Many businesses use the donation to pay their taxes. It becomes quite necessary to record such donations to ensure correct tax areas for the annual deduction. Hence you need to record this donation accurately in the accounting software.

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In QuickBooks, it is pretty easy to record a donation and charitable contributions in the form of credit cards, checks, and cash. The below post will enable you to easily record the donation details in QuickBooks on your own.

How to record donations or charitable contributions in QuickBooks Desktop?

The process of recording charitable contributions or donations depends on the donation types. These require a different technique for recording the product donation and a cash donation you generally sell. The below sections will teach you the instructions required to record any type of donation.

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Cash donations setup:

You can set up a charitable organization as a vendor to donate cash. Hence whenever you process a donation you can record it as a bill, payment, or a check similar to the other payment to the vendors. Ensure that the expense account you choose from the drop-down list is named Account in the account details option. This section is a dedicated expense account for the tax-deductible contributions that are not used for other expenses.  If there is an existing expense account then click Add new drop-down list tab.

Follow the following pointers to record product and services donations:

  • Firstly generate an invoice for the donated products or services
  • Now make an account for charitable contributions
  • Click Service/product item named Charitable contributions
  • Next, issue a credit memo to the client
  • Check the applied credit memo to the invoice
  • Follow the in-depth steps to  go through the procedure:
  • You must create an invoice for the service or product to start recording a donation. Hence you can record the invoice. 

Make a charitable contributions account with the below instructions:

  • Locate Settings option
  • Choose Chart of Accounts
  • Click New
  • It will prompt account window, choose Expenses using drop-down list named Account Type
  • Choose Charitable Contributions using the drop-down list which says” Detail Type “
  • Give a name to the charitable contribution account
  • Choose Save and Close option
  • After an account creation now create an item for the charitable contribution’s service/product

Once you have created this account, the next step is to create a product/service item for donations.

Here are the steps:

  • Choose Settings tab
  • Below Lists, choose Products & services
  • Click on New
  • It will display a Product/Service information window
  • Choose the product or service type
  • Write an item name
  • Choose the check box named” I sell this service/product to my customers
  • Click on the charitable contribution account you have generated with a drop-down list in the field named income account
  • Hit Save and Close tab
  • Next, issue a credit memo for the products or services values with the below steps:
  • Click +New option
  • Below Customer, choose Credit Memo tab
  • Fill or choose the client you donated the service or product to
  • Click on the column named Service/Product, choose the charitable contributions item, and then write the donation amount as a positive number
  • Write donation/charitable contribution in the Memo field
  • Hit Save and Close tab
  • After this check the applied invoice
  • At last, check the credit memo with the below instructions:
  • Choose the Sales option then click the Customers tab
  • Hit the customer you have donated the service or product to use the list
  • Click on the tab labeled Transaction List
  • Now confirm the created invoice transaction at the start of the process which says “status of paid”
  • Next, verify the created credit memo transaction that is set as closed in the column named status
  • After this confirms the listed a new payment transaction with $0.00 appears in the Total column & Closed as a Status column.
  • Now the donation has been accurately recorded

Recording in-kind donations in QuickBooks Desktop:

For recording an in-kind donation, you need to set up an income & clearing account for charitable contributions & create an item named product or service for the donations. Follow the below steps:

  • Create an income account, a clearing account, and product item with the below steps:
  • Make an income account with the below instructions:
  • Click on the tab named Accounting
  • Choose Chart of Accounts option
  • Hit New button
  • It will display an Account dialog, choose income using drop-down menu named Account type
  • Click on the drop-down menu labeled Detail Type
  • Choose Non-profit income
  • Give an account name
  • Click Save & Close option

Follow the below instructions to create a clearing account:

  • Hit on the Accounting option
  • Choose Chart of Accounts
  • Click New
  • It will display the Account dialog field
  • Choose Bank box using drop-down menu named Account Type
  • Click on the drop-down menu which says “Detail Type”
  • Hit Cash & cash equivalent option
  • Write an account name
  • Click Save & Close option

Create an item for product or service with the below pointers:

  • Open the Settings tab
  • Choose Products & Services option
  • Click the New option and then hit Service
  • Choose the service or product type in the service/product information panel
  • Now give a name & description appropriate for the pledge, sales, or donation receipts
  • Click the drop-down button named income account
  • Choose the created In-kind contributions income
  • Below purchasing information, click on “I purchase the service/product using checkbox named supplier
  • Hit Save and Close.

Once you set up the accounts & the created product or service item, you can process to record in-kind donations.

