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Lists: Key to Getting the Most Out of QuickBooks for Nonprofits

Lists Key check-list-2304921 315 x 315If you’ve been using QuickBooks for a while, you may be frustrated over how to enter transactions so you get meaningful reports.

The key to good reports starts with understanding and using QuickBooks’ lists.

Today we want to give you a brief overview of QuickBooks’ most important lists. Effectively using QuickBooks’ lists is the key the getting the most out of QuickBooks for your nonprofit organization.

1. The chart of accounts is the backbone of your accounting system.

In both QuickBooks Desktop and QuickBooks Online, the chart of accounts drives the appearance of the Balance Sheet and Profit and Loss reports. If you have a disorganized Profit and Loss report that takes eight pages to print, your chart of accounts is to blame.

The chart of accounts is divided into account types that control where the accounts show up in your financial reports. For example a Bank type account will show up at the top of your balance sheet since cash is always the first asset on the balance sheet. An Income type account will show up in the income section of the Profit and Loss report.

Within each account type in the chart of accounts, you have a lot of flexibility to arrange the accounts to suit your organization’s needs.

2. The class list allows you to report by program vs. support services.

The class list lets you divide your nonprofit’s income and expenses into key operating areas, called functional areas. The functional areas are:

  1. Program
  2. Management & general
  3. Fundraising

The management & general and fundraising areas are collectively referred to as support services.

Your nonprofit may have just one program, or it could have several distinct program service areas. In QuickBooks you can set up a class to track each major program service.

If you code transactions to both accounts and classes, you can run a Profit and Loss by Class report to see operating results both by natural classification (payroll, rent, etc.) and functional area (program, management & general, fundraising).

The Profit and Loss by Class report helps you with managing the programs and other operations of your organization. It is also important because it provides information required for your audit and Form 990.

3. The item list is necessary for sales receipts and invoices, and lets you track a much greater level of detail.

The item list enables you to

  1. Produce sales receipts and invoices for customers or donors and
  2. Create useful reports about the nature and sources of your income.

QuickBooks is designed to record income transactions using a sales receipt or invoice form. If you bypass these forms and push income directly into bank deposits, you will not be able to:

  1. Print or email sales receipts or invoices to your donors and customers from QuickBooks. We’ve seen organizations create sales receipts in Word, then manually enter the same transactions into QuickBooks. That’s duplicating work! The point of QuickBooks is to save work by creating the sales receipt and recording your transaction at the same time.
  2. Easily run reports of money received by donor or client. Many of the most useful management reports in QuickBooks are based on items. If you are not using items then you cannot benefit from these reports.

4. Customer and vendor lists track who provides resources and to whom you pay money.

In QuickBooks anyone who gives you money or in-kind donations, whether it’s a gift or fee for services, goes on the customer list. Anyone to whom you pay money goes on the vendor List. The customer and vendor lists work very similarly.

In QuickBooks Desktop these lists allow you to enter detailed and comprehensive information. They are appropriately called the Customer Center and the Vendor Center. For example, you can keep notes about conversations, create custom fields for unique characteristics and categorize customers or vendors by type.

In QuickBooks Online the amount of information you can enter about each customer or vendor is limited. If you are using QuickBooks Online you will almost certainly want to use a separate donor management software such as Bloomerang. Bloomerang has a free version for small nonprofits.

5. The template list contains templates for sales receipt, invoice and other forms which you can customize for your organization.

In QuickBooks Desktop you can customize sales receipt and invoice forms so they have your organization’s logo and look beautiful for donors and customers. You can even create a sales receipt form that prints like a thank you letter to your donor! (See the “how to” article in Nonprofit Accounting Academy’s Free Member Resource Library.)

Another reason to customize forms is to tailor the data entry experience to the way your organization operates. For example, you can add fields you need and remove fields you don’t need.

In QuickBooks Online you can make simple edits to forms such as adding your logo and whether to show certain fields.  More recently Intuit made available a QuickBooks Labs feature which allows you to import an invoice designed in Word into QuickBooks Online. Read more about Import Style here.

6. Plus QuickBooks has a few other handy lists.

QuickBooks Desktop has a few other lists such as the Other Names list and the Customer & Vendor Profile lists which can come in handy for various purposes.

Lists Unlock the Power of QuickBooks

The most important lists to master are the Chart of Accounts, Class and Item lists. In addition, learning how to customize forms on the Templates list comes in handy if you want to edit forms for data entry purposes and/or customize forms you give to customers, clients and donors.

In future posts we will take a deeper dive into each of these types of lists. Learning to use QuickBooks’ lists is the key to unlocking the power of QuickBooks for nonprofits!

 

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