2. QBO Setup – Settings
Work through each of the steps below to update the settings for your QBO account. Even if you already have QBO set up, it is a good idea to review these settings to see if you are missing anything.
I will highlight the most important settings to get the functionality you’ll need from QBO, but also go through each part of the settings menu and enter your organization’s info, if you have it.
Navigate to Settings
Navigation: Gear Icon > Your Company > Account and Settings
All the settings you need to update are in this menu.
How to Edit
Use the pencil icon on the right to update each section.
Update Company Type to Nonprofit
Navigation: Company > Company Type
Doing this will change the default Chart of Accounts and the names of some reports*.
Turn off Tags
Navigation: Sales > Sales form content
Toggle Tags off. This is optional but recommended. There are some cases where tags might be useful, but best practice is to not use them for any significant part of the bookkeeping. I recommend starting off without them because it’s easy to get carried away with them, and a lot less easy to clean it up when you realize they’re not resulting in the records and reports you’d hoped for.
Turn off Quantity and Price
Navigation: Sales > Products and Services
Toggle off “Track quantity and price/rate.”
This is optional, but if you won’t be using these, it’s nice to have them off to declutter the income entries. If left on and not used, there will just be extra fields that will always be empty. It’s unnecessary visual clutter and you’ll have to remember to skip them, which is unnecessary mental processing power that you don’t need to deal with when just starting out.
One situation where having these turned on might be helpful is if you have something with a set price, like membership, and you will be using QBO to either track the number of memberships paid for and/or using QBO as your donor database. If you’re not sure, then skip this for now.
Turn on Tracking by Customer
Navigation: Expenditures > Bills and expenditures
Toggle on “Track Expenditures and Items by Customer.”
This is necessary for tracking restricted funds.
Fiscal Year and Accounting Method
Navigation: Advanced > Accounting
The default fiscal year is the calendar year. If your organization’s fiscal year starts on a different month, set that here. This is necessary to get the right reports.
Also set your accounting method; cash or accrual. If you’re unsure what method you’ll be using, and you’re still filing the 990N, you can probably do cash for now. (If you’ve filed the 990 or 990EZ, then your method will be on here. But you may also need more information / help than this guide currently provides to get going in QBO. Reach out or ask questions in the comments if that’s that case!) If you’re experiencing sudden growth and will need to file the full 990, receiving government funding with specific reporting requirements, or want to prepare now for future growth that will probably eventually do better with accrual accounting, then start accrual now. The differences aren’t too major, especially when the organization is still small, so which one you choose might not make too much of an impact right now.
Enable Account Numbers
Navigation: Advanced > Chart of Accounts
Enable and show account numbers. This will allow you to change the order of the individual account in the Chart of Accounts and create reports that make more logical sense. The alternative is that QBO will order them alphabetically by name. Having numbers will make entering transactions quicker and easier too.
Turn on Classes
Navigation: Advanced > Categories
Toggle on track classes, warning, and set one class to each row. This is how you will track your functional expenses.
Other Preferences
Navigation: Advanced > Other Preferences
Toggle on warnings. Warnings on duplicates can help prevent duplicate transactions, which is a common and frustrating issue. It isn’t guaranteed to catch everything, but any help to prevent duplicates is better than nothing!
You can also change the Customer Label from “Customers” to “Donors.” Just know that I use the default “Customers” throughout this guide, and it will come up a lot when talking about transaction entries and restricted funds.
