Setting Up Your QuickBooks Online® Company – Part Ten

In this installment of our series on setting up your QuickBooks Online Company we will look at both the 'classes' and the 'locations' lists.

Classes

The 'Class' feature within QuickBooks Online Plus as a way of tagging transactions to separate them into different groups in company reports.

This advanced option provides an additional level of analysis, but it also requires an additional click in every transaction.

The benefit of Classes is that your business can run the Profit and Loss Report by Class so that you can see multiple columns dividing out the income and expenses.

  • A landlord may use Classes for each property so that a landscaping bill can be divided up by addresses. Her P&L by Class would should the revenue and expenses for each property.
  • A contractor may use Classes to divide reports into Residential and Commercial projects.
  • Our company uses Classes to track our Net Income by revenue source, including onsite services, classes, and publishing.

Because it’s a free-form list, use it to tag your transactions to analyze your company’s way of doing things.

Keep in mind that this is a meta-category, an additional set of tags that over-arches the other data. Set up the Chart of Accounts and Products & Services lists first. If you find yourself wishing you could replicate parts of these lists to track something separately, that’s a flag that Classes would be useful.

Turn on Classes in Account and Settings > Advanced. Choose to assign Classes line-by-line, or once per transaction (options shown in the illustration below).

Always create an additional Class called Overhead, and assign it to transactions that have nothing to do with the Classes, like company expenses.

PEBCAK! If you see Unclassified or Unspecified on your reports, it’s because it wasn’t assigned to a Class when it was created.

Locations

QuickBooks Online Plus and Advanced have one additional way to slice-and-dice the data: Locations.

Locations allow you to tag each transaction with one classification that can be used on reports. Traditionally used when your business has more than one physical location, you can also use the feature to separate your data by Department, Division, Tenant, Business, Territory, or Property.

Locations work quite well on QBO Balance Sheet reports!

Turn on Locations in Account and Settings > Advanced (options shown in the illustration above).

Following-up

Setting up Class and Location tags is a great way to analyze your business and see which revenue streams are truly profitable. They are extremely  helpful tools to aid you in understanding your company.

If you are interested in learning more about QuickBooks you should check out some of my course offerings at my Royalwise website, as well as some of the webinars I am offering in conjunction with Insightful Accountant like my QBO 1099 Contract Tools on January 7, 2020 , or QBO Customers & Accounts Receivable on January 9, 2020.

And, to see specifically how Classes and Locations play out in Reports, I have a special course on how to customize reports and analyze them!  In that course you will learn reporting techniques that will show you who your best customers are, which products are the most sought after, and which revenue streams have the biggest margin. Gaining this perspective guides your clients toward financial freedom!.

By the way, in my next article I’ll show you step-by-step instructions on making the most of the QBO Banking Feeds!