QuickBooks' standard reports are critical to understanding your company's past, present, and future. But the program also offers innovative tools that can make them significantly more insightful and comprehensive.
QuickBooks offers two simple methods to identify related data: classes and types. Classes are used in transactions. Types are assigned to individual customers, vendors, and jobs.
An example of how you might use classes is to separate transactions that relate to different departments, locations, or types of business. A construction company for example might want to track classes using New Construction, Remodel, and Overhead. Your customer types might help you isolate groups by characteristics like Industry or Geographical Location.
First, make sure that QuickBooks is set up to use classes. Go to Edit | Preferences | Accounting | Company Preferences. Make sure that Use class tracking is checked. If you want to be prompted for a class designation in transactions, check that box, too.
The next step is to define classes. Go to Lists | Class List. In the bottom left corner of the screen, click on Class, then select New from the menu. You'll see this:
Figure 1: To create a class, just give it a name and click OK.
Continuing with the example of a construction company... as a contractor you decide you want to separate remodeling jobs into room types, like Family Room or Kitchen. Create a Class called Remodel. Go through the above steps again. This time, enter "Family Room" in the Class Name field and click the box next to Subclass of. Open the list and choose "Remodel." Click OK.
Over time, your class list might become lengthy. You can tidy it up by inactivating classes that you're not currently. Click the box next to Class is inactive, as show in Figure 1. It will remain in your QuickBooks records and can be reactivated again.
Putting Classes to Work
Now you can use classes in transactions. Open a blank invoice and select a customer. The Class field will be next to the customer name. If the entire invoice will be assigned to the same class, click the drop-down list and select it. You can also assign separate classes to individual line items:
Figure 2: You can assign different classes to individual line items in transactions.
Not all invoice templates include a column for classes. You can add this by selecting the invoice form you want to modify and clicking Customize in the toolbar. The Customize Data Layout window will open and you can add classes under the columns tab.
QuickBooks comes with two reports specially designed for tracking class-based transactions: Profit & Loss by Class and Balance Sheet by Class. Both reports can be found in the Reports menu, under Company & Financial. Of course, you can filter other reports to include a class column. You can also create a QuickReport for individual classes. Go to Lists | Class List and select a report or graph.
Figure 3: You can filter by class in QuickBooks reports.
Warning! The Balance Sheet by Class report is complicated and may produce unexpected results. Let us help you work with this one.
A Simpler Assignment
Customer, vendor, and job types can produce output for things like targeted mailings and reports.
Creating types is very similar to creating classes. Go to Lists | Customer & Vendor Profile Lists, and select the type you want. You'll follow the same instructions here as you did for classes. Types do not appear on transactions; they're designed for your own internal use, and they're stored in records.
Figure 4: Customer, vendor, and job types are specified in their records.
Classes and types can be used very effectively in your daily bookkeeping, but they require a good deal of thought and planning upfront to get accurate, meaningful reports. If you are still unsure how classes and types can help your business, we can assist you in setting up these useful forms of classification.
For more information on this topic or QuickBooks products, software implementation, and training please email Vanessa Birman at VanessaB@ehtc.com or call 616-575-3482.
To learn more about Cloud Accounting Software for Small Businesses, visit the QuickBooks website here.