App for labor distribution and indirect cost allocation for a non-profit

For QBO, the Advanced subscription offers solid tools to handle labor distribution and indirect cost allocation across your grants. The key is combining Classes, Projects, and Journal Entries to get the job done.

Please follow this process for labor distribution without QBO Payroll:

1. Use QBO's built-in time-tracking feature to log hours per grant or project. Then, enter it as a journal entry, since this transaction is non-posting, for proper distribution. (The same goes if the hours are imported from a third-party application.)
2. Split the entry across multiple classes (one per grant or program) based on your labor distribution percentages.
3. Use Projects to tie those labor costs directly to each grant for reporting.

For indirect allocation, set up a dedicated indirect cost pool account to accumulate your overhead costs throughout the duration. At period-end, create a journal entry to allocate from that pool to each grant's class using your predetermined indirect cost rate.

Given the complexity of this configuration, I recommend working with your accountant to keep your books accurate.

Feel free to return here if you have additional questions.