Question

account types to track designated funds for a church?

Forum|Forum|7 years ago
January 28, 2019
5 replies
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I recently started as the treasurer at our church. I do have experience with quickbooks online bc I keep books for my husbands landscaping business however the funds are so different. Before me everything was tracked with excel sheets so I am now starting with a fresh Chart of accounts. There are roughly 30 categories of funds that I need to track with a running balance available. These funds are all within the same checking account. There are basically two different accounts. #1 money is donated for a specific mission. We collect the money and at the end of the month the money gets sent to that particular group. in other words we just house it and pay it forward #2 is funds that are donated and used within our church. For example, a donation is made to be used for flowers. I then need to track expenses used against that category. How is the best way to set this up. They #2 type of account will all have starting balances. Any advice?

QuickBooks Online

L

leann3

I recommend using classes to track the designated funds and expenditures. You can then pull a P&L by class at any time and get a report with full detail for that designated fund.

J

justme70

I noticed your reply refers t o QB on line, I use QB desktop. Is classes still your recommendation ?

Rejeil_O

Hi there, @justme70.

Let me walk you through the steps to set up classes in your QuickBooks Desktop account. Yes, classes still recommended since it helps you handle designated accounts for a church and use Profit and Loss report to check the data. You can follow these steps on how to set up classes in your QuickBooks Desktop account:

Step 1: Turn on class tracking

Open your company file.
Go to the Edit menu, then select Preferences.
Choose Accounting, then go to the Company Preferences tab.
Click the checkbox beside the Use class tracking for transactions.
Select the Prompt to assign classes checkbox if you want a reminder when you haven't assigned a class yet.
Click OK.

Once done, you can refer to this article for the next step setting up classes in your QuickBooks Desktop account: Set up and use class tracking in QuickBooks Desktop.

Also, you can create separate accounts as what DeaB recommends so that you can track your balance in the Chart of Accounts.

In case you'll need help to generate reports to compare the balances across multiple classes, departments, or locations, refer to this article: Filter, sort, or total reports by Class.

If you have additional questions, feel free to leave a message in the comment section. I'll be happier to help. Take care and have a great day!

A

Anonymous

Hello AngG,

Welcome to the Community.

The answer of @leann3 is a great help to keep track your expenditures and revenues. I'll just add a little more about class tracking in QuickBooks Online. This feature is only available in the Plus version, and you'll have to turn it on in the company settings.

Here's how:

Click on the Gear icon.
Select Account and Settings.
In the Advanced section, select Categories.
Check the Location and Class boxes.
Click on Save.

To learn more about it, please check out this article: Using Classes and Locations in QuickBooks Online.

Here's a list of reports available: Available Reports in QuickBooks Online.

If you have any questions, please let us know. Thanks!

A

AngGAuthor

I was thinking classes but how would I have a starting balance then? Would having the designated funds as sub accounts to my checking account be better?

PreciousB

Hello AngG,

I'll chime in this thread to help you enter the account's starting balance.

If the bank has a running balance, you can enter it as an opening balance when you first set it up.

Here's how:

Choose the Gear icon at the top.
Select Chart of Accounts.
At the top right, select New.
Choose the account type, then from the Detail Type drop-down, choose Checking.
In the Name field, enter the name of the account.
Enter in the appropriate information for the opening balance and the date as of (see the screenshot below).
Select Save and close.

As for your other question, you have the option to add a sub-account on your checking account. Please note that everything in your sub-accounts roll up to the parent account.

Check out this article for the detailed steps: How to create a new parent account or sub-account.

That's it. Let me know if there's anything else you need, I'll be around. Have a great day.

lorendac

I'll second the suggestion to track these funds by class...it will make it easier at the end of the year to adjust any restricted equity accounts so you have a permanent record of how much each fund balance is.

This is how I handle fund accounting in QBO. If your different funds just need to be tracked separately, I just set up a class for each, and make sure to designate the class each time activity occurs.

If you're needing your books to adhere to GAAP accounting (i.e. separate treatment between Unrestricted and Restricted) I still use the classes mentioned above, but I'll also set up an Other Income account called "net assets released" or something similar, and each month/period make an entry to this account to zero out my net income for all the restricted activity, with the offset being the restricted equity account matching that fund on the balance sheet. This way, your P&L is appropriately tracking both the inflows and outflows of your restricted activity on your P&L, and your equity section of the balance sheet shows the correct balance of each fund.

D

DeaB

I just started doing the bookkeeping for a church and they have their designated funds set up as sub accounts of their checking account. That way, in the chart of accounts, it is easy to see the running balance of each designated fund and what part of the checking account is already designated to something specific.

Can you think of a reason that this wouldnt work??

The other church I do bookkeeping for has their designated funds set up as equity accounts. But in order to keep the profit and loss correct the designated income has to be entered in as Miscellaneous income and then using a general journal entry to expense them into the equity account. Its kind of messy. And takes time at the end of each month to make sure none of the journal entries are missing.

I dont like using classes because if you get in a hurry and forget to add the class to a transaction, it would be difficult to know that it was missed, at all. How would you reconcile the classes to be sure they were accurate.

lorendac

I think as long as the only things flowing in and out of the designated fund accounts are restricted activity, this will work great. My suggestion is more for folks who have only a general fund bank account, but need to track how much of that bank balance is actually donor-restricted/donor-directed.

Another thing you will need to think of is how to keep the revenue and expense side of the bank activity separate. For GAAP accounting, restricted fund activity has no impact to the Net P&L - as Restricted Funds are used (expense), you would recognize the revenue at the same time, so the "net income" impact is 0 to P&L. That being said, if you're not doing GAAP, I'm not sure that matters as much.

lorendac

Sorry - this was in response to k8tfbc's comment.

C

cljoiner

I am in the same situation you were in four years ago. Except I was not familiar with Quick Books at all when I took on the church financial duties. How did you set this up for your designated funds? What types of accounts do you have them set up as. And though my check register has the correct bank balance for the designated accounts, the funds that make up this account do not. How do I find what else is linking to this bank account?

Thanks for any help you can give.

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