdown, select the Account type.
- Then click on the detailed type dropdown and select.
- Fill in all the fields and then click on save and close.
Steps to Set up Fund Accounting in QuickBooks
If you have Quickbooks software and running a nonprofit organization then you have to set up fund accounting in Quickbooks. The step-by-step procedure is given below:
Step 1. Turn on Class Tracking
- Firstly you have to go to the gear icon ⚙ and then click on Account and Settings.
- Then the next step is to select Advanced.
- Now go to the categories section and select the pencil icon which is an edit button.
- Then click on the Track classes option.
- Then click on the save.
- After doing the above-mentioned steps click on Done.
Step 2: For each fund, Set up a class
You have to track each fund separately by setting up a class. For this follow the steps:
- Firstly you have to go to the gear icon ⚙ option.
- Next, select All List.
- Then select classes
- Then the next step is to select New after that you have to fill in the name of the fund in the Name field.
- Then select Save
So, follow all the above steps for tracking the funds but keep remembering that you have to repeat these steps every time if you need to track each fund.
Step 3: Track Multiple funds with bank sub-accounts
If you have numerous funds, you can record the sum of all the funds to a single bank account on your chart of accounts while keeping track of each fund separately using different sub-accounts. For the purpose of tracking each fund, you have the option to create a separate sub-account. Every transaction you associate with one of the created sub-accounts appears in the main account.
To set up sub-accounts:
- Firstly go to the Transactions and then charts of account.
- Next, you have to select New and see the panel.
If you want to see the New account panel follow the given steps:
- Firstly select the Banks.
- Then next choose Bank Accounts from Save account under dropdown.
- Then the next step is to Select Checking from the Tax form section dropdown.
- Now in the fund name field, you have to enter the fund name.
- Before adding information select starting date and opening balance.
- The final step is to click on save.
If you want to see the New category panel then follow the below steps:
- Firstly, in the category name field, you have to enter the fun name.
- Then click on the select category link and then select bank and credit cards.
- Now from the Account type field dropdown, you have to click on checking.
- After doing all the mentioned steps enter the opening balance.
- The final step is to click on save.
Step 4: Prepare a profit and loss report for each class
For reviewing the fund income and expenses you can run a profit and loss report. Here’s how.
- The first step is to tap on Transactions.
- Then click on Reports.
- The next step is to search Profit and loss by class and select it. It shows all the fiscal year’s numbers.
- Now from the Report period dropdown, select All Dates to review the total of the expenses and income for the entire life of the fund.
- The final step is to click on Run Report.
So here we discussed all the steps and a complete guide on how to set up fund accounting in QuickBooks. We hope this information will be informative to you and help to get the details about fund accounting.