You can link costs and gains to particular tasks, customers, employees, and activities using class tracking, also known as project coding. You can use classes to track departmental costs, assess the profitability of individual businesses, or generate market analysis reports for various service categories. If your company uses project coding in QuickBooks from Intuit, you can set up optional class tracking to give you better control over your finances and QuickBooks displays issues more freedom when reviewing the financial health of your company and can easily start with QuickBooks online.
Activating Class Tracking
You must turn on the feature in your QuickBooks program before you can use classes to segment your costs and projects. You must quickly navigate to your application preferences to turn it on. When you open the Edit menu and select “Preferences,” Accounting will be listed on the left under the various categories. There is a checkbox labeled “Use Class Tracking” on the Accounting screen’s Company Preferences tab. You can start creating classes after you turn it on and click the “OK” button to confirm your choices.
Setting Up Classes
Coding projects only function correctly when class tracking is applied and your business is segmented from a single viewpoint. Architects, advertising agencies, and law firms, for instance, should set up classes to track either the firm’s principals or each of their individual office locations, but not both. Almost every aspect of your income and expenses can be coded, but tracking the costs that are most important to you will yield the best results. If you’re paying for copies at a retail print shop, keeping track of these expenses as a group could help you decide when it’s best to buy internal equipment. Use a miscellaneous code to track expenses that help your bottom line but don’t fit anywhere else at the same time.
Classes Vs. Types
You can define your clients, projects, and outside service providers in QuickBooks using both classes and types. Consider classes as broad transaction categories that can be used to categorize all of your customers. Your vendors can be categorized based on the services they offer, your customers can be divided into retail and wholesale, and your projects can be either residential or commercial construction. Types are divided into subtypes by subcategories. Classes give you the ability to track your divisions by product line or location, set up a department as a cost center that bills other departments for its services, or keep track of the revenue generated by a specific partner.
Considerations
For classes to function properly and to track taxable expenses, you will need to separate any additionally incorporated entities or independent businesses into separate QuickBooks files. While it may be tempting to attempt to combine all of your distinct businesses into a single set of books, doing so will only cause you more trouble in the long run. Remember that classes only function if you enter and code your data consistently, just like with any financial tracking procedure. The likelihood that you’ll rush through the paperwork to get it entered and make mistakes in your haste to finish your task increases if you put off the paperwork until it accumulates.
You can also read: How To Convert QuickBooks Desktop To Online
