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Using Classes and Locations in QuickBooks Online

Have you ever stopped to work out which part of your business is bringing in the money? Your business could be broken up into departments, across states or in different properties. You need to know where a majority of your business income is coming from.

You can track this important information in Locations and Classes in QuickBooks Online Plus. Once these features are turned on and setup correctly you can clearly see which area of the business is thriving, and which isn’t. This can help you make important decisions and create efficiencies across your business.

Locations and Classes are best for tracking large categories of your business, not for tracking individual jobs or projects. If you want to analyse your business on a project-by-project basis, use the Projects feature.

Examples of How People Use Locations and Classes

Location: Stores

Classes: Men’s wear, Ladies wear, Shoes, Electrical, Furniture.

  • In this example the Locations are different stores. Classes are different departments within the store.

Location: Three different business units within the business.

Classes: Income services and products provided within each unit.

  • In this example the Locations could be consulting business, installation business and retail sales. Classes could be different services you provide and products that you sell.

You can start to track Classes and Location if you have the QuickBooks Online Plus version. These features are not available in Simple Start and Essentials.

Location Tracking and Class Tracking lets you track your income and expenses. You can use either one of them individually or both of them together.

  • Class tracking specifies a different class for each detail line of a transaction
  • Location tracking allows you to assign a location to an entire transaction

Turning On Classes and Locations

Under the Gear Icon > Account and Settings > Advanced > Categories > Choose to switch on Classes and Locations or only one.

QuickBooks screenshot demonstrating how to enable Classes and Locations feature

Under the Gear Icon > Lists > select All Lists.

QuickBooks settings menu displaying steps to activate Classes and Locations feature

Choose either Classes or Locations.

QuickBooks settings menu instructions on activating Classes and Locations feature

Click New on the top right > Enter in a name for your Class/Location.

Classes and Locations can be hierarchical allowing you to group each category together. Just add a sub-class/sub-location under the main class.

Adding a sub-class/sub-location

Click New on the top right > Add the Name > Click the Is sub-class or Is sub-location check box and select the class/location from the drop down menu.


QuickBooks settings menu instructions on creating a sub-class or sub-location
QuickBooks interface displaying steps for creating a sub-class or sub-location

You can only nest sub classes up to five levels deep.

QuickBooks Online Plus allows up to five levels under the one class and an unlimited amount of classes in each.

Making Locations and Classes Inactive

You can make a location or class inactive (delete) at any time if you no longer require the class. You can also reactivate if required.

To make a location or class inactive, select the dropdown arrow next to Run Report click Make inactive.

Transactions

Once all your classes and locations have been switched on, you can add this information when processing transactions. This information is required when entering Quotes, Invoices, Expenses, Write cheques or Bills, for example.

This ensures that the information is attributed to the correct location and class, giving you the correct information in financial reports.

QuickBooks interface displaying steps for adding information while processing transactions for classes and locations

Reporting on Your Locations and Classes

Reports allow you to summarise the income and expenses for each class or location, so you can see which areas in your business are operating in a profit or loss.

To access the reports click Reports > All Reports > Business Overview > Profit and Loss by Class or Profit and Loss by Location.

We will also look at Job Costing Reports > All Reports > Business Overview > Budget Vs. Accruals.

You can customise your reporting and choose if you wish to see ALL Locations and ALL Classes you have set up or just one in particular.

Profit and Loss by Location

For example Location: Electrical.

QuickBooks screenshot showcasing an example of Profit and Loss by Location report

Profit and Loss by Class

The five sub-classes are listed across the top.


QuickBooks screenshot showcasing an example of Profit and Loss by Class report

Budgeting by Class

You can plan out and analyse your business’ performance on a class-by-class or location-by-location basis when you subdivide your budget.

Let’s look at an example: see the below image.

Set up a Budget name such as “Electrical”.

When setting up your budget choose Subdivide by Locations or Classes.

In the months of September and October allocated amounts have been entered. These amounts are associated with the Income and Expense accounts that have been costed when quoting a job.

Income: Services account $8000.

Cost of Sales: Cost of Sales, $500 and $1000; Freight and Delivery, $50 and $400; Subcontracted Services, $500 and $1000.

Click Finish. Once this has been finalised you will be able to run reports comparing the actual figures that are entered into QuickBooks Online to the Budgeted figures you have entered.

QuickBooks screenshot showcasing an example of Budgeting by Class feature

In Reports > All Reports > Business Overview > Budget vs. Actuals.

QuickBooks screenshot demonstrating an example of Accounts vs. Classes feature

Run your report to see customisations to suit your needs. See the reports below.

QuickBooks screenshot showcasing a Budget vs. Actuals report example
QuickBooks screenshot showcasing an example of Accounts vs. Total comparison

The Income Services that is budgeted is $8000. The actual received in Services is $7727.27. This is under our budget amount by $272.73.

The Cost of Sales Budgeted amount was $1500. The actual was $2500. This area is running $1000 over budget.

Freight and delivery budgeted $450 and actual $650. This is over budget by $250.

We can clearly see based on the Budgets vs. Actuals report in our classes that the actual costs are over budget. This allows us to make an informed decision to increase our income by reducing our Cost of Sales.

QuickBooks screenshot showcasing a Budget vs. Actuals report example

Using the Locations and Classes features allows you to capture information to analyse which part of your business is running efficiently and which area needs improving. By using the budgeting feature you can review the job costs by either locations or classes. This allows you to view how close you came to your actual job costing.


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