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An asset or service other than cash is known as an in-kind donation. It includes office supplies, printing services, leased space, furniture, or other professional services. If you are willing to record the in-kind donation, QuickBooks makes it possible for you. In this guide, we will share the whole procedure of recording in-kind donations in QuickBooks Online and Desktop.
However, if you have no idea whether your donation needs to be recorded in the books as an in-kind donation then you should check it with your accountant. Make sure you are aware of the Fair Market Value (FMV) of donation. Read on to know more.
How to Record In-kind Donations in QuickBooks Online?
Before you proceed with recording in-kind donations in QuickBooks, one has to create a certain type of account. Once you set up the necessary accounts, you can record the in-kind donations in QuickBooks. In the following discussion, you will learn to set up the in-kind donations and record the in-kind donations as well.
Set Up the In-Kind Donation
To set up the in-kind donations, you need to create an income account and a clearing account to record charitable contributions. After this, set up the product or service items to record the donations. Let us help you to guide on how to record in-kind donations in QuickBooks Online with detailed instructions:
Step 1: Set Up the Income Account
- Click on the “Accounting” tab.
- Then, select the “Chart of Accounts” option.
- Press the “New” button.
- When you see the “Account” dialog, click on the “Income” option using the “Account Type” drop-down arrow.
- Now, click on the “Detail Type” drop-down arrow to choose the “Non-Profit Income” option.
- After this, add the name for your account, e.g., “In-Kind Contributions”.
- Click on the “Save and Close” button.
Step 2: Set Up the Clearing Account
- Switch to the “Accounting” tab.
- Then, click on the “Chart of Accounts” option.
- Click on the “New” button.
- From the “Account” dialog, you can click on the “Bank” option using the “Account Type” drop-down arrow.
- Click on the “Cash and cash equivalent” option using the “Detail Type” drop-down option.
- Here, you can type the name for your account, e.g., “In-Kind Clearing”.
- Click on the “Save and Close” button.
Step 3: Set Up the Product or Service Item
- Navigate to the “Settings” icon.
- Click on the “Products and Services” option.
- Select the “New” button.
- Choose the “Service” option.
- When you see the “Product/Service Information” screen, you can choose the type of service or product you want to create.
- Enter the “Name” as well as the “Description” that suits the sales, donation receipts, or pledge.
- Click on the “Income Account” drop-down arrow and choose the “In-Kind Contributions” account that you created.
- After this, select the checkbox (I purchase this product/service from supplier) from the “Purchasing information”.
- Click on the “Save and Close” button.
Now that you have created the required accounts and products/services item, continue recording in-kind donations in QuickBooks Online.
Record the In-Kind Donations
To start recording in-kind donations in QuickBooks Online, first, you will have to enter the sales receipt, create the bill for donation and then mark this bill as cleared.
Important Note: If you get a fixed asset as an in-kind donation then you should use the fixed asset or expense account on the bill. In case you are not sure whether the item belongs to a fixed asset then you should connect with your account.
Step 1: Enter the Sales Receipt
- Click on the “+New” menu.
- Then, select the “Cash Memo” option.
- Go to the “Customer” field and add the name of the donor. If it is the very first entry then type the donor’s name, click on the “Add” button, and hit the “Save” button.
- Select the donation “Date”.
- Now, click on the “Deposit to” drop-down menu and select the “In-Kind Clearing” bank account that you created.
- Here, you can choose the item using the “Product/Service” column drop-down menu.
- If required, you can add the “Description”.
- After this, you can assign the “Class” linked with the donation.
- Moving to the “Amount” field and adding the “Fair Market Value” (FMV) of the donation. If you have no clue about FMV, we suggest you consult with the accountant.
- Once done, click the “Save and Close” button.
Step 2: Enter the Bill
- Navigate to the “+New” button.
- Then, click on the “Purchase Bill”.
- Go to the “Supplier” section and enter the name of the donor and enter 1 or period (.) after the name. This will be accepted by your system. All you have to do is click on the “Add” and “Save” buttons.
- From the “Item details” section, choose the service or product using the drop-down menu.
- After this, you can assign the “Class” linked with the donation.
- Click the “Save and Close” button.
Step 3: Make Your Bill as Cleared
- Click on the +New” button.
- Select the “Pay Bills” option.
- Click on the “Clearing Account” using the “Payment Account” drop-down arrow.
- Here, you need to place the checkmark for the bill you entered.
- Press the “Save and Send” button.
By following the aforesaid steps, you can easily record the in-kind donation in QuickBooks Online. Make sure you create the necessary accounts and service/product items before recording in-kind donations in QuickBooks.
How to Record In-Kind Donations in QuickBooks Desktop?
