QuickBooks for Nonprofits: The Complete Setup Guide

Many nonprofits use QuickBooks Online because many accountants already know it and it handles basic accounting well. Setting it up for nonprofit needs takes some planning, and this guide walks you through the setup in order.

Before you start

Choose the right plan

QuickBooks Online plans and features change, so compare them on Intuit's current plans page before you subscribe. As of this writing, the plans are Simple Start, Essentials, Plus, and Advanced. Classes, Locations, budgets, and Projects are available only in Plus and Advanced. Plus allows 40 active Classes and Locations combined, and Advanced has no limit.

Classes help with grant analysis, but not every accounting design needs them. Choose your tracking dimensions with your accountant, based on what you must report.

Gather information

Before setup, collect:

• The chart of accounts from your current system, or a template
• Bank account information
• A list of grants and funders
• The first month of your fiscal year
• The people who need access, and what each person needs to do

Step 1: Company settings

Basic information

1. Go to Settings > Account and settings.
2. On the Company tab, enter your legal name and your EIN.

Nonprofit settings

1. In Account and settings, select Advanced.
2. In Company type, select Edit.
3. In Tax form, choose Nonprofit organization (Form 990).
4. Select Save, then Done.
5. Sign out and sign back in so the changes appear everywhere.

After the change, QuickBooks Online shows nonprofit report names such as Statement of Activity and Statement of Financial Position, and some labels change, for example Invoice becomes Pledge. To call Customers "Donors," go to Advanced > Other preferences and set the Customer label to Donors.

Advanced settings

In Settings > Account and settings > Advanced, review these settings:

Setting	Section	Turn on?	Why
Track classes	Categories	If your design uses them	Grant, program, or other reporting
Track locations	Categories	Optional	Sites, programs, or departments
First month of fiscal year	Accounting	Set it	Matches your fiscal year
Close the books	Accounting	After year-end close	Protects closed periods
Warn if duplicate check number is used	Other preferences	Yes	Prevents errors
Warn if duplicate bill number is used	Other preferences	Yes	Prevents errors

Step 2: Chart of accounts

Your chart of accounts lists every account in your general ledger. Here is an example structure for a nonprofit. Your CPA may use different numbers.

Assets (1000s)

1000 - Cash and Cash Equivalents
  1010 - Operating Checking
  1020 - Payroll Account
  1030 - Savings/Money Market
  1050 - Petty Cash

1100 - Accounts Receivable
  1110 - Grants Receivable
  1120 - Pledges Receivable
  1130 - Other Receivables

1200 - Prepaid Expenses
  1210 - Prepaid Insurance
  1220 - Prepaid Rent

1500 - Fixed Assets
  1510 - Furniture & Equipment
  1520 - Accumulated Depreciation

Liabilities (2000s)

2000 - Accounts Payable
2100 - Accrued Liabilities
  2110 - Accrued Payroll
  2120 - Accrued Vacation
  2130 - Accrued Benefits

2200 - Deferred Revenue
  2210 - Conditional Grant Advances / Contract Liabilities, as Applicable

Use a liability account only when the accounting analysis supports it. Examples include a conditional contribution received before its barriers are overcome, or a contract liability under the revenue guidance that applies. A grant isn't deferred only because money is unspent or covers a future period.

Net assets (3000s)

3000 - Net Assets
  3100 - Without Donor Restrictions
    3110 - Undesignated
    3120 - Board Designated
  3200 - With Donor Restrictions
    3210 - Purpose Restrictions
    3220 - Time Restrictions
    3230 - Perpetual (Endowments)

Revenue (4000s)

4000 - Contributions
  4010 - Individual Contributions
  4020 - Corporate Contributions
  4030 - Foundation Grants
  4040 - Government Grants
  4050 - Special Events Revenue

4100 - Program Revenue
  4110 - Fee for Service
  4120 - Membership Dues

4200 - Other Revenue
  4210 - Interest Income
  4220 - Investment Income

Expenses (5000s to 8000s)

5000 - Personnel
  5010 - Salaries
  5020 - Payroll Taxes
  5030 - Health Insurance
  5040 - Retirement Benefits
  5050 - Workers Compensation

6000 - Program Expenses
  6010 - Program Supplies
  6020 - Participant Support
  6030 - Subcontractor/Consultant
  6040 - Program Travel

7000 - Operating Expenses
  7010 - Rent
  7020 - Utilities
  7030 - Office Supplies
  7040 - Telephone/Internet
  7050 - Insurance
  7060 - Professional Fees
  7070 - Staff Development
  7080 - Marketing/Communications

8000 - Other Expenses
  8010 - Depreciation
  8020 - Bank Fees
  8030 - Miscellaneous

Adding accounts

1. Open the chart of accounts. In current QuickBooks Online, go to All apps > Accounting > Chart of accounts.
2. Select New to add each account.
3. Choose the correct account type and detail type.
4. To use account numbers, go to Settings > Account and settings > Advanced and turn on Enable account numbers in the Chart of accounts section.

