QuickBooks Tip: Add Depth to Financial Reporting with Class Tracking
The use of class tracking in QuickBooks gives a business one more dimension – a way to categorize and track business activity that is meaningful in your particular company. Assigning a class to transactions allows you to report on each class separately. Classes should be used to group transactions into categories that are different from your chart of accounts. As with most things in QuickBooks, planning up front to determine which classes your business needs will make them the most effective.
Classes can be used for tracking different product lines. For example, an accounting firm may track revenue and expenses for tax, accounting, and audit services using classes. Another example is tracking product sales by wholesale vs. retail.
Another use of classes to evaluate business locations. For example, if you have different office locations, you may want to track revenue by each location to determine its profitability. Landlords can use classes to track revenue and expenses by rental property.
Essentially you use classes for any meaningful breakdown of your business that you want reporting for. Here’s how to set up a class:
- First, activate class tracking.
- Open Accounting Preferences.
- Select the Company Preferences tab.
- Select Use Class Tracking. Now you are ready to add classes using the list function.
Every transaction in QuickBooks (e.g., entering a bill, entering an invoice) will now prompt you for a class. If you do not enter a class, that transaction will go to the class “unassigned.”
Contact Kaufman, Rossin’s QuickBooks ProAdvisors to learn more about using class tracking for your business.