How Do I Set Up Classes and Locations in QuickBooks Online?

Setting up classes and locations in QuickBooks Online allows you to track income and expenses for different segments of your business, providing more detailed financial insights and reporting capabilities. Classes are ideal for tracking departments, programs, or specific projects, while locations are perfect for monitoring performance across different physical branches or regions.

1. Enable Classes and Locations

Before you can set up classes and locations, you must enable these features in your QuickBooks Online settings.

1. Go to Settings ⚙ (the gear icon) in your QuickBooks Online account.
2. Select Account and settings.
3. Choose the Advanced tab on the left-hand menu.
4. For Classes:
   • Locate the Categories section.
   • Toggle Track classes to On.
   • You can also select whether to be prompted to assign classes or make it a required field on transactions.
5. For Locations:
   • Locate the Locations section.
   • Toggle Track locations to On.
   • Similar to classes, you can choose to be prompted or make it a required field.
6. Click Save at the bottom right of each section, then Done to exit Account and settings.

2. Set Up Classes

Classes allow you to categorize transactions by department, project, or any other segment that crosses your usual chart of accounts. This helps you generate reports that show how each segment is performing.

What are Classes Used For?

• Tracking income and expenses for different departments (e.g., Sales, Marketing, Operations).
• Monitoring profitability of various programs or services (e.g., Consulting, Training, Product Development).
• Categorizing transactions for specific grants or funding sources.

Steps to Add a New Class:

1. Go to Settings ⚙ and select All Lists.
2. Select Classes.
3. Click the New button.
4. Give this class a descriptive Name (e.g., "North Store Sales," "Online Programs," "Service Department").
5. To add a sub-class (e.g., "Online Programs - Basic," "Online Programs - Advanced"), select the Is a sub-class checkbox and then select the main class it falls under. You can nest up to five levels of classes.
6. Click Save.

You can add as many classes and sub-classes as needed to accurately segment your financial data.

3. Set Up Locations

Locations enable you to track your financial data by different physical sites, branches, or regions where your business operates. This is invaluable for multi-branch businesses or those operating in different geographical areas.

What are Locations Used For?

• Monitoring the profitability of individual store locations (e.g., Downtown Branch, Eastside Store).
• Tracking sales and expenses for different warehouses or distribution centers.
• Analyzing performance by sales regions (e.g., North Region, South Region).

Steps to Add a New Location:

1. Go to Settings ⚙ and select All Lists.
2. Select Locations.
3. Click the New button.
4. Give this location a descriptive Name (e.g., "Main Office," "Warehouse 1," "California Branch").
5. (Optional) You can also add more details like location type, contact info, and addresses, although these are not mandatory for basic tracking.
6. Click Save.

Just like with classes, you can create multiple locations to suit your business structure.

Using Classes and Locations in Transactions

Once classes and locations are enabled and set up, you will see new fields on your transaction forms (such as invoices, expenses, bills, and sales receipts). When you create a new transaction, simply select the relevant class and/or location from the dropdown menus to assign it.

Benefits of Tracking Classes and Locations

• Enhanced Reporting: Generate detailed Profit & Loss reports, Balance Sheets, and other financial statements broken down by class or location. This allows you to pinpoint which areas of your business are most profitable or require more attention.
• Better Decision Making: Gain clear insights into the financial health of specific departments, projects, or branches, empowering you to make informed strategic decisions.
• Budgeting and Forecasting: More accurate historical data by segment helps in creating more precise budgets and financial forecasts.

For more detailed information on managing these features, you can always refer to the official QuickBooks Online support resources.