Be on the lookout: Class tracking in QBO Items

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Back in 2013 QuickBooks Enterprise introduced the concept of ‘default class’ to QuickBooks.  Enterprise users could pre-assign a class (from class tracking) to Accounts, Names (Customers, Vendors, etc.) or Items.  Administrators of the software had to decide which, if any, of these three configurations would work best for them or if users would simply continue to assign ‘class’ on either a transaction-wide basis (within the transaction header) or on a line-item basis (using the class column of transactions).

QuickBooks Online had ‘location’ tracking for several years prior to implementing ‘class tracking’ (in addition to location).  Having both location and class tracking made QBO much more like QuickBooks Enterprise with Advanced Inventory (multi-location) turned on than QuickBooks Pro/Premier. 

Well, Intuit has announced the soon-to-be (and perhaps underway by the time you read this) addition of ‘default classes’ for QuickBooks Online Products and Service (items). Once the feature goes live, users will be able to assign a class to their various Products and Services (as shown below). 

Simply click the drop-down arrow of the new Class field and select from your Class list. When the Product or Service is used on a transaction the default Class is automatically posted to the transaction for that product or service. 

Even though the class is posted to the transaction by default, users can still edit the class listed within the transaction just as with any manually applied class posted to a transaction.

One of the fundamentals we have taught regarding Class in QuickBooks Desktop has always been “ever use class, always use class.”  In other words if you apply class tracking to any transaction, you should apply it to every transaction.  We even went so far as to teach, ‘set-up a un-classified class’ so you can apply it whenever another class isn’t appropriate; that way you know that if a transaction actually has ‘no class’ then it was left classless by mistake.

Well for the exact same reason why QuickBooks Enterprise made you choose if you would use ‘default classes’ on either Accounts, Names or Items rather than all three, the entire concept of ‘is default class’ a good thing for QBO users when it comes to Products and Services must be considered?

Let’s assume I am a plumbing contractor using QBO, my products and services list contains a number of parts and several services. For example, I might have a service item called “Journeyman Plumber (licensed) per hour”.  I might have another called “Apprentice Plumber (registered) per hour”.  I might have a third called “Plumber’s Assistant per hour”.   Let’s assume my plumbing company charges hourly rates at $135 for a Journeyman, $85 for an Apprentice, and $45 for an Assistant.  I make no distinction as to where the work is performed by these tradesmen, but I do track jobs as either Commercial or Residential. 

If I wanted to use a ‘default class’ for these services, then I would be required to set-up duplicate items so that I could have each of the three items a Residential version and each of them as a Commercial version.  Of course, one alternative to duplicating my items list would be to simply assign Residential or Commercial to the existing three service items, and then try to remember to ‘edit’ the class when it posts on an actual transaction if it needs to be different than the default.

But perhaps the best course of action is to simply ignore the new ‘class’ field and not assign a ‘default class’ to any of these service items. Then I would just assign class the old fashioned way directly on the transaction just it has been done in QuickBooks Online up until now.

So while the new feature can have it's advantages, it can also have its disadvantages. It’s a prime example of what the old philosopher once said; “just because you can assign a default class to items, doesn’t mean you should.” 

By the way, don’t Confucius the true author of this quote, it’s all ‘Murph’.