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Joanna25
March 13, 2021
Question

Changing Ltd company to charity

  • March 13, 2021
  • 1 reply
  • 0 views

I have just taken on a new client who has traded for 18 months as a Private Limited Company by guarantee without share capital, they are a Trust company managing a new estate so there income is rental management fees restricted and restricted and unrestricted grants. They have not done any accounts as yet but need to do the first 18 months soon. I have been asked to set them up on QB's but they are changing to a Charity as at the new accounting year.
The problem I have is if I set QB's up as a Ltd company will I then be able to change the status to a Charity and it have the correct chart of accounts? Or will I need to do the first 18 months as a separate company on QB's before transferring the opening balances to the Charity? As they are working as a Trust at the moment the account set up would be the same with the Restricted and unrestricted equity accounts on the B/S as a charity so would it be best to set it up as a non-profit company from day one.
Thanks

1 reply

AlcaeusF
AlcaeusF
March 13, 2021

Welcome to the Community, @Joanna25.

 

Yes, you will be able to change the status from an Ltd company to a Charity. All you need to do is to change the Company type in the settings.

 

Here's how:

 

  1. In QBO, go to the Gear icon at the top right to get to the Account and settings. 
  2. Tick the Advanced tab at the left pane.
  3. In the Company type, choose the Pencil (Edit) icon.
  4. Select the Tax form drop-down, then choose Nonprofit organization (Form 990).
  5. Hit Save, then Done.
  6. Sign out and sign back in to see the changes reflected throughout QuickBooks.

 

After that, "Invoice" should now say "Pledge." You should now also see common reports for nonprofits like Statement of Activity and Statement of Financial Position.

 

In addition, you may now change customers to donors. This can be done by going back to the Advanced tab and clicking the Pencil (Edit) icon in the Other preferences. From there, choose Donors in the Customer label drop-down.

 

Once done, you can start to track donations to your organization. For more information on how to go about this, check out this article: Track funds you receive from donors in QuickBooks Online.

 

Reach out to me in the comment below if you have any additional quesitons. I'm more than willing to answer them. Have a good one!

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