Class is a powerful feature available in QuickBooks Online (QBO). Although originated from QuickBooks Desktop accounting system, there is a slight difference in reporting.
How to use class in QuickBooks?
You may use the class as a departmental account. Set up marketing, R&D, production, etc. as a class; then, tag it to each income or expense account when creating an invoice or bill. The profit and loss report shows the income and expense breakdown by class once the transaction saved. QuickBooks class feature is a unique way of analysing the business account and less tedious in setting up compared to the sub-ledger method used by other accounting systems.
There are many other ways of using the class feature in QuickBooks:
The class feature is flexible and is up to your imagination to apply it into your business account.
Each transaction consists of a header and a detail section. For payment transaction, the payee and bank are part of the header section, whereas the accounts used at the bottom of the transaction are the detail section. Each of the expense account at the detail tagged to a class, and pick up by the Profit & Loss by Class report once transaction saved. But if you print the Balance Sheet by Class from QuickBooks Online, the amount paid from the bank account will group under the unassigned classification since there is no class field available at the header.
You may consider using a location feature, for branches or retail outlets, in QuickBooks Online instead of a class. The data entered will show in both Profit & Loss and Balance Sheet.
The location field is at the transaction header section, which breaks down the accounts used in both the header and detail section. Location is a better choice for businesses that have multiple branches, but you cannot have multiple locations in one transaction (at this moment). You may have to get the supplier to change the way they bill or change the internal workflow if they bill you more than one branch in a single invoice.
Technology is evolving, QuickBooks introduces new feature from time to time. Who knows? Maybe someday there might be a better way of using or reporting by class and location 🙂
Discuss with your QuickBooks consultant, sign up a demo or trial to test drive before you switch over from QuickBooks Desktop to QuickBooks Online.