Home NonprofitNonprofit Accounting QuickBooks® Nonprofit Chart Of Accounts Isn’t The Answer

QuickBooks® Nonprofit Chart Of Accounts Isn’t The Answer

by Clay Harmon

If you’re reading this article, it’s likely you’re looking for a way to create a chart of accounts. QuickBooks® has often been an answer to these kinds of bookkeeping questions. However, creating a QuickBooks® nonprofit chart of accounts shouldn’t be considered the best answer if you’re a nonprofit. After all, QuickBooks® has been the go-to solution for for-profit businesses, and your organization is not a for-profit, is it? The difference between a traditional business and your organization is substantial. It’s important you understand what those differences are while creating a chart of accounts.

So, what exactly is a chart of accounts, and how might it be unique to you and your organization? For those who only know they need a chart of accounts, but don’t quite understand what that is, we’ve provided a definition below.

What Exactly Is A Chart of Accounts?

A chart of accounts is a detailed listing of minor categories under the major categories of assets, liabilities, equity, income, and expenses. Your chart of accounts will list all the accounts used for money going in and out of your organization.

Below is a visual example of the five major categories.


Think of it as a filter through which information from the outside world will enter your accounting system. The manner in which you set up that filter will be the basis for the reports. If the filter is too summarized, the reports will be too summarized. If you’re too detailed with the filter, the reports will be too detailed. It’s important that the chart of accounts remains informative but not too dense.

Creating A Chart Of Accounts For Your Nonprofit

Since there are few requirements for how a chart of accounts should look, there won’t be a standardized structure for use for all types of organizations. With that said, here is a template your nonprofit can use as a starting point. It’s important you avoid what for-profit businesses do, since their accounts will look different compared to your organization. After all, the type and number of accounts needed by a large corporation would significantly differ from those needed by a small nonprofit. Similarly, many accounts essential in manufacturing businesses won’t be used by merchandising companies. This is why you might avoid creating a QuickBooks® nonprofit chart of accounts, since QuickBooks® doesn’t specialize in nonprofit needs.

Below is a representation of what your assets section might look like.


As you can see in the above visual representation, the numbering system denotes assets to the 1000s. The 2000s denote liabilities, 3000s for your equity accounts, and so on. You don’t have to follow the same numbering system; just remain consistent and make the information easy to read.

In Closing

While QuickBooks® has often been the go-to for most organizations, there are many platforms out there designed specifically for nonprofits in mind. And considering how complex accounting can be, you’ll want to ensure you’re receiving the most reliable information possible. Never underestimate the power of a good fund accounting platform that can help you set up your chart of accounts step by step! Check out our full comparison of QuickBooks® and nonprofit accounting solutions like Aplos.

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