Record in-kind donations:

During in-kind donation records, fill a sales receipt and generate a donation bill then set the bill as cleared. Now here are the steps:

  • Fill a sales receipt with the below instructions:
  • Click +New option
  • Choose Cash Memo
  • Write the name of the donor in the customer box
  • Fill in the donor’s name in case of the new entry and then click Add & Save option
  • Write the donation date
  • Click on the drop-down option named “from the Deposit to”
  • Choose the created in-kind clearing bank account
  • Click on the suitable item using the product/service column drop-down menu
  • Write an extra description
  • Set the class related to the donation
  • Fill the donation named fair market value in the field named Amount
  • Hit Save & Close option

Step 2-Enter a bill with the below steps:

  • Click +New option
  • Choose the Purchase Bill tab
  • Write the donor’s name & (.)period in the supplier box
  • Click on Add and Save option
  • Below Item details, choose the product or service you created using the menu named drop-down
  • Hit Save & Close tab

Step 3- Mark the bill as “cleared”

  • Click +New option
  • Choose Pay bills
  • Using the drop-down option using payment account choose the clearing account
  • Choose the checkbox for the entered bill
  • Click Save and send

Closure:

Here the write-up completes! Hopefully, the information is helpful. In case of any further queries get connected to the professional team.

FAQs:

Most common questions related to record a donations in QuickBooks

How do I know the donation amount in QuickBooks?

The credit memo reflects the donation amount

Can I track the contributions in QuickBooks?

  • Hit on the Gear icon
  • Choose Chart of Accounts
  • Select New
  • Below Account type choose Income
  • Click on Non-profit Income below Detail Type
  • Write a name like the In-kind contributions tab
  • Hit Save option

How would I record a donation in QuickBooks Desktop?

  • Hit on the menu says “Non-Profit”
  • Choose Enter Donations using the drop-down option
  • Click on the drop-down arrow named Customer job
  • Choose an existing donor
  • Hit Add New option
  • Select the “Item List” tab  
  • Choose New option
  • Enter drop-down list and choose Service
  • Hit the drop-down list named Account and choose an account to deposit donated
  • Choose the fund according to the class column
  • Fill total of the donation in the field named Amount
  • Hit Customize tab & choose any fields you need to add or delete
  • Click Deposit To from the drop-down list
  • Choose the received deposit
  • Hit Save & Close.

How to Keep Record Donations to LLC’s in QuickBooks?

There are two types of donations to an LLC supported by QuickBooks. Non-cash donations are handled via a sales receipt and journal entry, and cash-based donations can be handled through the register. 

Steps to Record Non-Cash Donations to LLC in QuickBooks:

  • Choose “Enter Sales Receipts” under the “Customers” menu.
  • Fill in the “Customer:Job” field with the name of the LLC receiving the donation. You can also choose an existing customer. To add a new one, select “Quick Add” and enter the information.
  • Select a template for your sales receipt from the “Template” drop-down list. On the QuickBooks Desktop Support website, you can download a template if you don’t already have one.
  • From the drop-down list in the “Item” column, choose the good or service you are donating.
  • To zero out an item, change the “Rate” column to “0”.
  • To deposit money, select your bank account from the “Deposit To” drop-down list. Save and close the window.
  • You can make general journal entries by clicking the “Company” menu.
  • Simply enter the date of the donation and the entry number. The entry number advances to the next available entry if you have used journal entries previously.
  • In the “Account” list, select Donation. You may use this account to track donated goods or services, such as Charitable Donations Expense.
  • Input the donation cost in the “Debit” field. To keep track, write “Donated Inventory” into the Memo field.
  • The next line should have “Cost of Goods Sold” selected, and you should enter a credit. You may need to manually enter the number from the “Debit” field. Click “Save & Close” after typing “Donated Inventory” into the Memo column.

Steps to Record Cash-Based Donations to LLC in QuickBooks:

  • “Chart of Accounts” can be found in the “Lists” menu.
  • Choose the bank account that you want to use for the donation.
  • Fill in the fields with the date, check number, and payee for the first available blank entry. Select it from the “Name” drop-down list when entering a name. Enter the LLC’s name in the “Name” field, hit “Enter,” select “Quick Add,” and then enter the required information.
  • Choose the payment amount in Payment. Enter the name of the account you wish to use to track your donation if you’re sending a check.
  • If you ever need to locate the transaction in the future, you can write “Donation” in the Memo field. After that, click “Record.”

How to record a donation refund in QuickBooks?

To record donation to charity that is also a customer is counted under Refunds or Credit Memos. Steps are:

  1. Click on Customers.
  2. Click on Create Credit Memo/Refund.
  3. The Refund icon will appear.
  4. Select the bank account.
  5. In the Pay to order section, click on the customer.
  6. Type the amount to be donated.
  7. Then click Save.
record-donations-quickbooks
Record Donations in QuickBooks

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