QuickBooks Limitations for Nonprofits

General limitations

Chart of accounts limitations

Accounting restrictions

Reporting limitations

Other annoyances

The way QuickBooks is designed and programmed presents some limitations in the features that are needed by nonprofit organizations. This is true for all editions of QuickBooks, including the QuickBooks Premier Nonprofit Edition, and the QuickBooks Enterprise Solutions Nonprofit Edition. However, there are ways to set up and use QuickBooks that ease the impediments these limits impose. Those workarounds and adaptations are a large part of this book.

If you've been using QuickBooks for a while, you're probably aware of most of the limitations (which are discussed in this chapter). However, I've found that users, and even bookkeepers, aren't aware of the severity of some of these confines, because they haven't been exposed to other more expensive and more powerful nonprofit accounting software programs.

If you're new to QuickBooks, it's important to understand the limitations, so you can plan the way you're going to use the software with those restrictions in mind. QuickBooks is a basic, no-frills software application. You're probably using QuickBooks for your nonprofit organization for one (or more) of the following reasons:

• It's inexpensive

• It's easy to use

• Your bookkeeper is familiar with it.

• An accounting professional connected to your organization is comfortable with it, and recommended it

These, and other, reasons for using QuickBooks are all valid, but you must remember that the software isn't designed for nonprofit accounting, even though you can adapt it for that purpose. As is true for the application of many "adaptive" technologies, you won't end up with everything you need or want.

As a result, some nonprofits that use QuickBooks spend more money on accounting services than nonprofits using full-featured nonprofit accounting applications. Those accounting tasks are necessary to overcome the limitations in QuickBooks when it's time to file reports with the government, funding agencies, or the nonprofit's board members.

However, that extra expense is not necessarily a negative; it's balanced by the advantages QuickBooks offers. QuickBooks costs less to run and maintain than many nonprofit accounting applications, and it's not difficult to find users who are very comfortable with QuickBooks.

QuickBooks can be adapted to work reasonably well for small nonprofit organizations that obtain the majority of their funding from unrestricted sources. "Small" is, of course, a relative term, and I don't have a firm definition to offer. However, I don't think I'd try to use QuickBooks