RubinBrown is focused on helping our clients grow and providing resources to help achieve this growth. Because many organizations currently utilize QuickBooks, we are interested in sharing our expertise to help organizations get the most out of this software.
One way we plan to do this is through launching RubinBrown’s QuickBooks Software Users’ Group. The purpose of this users’ group is to provide you an avenue to learn more about QuickBooks capabilities, develop your network of fellow QuickBooks users and utilize our expertise to resolve any questions you may have. We will be hosting our first users’ group meeting at RubinBrown on September 8, 2016 from 4:00pm to 6:00pm. Our topic for this first meeting will be financial reporting. This will be a great opportunity to learn more about QuickBooks financial reporting from a high-level perspective. Our QuickBooks experts will share how to customize some of the most utilized financial reports as well as answer your questions. We hope that you will join us for this event. If you have not already signed up, please click here to register.
In advance of this first meeting, we wanted to share some QuickBooks tips. An area of concern frequently expressed by organizations is a lack of knowledge of how to use QuickBooks for internal reporting. Strong financial reporting can help organizations in a variety of ways. The most obvious is simply to help an organization determine if it is making or losing money from operations. Organizations need to also track expenditures by functional class for both GAAP reporting and tax reporting purposes. Organizations also may need to know how a specific department, program or location is doing financially. Many organizations also need to have methods of tracking grant and government funds and expenditures. More detailed reporting also can strengthen accountability and assist in making informed strategic decisions. Knowledge is power, and we hope these tips to strengthen your financial reporting will be beneficial to your organization.
- Functional Expense Allocations
Class tracking is the easiest way to accomplish splits of expenses between programming, fundraising and management and general categories. This can be set up to directly mirror the appropriate categories for GAAP financial reporting and preparation of the 990 tax return. At a minimum, organizations should establish the required 3 categories as separate classes. Organizations can then actively monitor year-to-date activity to avoid end-of-the-year surprises. QuickBooks can also track various locations and provide more detailed program monitoring. For example, if your organization has multiple resale shops in various locations, you could utilize class tracking to see how each shop is doing under the main program. You could also use this set up to run reports to determine how the resale shop is doing in one city compared to another. Proper class tracking and setup is critical to managing an organization and makes your audit and tax return preparation easier as well.
- Donor-Restricted Gift Tracking
If your organization receives restricted donations or grants or government funds, you already know what a cumbersome process the tracking of these funds can be. QuickBooks has tools to help streamline this process. From our experience, job costing is the best way to keep track of grants and restrictions alike. Both revenue and expenses can be allocated to jobs within QuickBooks, allowing organizations to simply run a memorized report in QuickBooks that breaks down the restricted funding received and how the organization spent these funds. At any time, organizations can then simply “double click” in this interactive report to understand how the restricted funds were spent. Also, viewing the restricted funds still available to your organization is literally at your fingertips. In addition, because QuickBooks can be highly modified and exported to excel, many organizations are able to do much of their grant and donor reporting in QuickBooks to avoid potential data re-entry or use of another software or spreadsheet.
Another resource available to organizations within QuickBooks is budgeting. Many of the organizations that we serve utilize budgets only on an organization-as-a-whole basis and stop there. QuickBooks has the capability to run a budget by program, by restriction, and by grant simultaneously. This is a great way for organizations to delegate budget monitoring responsibilities for various elements to different members of management within the organization. Running budget to actual reports for a specific segment can enable a manager to receive actual real-time feedback that is meaningful and can help manage operations. By tracking these expenses accordingly, the project manager could receive weekly updates on activity and spending. The project manager could also then react timelier and more accurately then when this information is not readily available to them. This is a great example of how an organization could set up QuickBooks in a manner which enables managers to operate more effectively and efficiently while understanding exactly how much money it takes to support the activities of the organization.
Reporting, just like any other tool, must be initially set up correctly and operated appropriately for best results. Whenever we consult with organizations, we always recommend that they start with the end product (reporting) and work their way back to the beginning steps (data entry Methodology). The question we recommend you ask in your organization is “what financial information are we missing that could help us better manage our organization and how do we get this information?” From there, we recommend an assessment of what system modifications it would take to accommodate those additional reports within QuickBooks and what expertise is needed to make those changes
In addition, the popular saying “garbage in, garbage out” is appropriate with regard to financial reporting. No matter how well QuickBooks was originally set up, if the day-to-day data entry is not done correctly, it will provide misinformation that can actually hurt your organization if relied upon. Proper training and oversight is crucial to ensuring the integrity of your financial data.
It would be great if there was a “one size fits all” solution for every organization; however, every organization is different and may require different functionalities within QuickBooks. Proper planning and set up is the key to success.
We hope that this first newsletter has been helpful and if nothing else, has given you a reason to consider utilizing more of the resources that you have available to you in QuickBooks. Please contact our team listed above for more information or to set up a meeting to discuss additional QuickBooks best practices for not-for-profits. We hope to see you on September 8, 2016 from 4:00pm – 6:00pm to kick off our QuickBooks Software Users’ Group!
To register for the QuickBooks Users' Group Meeting click here.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.
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