QB Back to the Basics (NAR)
It never hurts any of us to review the fundamentals, and we also need to remember that there are new people joining our ranks every single day. That's why Insightful Accountant is going to be publishing a new by-line titled 'Back to the Basics.' We are launching this new series with a short article on 'Class Tracking' from Beverly Lang, an Advanced Certified QuickBooks ProAdvisor who is the founder of Diversified Business Solutions.
Do you want to go beyond standard account-based tracking in QuickBooks?
Expanding into class tracking provides you with a customizable way to track specific expenses, categorize shared expenses across multiple accounts and handle the accounting for one-off and occasional expenses that aren't necessarily associated with a particular account type.
QuickBooks Online (QBO) lets you use Class-tracking in addition to location tracking. QuickBooks Desktop (QBD) doesn't offer location tracking except in the QuickBooks Enterprise version with Advanced Inventory (multi-location) functionality turned on. Even when using location in QBO you might still need (or want) to use Class tracking.
Most of this article covers principles related to the use of class in either QuickBooks Desktop or QuickBooks Online. Where differences exist they will be illustrated or otherwise specified.
Settings for Class and Location Tracking in QBO
QBO Class & Location Tracking
QuickBooks offers a user-friendly method for setting up class tracking, allowing you to get up and running quickly. Greater control over expense categorization is the primary benefit of class tracking, which makes sorting expenses easier.
Preference Setting for Class Tracking in QuickBooks Desktop
QBD Class
In QuickBooks, you can create classes that you assign to transactions. This lets you track account balances by department, business office or location, separate properties you own, or any other meaningful breakdown of your business.
Many business owners have certain segments of their business that they want to keep a close eye on. By using the class tracking feature, you can define these segments and track their associated account balances on invoices, bills, and other documents.
Businesses with different departments or locations can use classes to report account balances for each department.
For example, if you were using QuickBooks Desktop and you had a small chain of Mexican restaurants with three locations in the same city, you might create an Uptown, a Midtown, and a Downtown class for tracking account balances by location.
Example of Classes used to track a small restaurant chain in QuickBooks Desktop
QBD Classes
At the end of an accounting period, the restaurant could create separate reports for each restaurant location using Class as a report 'filter'.
If a farmer was using QuickBooks Online he might choose to use class tracking for each of his farm operations—for example, Corn crop, Hog production, and Soybean crop.
Example of QBO Class-tracking for farming operations
QBO Classes
In this case our farmer could also segregate his accounting for each of his farm operations using the Class feature.
While class tracking takes some time to set up, and requires consistent use on every transaction, it pays off in the long run. Class tracking gives you an excellent overview of your company expenses and can see how your money is being spent. With this information, it's much easier to stay on top of your overall budget.
About the Author:
Beverly Lang founded of Diversified Business Solutions (DBS) of Owens Cross Roads Alabama in 2008.
A former corporate controller, Beverly Lang offers more than 20 years of experience assisting business owners, managers and bookkeepers with their accounting and bookkeeping, as well as teaching bookkeeping, accounting and QuickBooks classes, webinars and seminars throughout the southeastern region of the United States.
Diversified Business Solutions is a recognized Intuit Premier Resellers authorized to sell and implement Intuit products at the lowest possible price.