News & Tech Tips

Is QuickBooks right for your nonprofit?

Not-for-profit organizations exist to achieve nonfinancial or philanthropic goals, not to make money or build value for investors. But they still need to monitor their financial health — that is, how much funding is coming in from donations and grants and how much the organization is spending on payroll, rent and other operating expenses.

Many nonprofits turn to QuickBooks® for reporting their results to stakeholders and managing their finances more efficiently. Here’s an overview of QuickBooks’ specialized features for nonprofits.

Terminology and functionality. QuickBooks for nonprofits incorporates language used in the nonprofit sector to make it easier to use. For example, the solution includes templates for donor and grant-related reporting. Accounting staff can also assign revenue and expenses to specific funds or programs.

Expense allocation and compliance reporting. Nonprofits often receive donations and grants with stipulations regarding the expenses that can be applied. They can use QuickBooks to establish approved expense types and track budgets for specific funding sources, as well as satisfy compliance-related accounting and reporting requirements.

Streamlined donations processing. The easier it is to donate to a nonprofit, the more likely people will do so. QuickBooks facilitates electronic payments from donors. It also integrates with charitable giving and online fundraising sites and includes the functionality to process in-kind contributions, such as office furniture and supplies.

Tax compliance and reporting. Failure to comply with IRS reporting requirements can cause an entity to lose its tax-exempt status. QuickBooks offers a customized IRS reporting solution for nonprofits, which includes the ability to create Form 990, “Return of Organization Exempt from Income Tax.”

Donor management. QuickBooks allows nonprofits to store donor lists. This functionality includes the ability to divide the data according to the location, contribution and status. These filters can make it easier to contact and nurture donors who meet specific criteria, such as significant donors who’ve stopped making regular contributions.

Data security. Data security is key to building trust and encouraging future donations. QuickBooks protects donors’ personal identification and payment information by allowing the account administrator to limit which users are allowed to view, edit or delete donor-related data. With QuickBooks, personnel can only access and share data with the administrator’s permission.

Not just for for-profit businesses

QuickBooks is an accounting solution for small and medium-sized entities, including those in the nonprofit sector. The software’s streamlined processes, third-party integrations and robust reporting can help nonprofits improve their approach to financial management and fulfill their organization’s mission. Contact us to find out if QuickBooks is right for your organization and, if so, for help getting it up and running.

© 2023

Overview of discontinued operations reporting

Traditional business models in many sectors have been disrupted by the COVID-19 pandemic, geopolitical uncertainty, rising costs, and falling consumer confidence. If your company is planning a major strategic shift this year, management may need to comply with the updated accounting rules for reporting discontinued operations that went into effect in 2015.

Discontinued operations typically don’t happen every year, so it’s important to review the basics before preparing your year-end financial statements.

Defining discontinued operations 

The scope of what’s reported as discontinued operations were narrowed by Accounting Standards Update (ASU) No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. Since the updated guidance went into effect in 2015, the disposal of a component (including business activities) must be reported in discontinued operations only if the disposal represents a “strategic shift” that has or will have a major effect on the company’s operations and financial results.

Examples of a qualifying major strategic shift include the disposal of:

  • A major geographic area,
  • A line of business, or
  • An equity method investment.

When such a strategic shift occurs, a company must present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the asset and liability sections of the balance sheet.

Disclosing the details

In addition, ASU 2014-08 calls for expanded disclosures when reporting discontinued operations. The goal is to show the financial effect of such a shift to the users of the entity’s financial statements, allowing them to better understand continuing operations.

The following disclosures must be made for the periods in which the operating results of the discontinued operation are presented in the income statement:

  • Major classes of line items constituting the pretax profit or loss of the discontinued operation,
  • Either 1) the total operating and investing cash flows of the discontinued operation, or 2) the depreciation, amortization, capital expenditures, and significant operating and investing noncash items of the discontinued operations, and
  • Pretax profit or loss attributable to the parent if the discontinued operation includes a noncontrolling interest.