Simple Start, Essentials, and Plus allow up to 250 active accounts, and Advanced has no limit.

Step 3: Classes for grant tracking

Classes let you track income and expenses by grant, or by another dimension that you choose.

Create your Class structure

1. Go to Settings > All lists > Classes.
2. Select New to create each Class. To nest a Class, select Is sub-class and choose the parent.

Here is an example structure.

Unrestricted
Restricted - Foundation Grants
  ├── Gates Foundation 2024
  ├── Ford Foundation 2024
  └── Kellogg Foundation 2025
Restricted - Government
  ├── HHS Youth Services
  └── DOE Education Grant

A Class name such as "Restricted" is a label only. It doesn't prove that a gift is restricted, so keep your restriction records separately.

Class practices

• Create one Class for each grant, and don't combine grants.
• Include the year in the name to tell multi-year grants apart.
• Use parent Classes to group Classes in reports.
• Make old Classes inactive instead of deleting them.
• On Plus, count your planned Classes and Locations against the limit of 40.

Step 4: Locations (optional)

Use QuickBooks Online Locations as a second reporting dimension, such as a site, program, or function. A Location applies to the whole transaction, not to each line. Locations can have sub-locations, and you can change the field's label to Department, Division, or another option that QuickBooks offers.

Example Location list

Youth Services
Adult Education
Community Outreach
Management & General
Fundraising

Location tags can support an analysis of expenses by function. They don't by themselves produce the expense analysis that U.S. GAAP requires. You need a documented process that reports natural expenses by function and allocates shared costs consistently, and your CPA should review it.

Set up Locations

1. Go to Settings > Account and settings > Advanced.
2. In Categories, turn on Track locations and choose a Location label.
3. Go to Settings > All lists > Locations and create the Locations your reporting design needs.

Step 5: Customers and vendors

Customers for funders

Create a Customer for each funder:

1. Go to All apps > Customer Hub > Customers & leads. If you changed the label, the list shows Donors.
2. Select New customer and enter the funder's details.
3. Connect the funder to its grants through Projects or Classes, depending on your design.

If you don't use Classes for grants, you can use a Customer with a Project for each grant instead.

Vendors

Set up vendors as you pay them. Include:

• The legal name, for 1099 reporting
• The address
• The tax ID, for 1099 reporting
• A default expense account

Step 6: Connect bank accounts

Bank feeds

1. Open Bank transactions. In current QuickBooks Online, go to All apps > Accounting > Bank transactions.
2. Select Link account, or Connect account for your first account, and connect your bank accounts.
3. Create bank rules for recurring transactions.

Bank rules

Bank rules categorize common transactions automatically, for example:

• Payroll to 5010 Salaries
• Rent payments to 7010 Rent
• Utility payments to 7020 Utilities

Step 7: Users and permissions

Add team members

1. Go to Settings > Manage users.
2. Select Add user, choose a role, and send the invitation.

Role names and options depend on your plan, and Intuit renames roles from time to time. Common roles include the following.

Role	What the user can do	Typical user
Admin	Everything	Executive director, CFO
Standard all access	Most accounting tasks, without managing users	Staff accountant
Standard limited customers and vendors	Customer and vendor tasks only	Program staff, if needed
View reports	View most reports, but not transactions	Board members

The View reports role doesn't count toward your user limit. QuickBooks Online Advanced adds roles based on job function and lets you create custom roles.

Accountant access

To invite your external accountant:

1. Go to Settings > Manage users and open the Accounting firms tab.
2. Select Invite and enter the accountant's email.
3. The accountant gets access to your company, and the invitation doesn't count toward your user limit.

Step 8: Nonprofit-specific setup

Statement of activities

QuickBooks Online reports can supply inputs to the statement of activities, but a Class doesn't prove that money is restricted. Under an account and report design that your CPA approves:

1. Run the Profit and Loss detail and your schedules that support restrictions.
2. Reconcile revenue, expenses, and releases to the changes in net assets with and without donor restrictions.
3. Compile and review the required presentation outside QuickBooks Online when the built-in report doesn't produce it.

