How do I set up classes and locations in QuickBooks Online?
Classes and locations serve different purposes in QuickBooks Online, and understanding the difference matters before you turn anything on. Classes let you track segments of your business like departments, service lines, or revenue streams. Locations track physical or geographic divisions like store branches, job sites, or territories.
A restaurant group with three locations would use the locations feature to see profit and loss by each restaurant. A single-location restaurant that does dine-in and catering might use classes to separate those revenue streams. Some businesses need both. Many don’t need either.
To enable tracking, go to Settings in the upper right, then Account and settings, then Advanced. You’ll see options for Track classes and Track locations. Turn on whichever you need. You can also choose whether QuickBooks should warn you when a transaction doesn’t have a class or location assigned, or require it before saving. Requiring assignment keeps your data cleaner but can slow down transaction entry.
Once enabled, create your classes or locations before you start entering transactions. Go to Settings, then All Lists, then Classes or Locations. Keep the list manageable. Five to fifteen categories usually works. Too many and people stop using them consistently. Too few and the reports don’t tell you anything useful.
The setup itself takes five minutes. The planning should take longer. Think about what questions you want your financial reports to answer. If you want to know whether your residential jobs are more profitable than commercial, you need a class structure that separates them. If you want to compare performance across crews or territories, locations might make more sense.
Consistency matters more than perfection. If some transactions get tagged and others don’t, the reports are unreliable. Anyone entering transactions needs to understand the system and use it the same way every time. QuickBooks setup done right includes training the people who will use it daily.
If you’re unsure whether classes and locations make sense for your business, talk to someone who handles bookkeeping services in Richmond before building a structure you’ll need to undo later. The wrong setup creates more confusion than having no tracking at all.
Greater Richmond's Small Business Bookkeeper
The Next Step:
A Short Conversation
Fifteen minutes to tell us what you're dealing with. We'll let you know how we can help and give you a clear price quote.
More Questions
What's the Best Way to Track Inventory for a Restaurant?
Count weekly, track waste daily, and compare what you should have used against what you actually used. The gap between those two numbers tells you where your food cost is leaking.
Read answerCan a bookkeeper help me catch up on years of messy records?
Yes. Catching up on neglected books is one of the most common reasons small businesses hire a bookkeeper. The process involves reconstructing transactions from bank records, categorizing expenses, and reconciling accounts month by month.
Read answerWhat's the best way to track costs for each project?
The best approach is capturing every cost as it happens and assigning it to the right project in your accounting system. This means tracking labor hours, materials, subcontractor bills, and direct expenses separately for each job so you know your actual profit margin on every project.
Read answerShould I run payroll myself or use a payroll service?
You can run payroll yourself with software, but the time investment and compliance risk grow with each employee. Most small businesses benefit from outsourcing once they reach three to five employees or have complex pay structures.
Read answerHow do I know if I need to collect sales tax in other states?
You need to collect sales tax in states where you have economic nexus, which usually means exceeding $100,000 in sales or 200 transactions. The rules changed in 2018, so physical presence is no longer required.
Read answerWhat is retainage and how do I record it in my books?
Retainage is a percentage of each payment that clients hold back until a construction project is complete. In your books, it's recorded as a separate receivable asset that gets collected when the job wraps up.
Read answer