Management also must provide various disclosures and reconciliations of items held for sale for the period in which the discontinued operation is so classified and for all prior periods presented in the balance sheet. Additional disclosures may be required if the company plans significant continuing involvement with a discontinued operation — or if disposal doesn’t qualify for discontinued operations reporting.

For more information

Major strategic changes don’t happen often, and in-house personnel may be unfamiliar with the latest guidance when preparing your company’s year-end financial statements. Contact us to help ensure you’re complying with the updated guidance.

© 2023

4 tax challenges you may encounter if you retire soon

Are you getting ready to retire? If so, you’ll soon experience changes in your lifestyle and income sources that may have numerous tax implications.

Here’s a brief rundown of four tax and financial issues you may contend with when you retire:

Taking required minimum distributions. These are the minimum amounts you must withdraw from your retirement accounts. You generally must start taking withdrawals from your IRA, SEP, SIMPLE, and other retirement plan accounts when you reach age 73 if you were age 72 after December 31, 2022. If you reach age 72 in 2023, the required beginning date for your first RMD is April 1, 2025, for 2024. Roth IRAs don’t require withdrawals until after the death of the owner.

You can withdraw more than the minimum required amount. Your withdrawals will be included in your taxable income except for any part that was taxed before or that can be received tax-free (such as qualified distributions from Roth accounts).


Selling your principal residence. Many retirees want to downsize to smaller homes. If you’re one of them and you have a gain from the sale of your principal residence, you may be able to exclude up to $250,000 of that gain from your income. If you file a joint return, you may be able to exclude up to $500,000.

To claim the exclusion, you must meet certain requirements. During a five-year period ending on the date of the sale, you must have owned the home and lived in it as your main home for at least two years.

If you’re thinking of selling your home, make sure you’ve identified all items that should be included in its basis, which can save you tax.


Getting involved in new work activities. After retirement, many people continue to work as consultants or start new businesses. Here are some tax-related questions to ask if you’re launching a new venture:

  • Should it be a sole proprietorship, S corporation, C corporation, partnership, or limited liability company?
  • Are you familiar with how to elect to amortize start-up expenditures and make payroll tax deposits?
  • Can you claim home office deductions?
  • How should you finance the business?


Taking Social Security benefits. If you continue to work, it may have an impact on your Social Security benefits. If you retire before reaching full Social Security retirement age (65 years of age for people born before 1938, rising to 67 years of age for people born after 1959) and the sum of your wages plus self-employment income is over the Social Security annual exempt amount ($21,240 for 2023), you must give back $1 of Social Security benefits for each $2 of excess earnings.

For individuals who reach full retirement age this year, your benefits will be reduced $1 for every $3 you earn over a different annual limit ($56,520 in 2023) until the month you reach full retirement age. Then, your earnings will no longer affect the amount of your monthly benefits, no matter how much you earn.

Speaking of Social Security, you may have to pay federal (and possibly state) tax on your benefits. Depending on how much income you have from other sources, you may have to report up to 85% of your benefits as income on your tax return and pay the resulting federal income tax.


Tax planning is still important

As you can see, you may have to make many decisions after you retire. We can help maximize the tax breaks you’re entitled to so you can keep more of your hard-earned money. Contact Us!

© 2023

Achieving the right balance of working capital

Working capital — the funds your company has tied up in accounts receivable, accounts payable, and inventory — is a critical performance metric. During times of rising inflation and interest rates, managers search for ways to free up cash and eliminate waste. However, determining the optimal amount of working capital can sometimes be challenging.

Balancing act 

The amount of working capital your company needs depends on the costs of your sales cycle, upcoming operating expenses, and current repayments of debts. Essentially, you need enough working capital to finance the gap between payments to suppliers and creditors (cash outflows) and payments from customers (cash inflows).