Expenses by function

To prepare the analysis of expenses by nature and function:

1. Define functions, such as program, management and general, and fundraising, with your CPA.
2. Use transaction tags that support the analysis.
3. Document how you allocate shared costs and how you report natural expense categories by function.
4. Review the final presentation. A tagged Profit and Loss report isn't the GAAP statement by itself.

Donor and grant tracking

When your design uses a Class for a grant:

1. Create a Class for the grant.
2. Apply the Class to recognized revenue and to related expenses, as your policy requires.
3. Run Class reports to review each grant.

A grant award isn't automatically income. Unconditional contributions, conditional contributions, and exchange transactions follow different recognition rules under U.S. GAAP. Follow a recognition and release policy that your CPA approves. A Class is only a reporting tag, and it doesn't record donor restrictions, releases, or compliance.

Step 9: Reporting setup

Main nonprofit reports

Statement	QuickBooks Online report	Work needed
Statement of financial position	Statement of Financial Position (Balance Sheet)	Reconcile equity accounts to the approved net asset presentation
Statement of activities	Statement of Activity (Profit and Loss), plus restriction schedules	Reconcile revenue, expenses, and releases by net asset class
Analysis of expenses by nature and function	Profit and Loss by Location or by Class, depending on your design	Document allocations and the presentation by nature and function
Budget vs actual	Budgets vs. Actuals	Requires a budget on Plus or Advanced

Saving custom reports

To save a report with your settings:

1. Run the report.
2. Change the columns, dates, and filters.
3. Select Save customization.
4. Open the saved report later from Reports > Custom reports.

Step 10: Ongoing processes

Daily or weekly

• Review and categorize bank transactions.
• Enter bills when you receive them.
• Process payments.

Monthly

• Reconcile all bank and credit card accounts.
• Review transactions without a Class or Location.
• Run grant budget reports.
• Post accruals and adjustments.

Quarterly

• Review how fast each grant is spending.
• Prepare board financial reports.
• Reconcile restricted fund balances.

Annually

• Close the books for the year.
• Prepare for the audit.
• Make Classes for completed grants inactive.

Common setup mistakes

Turning on tracking without a reporting design

If you turn on Classes or Locations without deciding what each one means, reports become inconsistent and you have to redo work. Define the grant, program, and function analysis you need with your accountant first, and turn on only the dimensions the design needs.

Using the wrong net asset structure

Standard business equity accounts don't show the two net asset classes. Create net asset accounts for without donor restrictions and with donor restrictions.

No process for expenses by function

Without a documented process, you can't produce the analysis of expenses by nature and function. Work with your CPA to define functions, tagging, allocation methods, and review steps. Locations may support the analysis, but they don't replace the process.

Wrong fiscal year

If you set the wrong first month of the fiscal year, budgets and year-end reports use the wrong periods. Set First month of fiscal year in Settings > Account and settings > Advanced before you enter transactions.

When QuickBooks Online isn't enough

QuickBooks Online handles basic nonprofit accounting, but you may need more if:

• Your detailed grant budgets no longer reconcile reliably with Classes, Locations, and spreadsheets.
• Funder reporting takes a lot of staff time.
• You need restricted fund tracking beyond Classes.
• You have trouble showing compliance.

Consider a grant management tool that works with QuickBooks Online instead of replacing it.

How GrantLink supports this today

You can add a grant manually or from a PDF of the award letter, agreement, or RFP. On the grant's Details page, use the QuickBooks panel to pick the Customers, sub-customers, Projects, Locations, or Classes for the grant on the Expenses and Money received tabs. GrantLink allocates eligible expense lines that match the Expenses links automatically. Money received links match income or revenue records, so a matched line isn't always a cash receipt.

To create a report, select Draft report with Assistant on the grant's Reporting > Reports page, or open Chats > New chat. Finished reports appear on the grant's Reports page. GrantLink doesn't require one tracking type for the whole organization.

GrantLink doesn't change QuickBooks Online unless your organization allows that change in Settings > QuickBooks > Permissions. Grant links are set on each grant, and the shared settings in Settings > QuickBooks > Mapping don't relink existing grants.

Sources

• Intuit: Configure an account for a nonprofit organization: the nonprofit tax form setting, label changes, and nonprofit reports.
• Intuit: Turn on class tracking, Set up and use location tracking, and Create budgets: tracking and budget features by plan.
• Intuit: Learn about usage limits: account, Class, Location, and user limits by plan.
• Intuit: User roles and access rights: user roles and accountant access.
• FASB: ASU 2016-14 and ASU 2018-08: presentation and contribution recognition.
• IRS: 2025 Form 990 instructions: functional expense and net asset reporting on Form 990.