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Tracking grant expenses in QuickBooks Online
QuickBooks Online has four places you can record which grant an expense belongs to: class, location, project and customer. Which one works for you depends on your plan and on whether you ever split a cost between grants.
Published 2026-10-14 · plan and feature details checked against Intuit's own help pages on 2026-10-14
The four options
| Field | Plans | Split a bill? |
|---|---|---|
| Class | Plus, Advanced | Yes, one per row |
| Location | Plus, Advanced | No, one per transaction |
| Project | Plus, Advanced | Yes, per line |
| Customer | Every plan | Yes, per line |
- Class. The usual choice. Turn on class tracking and set "Assign classes" to "One to each row in transaction" so a single bill can be split between grants. Intuit's fund accounting guidance for nonprofits suggests one class per fund. Plus allows 40 classes and locations combined; Advanced has no limit.
- Location. A transaction gets one location, so a shared cost can't be split between grants. Locations suit sites or departments better than grants. On Plus they count against the same limit of 40.
- Project. Available on Plus and Advanced. Bills, checks, expenses and timesheets can be assigned to a project. A good choice when classes already hold your programs.
- Customer. Every plan has a customer list, so this is the option on Simple Start and Essentials: set up each grant (or funder) as a customer and put it on each expense line. It is less tidy, because the same list holds your donors.
Payroll is where most grant reports go wrong
Salaries are usually the biggest line in a grant budget, and the hardest to tag. QuickBooks Payroll Premium and Elite can split each employee's pay across classes or projects: by percentage for salaried staff, by hours for hourly staff. The split applies to future payrolls only, so set it up before the grant period starts.
Many bookkeepers instead post payroll to a clearing account and move it to grants with a monthly journal entry. That works, with one catch: the journal entry has two sides. Tag the lines that hit salary and benefit expense accounts with the grant. The credit line back to the clearing account is not grant spending, and whoever builds the report has to leave it out.
Mistakes that throw off grant reports
- Tagging the whole transaction when it should be split. With classes set to one per transaction, a bill that covers two grants lands entirely on one.
- Forgetting refunds and vendor credits. If the original expense was tagged and the refund wasn't, the grant shows more spending than actually happened.
- Tagging balance sheet lines. Only lines on expense accounts are grant spending. A tag on a bank, payable or asset line doesn't belong in a grant report.
- Retagging after a report is filed. Moving an old expense to a different grant changes a report the funder already has. Fix it in the current period instead, and note why.
- Untagged spending. In Profit and Loss by Class, the "Not specified" column is expense with no class. Check it every month, before it is too old to sort out.
Reports
With grants as classes, Profit and Loss by Class gives spending per grant; set the dates to the grant period. Projects have their own reports in the project view. If you set your company's tax form to Form 990, QuickBooks adds a Statement of Activity and a Statement of Financial Position, and you can change the customer label to "Donors" in Advanced settings.
What QuickBooks doesn't do is compare that spending to the grant's approved budget lines, show if you are spending on pace, or remind you when a report is due. That usually lives in a spreadsheet next to it.
Frequently asked
Should I use classes or projects for grants in QuickBooks Online?
If you are on Plus or Advanced and have fewer grants than your class limit, classes are the simplest choice, and Intuit’s own fund-accounting guidance suggests one class per fund. If you already use classes for programs, put grants on projects instead so the two don’t compete. On Plus, classes and locations share a limit of 40.
Can I track grants in QuickBooks Online Simple Start or Essentials?
Not with classes, locations or projects, which need Plus or Advanced. The workable option on those plans is to treat each grant as a customer and put that customer on each expense line.
How do I split one bill across two grants?
Use classes set to "one to each row in transaction," or projects, and put each grant’s share on its own line. Locations can’t do this, because a transaction has only one location.
How do I get a grant expense report out of QuickBooks?
Run Profit and Loss by Class if grants are classes. Projects have their own reports in the project view. Nonprofits that set their tax form to Form 990 also get a Statement of Activity.
How FundMesa reads it
FundMesa's QuickBooks Online connection (Team plan and above) asks which of the four fields identifies a grant, then reads expenses, bills, journal entries and vendor credits, one line at a time. It counts only lines on expense accounts, so the clearing side of a payroll journal entry is ignored. Refunds, vendor credits and journal-entry credits reduce spending. Each line lands on the grant budget line with the matching account number, and FundMesa checks for new expenses daily. It can also list spending that has no grant tag.
It reads; it never writes to QuickBooks. It doesn't read QuickBooks Payroll paychecks directly, so payroll reaches a grant when it is posted as an expense or a journal entry.