The process of recording in-kind donations in QuickBooks Desktop is quite similar to the online version. All you are required to do is create the income account, the clearing account, and set up the product or service item. Thereafter, you can record the in-kind donation in QuickBooks Desktop. Let us help you with each step in detail.
Note: Make sure you take guidance from your accountant if your donation needs to be entered as an in-kind donation.
Set Up the In-Kind Donation
To get started, you will have to set up an income account and a clearing account to record charitable contributions. Once done, continue setting up the product or service items to record the donations. Let us help you to guide on how to record in-kind donations in QuickBooks Desktop with detailed instructions:
Step 1: Create the Income Account
- Click on the “Lists” tab.
- Then, select the “Chart of Accounts” option.
- Select the “Account” drop-down option to click the “New” button.
- Now, click on the “Income” or “Other Income” option as your account type. You can also issue with your accountant to choose the appropriate account type.
- After this, add the name to your account.
- Once you are done filling in the required details, click on the “Save and Close” button.
Step 2: Create the Clearing Account
- Switch to the “Lists” tab.
- Then, click on the “Chart of Accounts” option.
- Click on the “Account” drop-down option to select the “New” button.
- Now, choose the “Bank” as your “Account Type”.
- Here, you can type the name for your account, e.g., “In-Kind Clearing”.
- Click on the “Save and Close” button.
Step 3: Create the Product or Service Item
- Select the “List” menu.
- Then, click on the “Item list” option.
- Here, you can select the “Item” drop-down menu and hit the “New” button.
- Now, choose the “Service” option as your item type.
- After adding the required details, you can click on the “OK” button.
By following these steps, you can easily set up income accounts, clearing accounts, and products/services items. After this, you can continue recording in-kind donations in QuickBooks Online.
Record the In-Kind Donations
As you receive the contribution or donation, you can record it in your QuickBooks account. All you have to set up is the sales receipt and make sure that you choose the In-kind clearing account that you created using the Deposit To drop-down.
Later, you can set up the Bill once you get the goods and services donated and pay the bill using the In-kind clearing account. Let us help you in recording in-kind donations in QuickBooks Desktop in detail.
Step 1: Create the Sales Receipts
- Go to the “Customers” menu.
- Then, click on the “Create Sales Receipts” or “Enter Sales Receipts” option.
- By using the “Customer: Job” drop-down menu, you can choose the customer. In case the customer is not added to the list then click the “Add” button and hit the “New” button.
- Now, you can enter the required details such as “Date” or “Sale No.”.
- Select the “Payment Method”.
- Then, go to the detail area and choose the item you want to include as a sale.
Note: While adding the item, the amount and description are populated automatically based on the unit cost and description you added during the setup of the item. If required, you can delete it while creating invoices.
If required, you can apply for the discounts.
Step 2: Enter the Bill
- Navigate to the “Vendors” button.
- Then, click on the “Enter Bills”.
- Here, you can use the vendor using the drop-down menu. Thereafter, enter the required fields:
- Amount: The total amount of your bill.
- Date: Add the date on which you got your bill.
- Due Date: This is to add the due date of your bill.
- Once done, choose the bill type you wish to record:
- Expenses: Enter the bill for expenses that are incurred by your business, for example, rent, utilities, and phone service.
- Items: Enter the bill that the company sells, buys, or resells in business, for example, shipping, products, and discounts.
- Click the “Save and Close” button.
Step 2: Pay the Bill
- Navigate to the “Vendors” button.
- Then, click on the “Pay Bills”.
- After this, you can choose the appropriate accounts payable account using the drop-down.
- Now, choose the checkbox of your bill you wish to pay from a table. Make sure you mark or unmark all your bills in the list. To do so, click on the Select All Bills” or “Clear Selections”.
- Select the credit or discount you wish to apply to the bills:
- Discount: Choose this if the vendor has given you any discount for the transactions.
- Credit: This option can be selected if you have received the credit from the vendor and used it in order to reduce the total bill amount.
- After this, you can add the date on which you have paid your bill.
- Once done, choose the payment methods:
- Check
- Credit Card
- Online Bill Payment
- Online Bank Payment
- Cash, Paypal, Debit or ATM card, or EFT
- Click on the “Pay Selected Bills”.
- Select the “Done” button. You can also choose the “Pay More Bills” option if you want to pay more bills.
This way you can record the in-kind donation in QuickBooks Desktop. All you just have to do is create the sales receipt, enter the bills and pay them carefully.
To Conclude
QuickBooks allows you to record the asset or service other than cash such as office supplies, printing services, leased space, furniture, or other professional services. Here, we have shared the whole procedure of recording in-kind donations in QuickBooks Online and Desktop. However, you should consult your accountant, if your donation should be recorded as an in-kind donation.
Do you know how to delete a pending payroll in QuickBooks Desktop? Read the complete guide here.