Having too much-working capital on the balance sheet can drain cash reserves, requiring a company to tap into credit lines to make ends meet. In addition, money tied up in working capital can detract from growth opportunities and other spending options, such as expanding to new markets, buying equipment, hiring additional workers, and paying down debt.

But having too little working capital to act as a buffer can also create problems — as many companies learned from supply chain shortages during the pandemic. Ongoing geopolitical uncertainty has caused some companies to scale back on just-in-time inventory practices, causing working capital balances to increase.

3 keys to reducing working capital

Working capital best practices vary from industry to industry. Here are three effective ways to manage working capital more efficiently:

  1. Expedite collections. Possible solutions for converting accounts receivable into cash include the following: tighter credit policies, early bird discounts, collection-based sales compensation, and in-house collection personnel. Companies also can evaluate administrative processes — including invoice preparation, dispute resolution, and deposits — to eliminate inefficiencies in the collection cycle.
  2. Trim inventory. This account carries many hidden costs, including storage, obsolescence, insurance, and security. Consider using computerized inventory systems to help predict demand, enable data-sharing up and down the supply chain, and more quickly reveal variability from theft.

It’s important to note that, in an inflationary economy, rising product and raw material prices may bloat inventory balances. Plus, higher labor and energy costs can affect the value of work-in-progress and finished goods inventories for companies that build or manufacture goods for sale. So rising inventory might not necessarily equate to having more units on hand.

  1. Postpone payables. By deferring vendor payments, when possible, your company can increase cash on hand. But be careful: Delaying payments for too long can compromise a firm’s credit standing or result in forgone early bird discounts. Many companies have already pushed their suppliers to extend their payment terms, so there may be limits on using this strategy further.
For more information

There’s no magic formula for reducing your company’s working capital requirements, but continuous improvement is essential. Contact us for help evaluating working capital accounts and brainstorming solutions to minimize working capital without compromising supply chain relationships.

© 2023

How to use QuickBooks as a fraud detection tool

Many businesses and nonprofits use QuickBooks® as a cost-effective solution to manage their accounting processes. However, the software’s capabilities extend beyond organizing and streamlining your company’s accounting. QuickBooks can also help you detect fraud. Here’s an overview of the software’s fraud detection and prevention features:

Transaction audit trails

QuickBooks creates audit trails that capture user activities. This can help your company identify unauthorized changes. The audit trail includes:
• The transaction date,
• The user’s name, and
• The type of change.
Administrators can apply filters to audit log data that can help evaluate what’s happening and determine whether further analysis is required.

Trend detection and analysis

QuickBooks can generate accounts receivable and accounts payable aging reports to identify unusual balances. Creating periodic and ad-hoc financial statements can help uncover sudden changes or irregularities in revenue, expenses and cash flow. Unexplained anomalies can foreshadow asset misappropriation and financial misstatement schemes.

Exception reporting

Exception reports can be used to flag transactions that deviate from established patterns or thresholds. Customized reports can focus on specific areas of concern, such as duplicate payments, unusual expense categories, voided transactions and vendor payments. QuickBooks also makes it easier to perform bank reconciliations to detect discrepancies between bank and company records that can signal fraud.

User roles and access

Controlling access to data and limiting a user’s ability to engage in certain transactions is a crucial component of an effective internal control system. QuickBooks allows businesses to assign predefined and customized user access. Simply put, by limiting user access rights, your business can reduce the likelihood of fraud happening.

Fraud Awareness

In general, QuickBooks streamlines the detection, reporting and investigation of potential fraud. In turn, this creates a culture of fraud awareness that filters from the accounting department to the rest of the organization — and demonstrates that management is watching out for dishonest behavior. Proactive managers can thwart would-be fraudsters by minimizing perceived opportunities for fraud to happen, thereby minimizing the organization’s potential for losses.

More than an accounting solution

QuickBooks has built-in capabilities that make it a valuable tool for detecting and preventing fraud. Contact us for help using the functionality embedded in the software, adopting a proactive approach to loss prevention, and fostering a culture of fraud awareness.

© 2023