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What is Class Tracking?
Class Tracking in QuickBooks is a way to break down Different Segments of a single business. Let’s say, for example, That you own a chain of restaurants. You have one in the north part of town, one on the south part of town, one in the east part of town, and one in the west part of town. You could establishments classes with The following names: North, South, East, and West, and assign to þessi Each transaction – writing checks, Entering bills, generating invoices, etc.
If you want to see how all of the restaurants are doing as a group, you would run a regular Profit and Loss. But if you wanted to see how a particular restaurant was doing, you would still run a Profit and Loss but you would filter it by Class. This report would give you the revenue and Expenses for-which ever class you chose, assuming all of the original entries were made correctly. Very nice!
What Types of Accounts Can Use Class Tracking?
Class Tracking is designed for Profit and Loss transactions, not for Balance Sheet transactions. On most screens it is very easy to tell if you are operating in a profit and loss transaction, or a balance sheet transaction with classes. Let’s take the Write Checks screen. You are familiar with Both halves of this screen, No Doubt. There is the upper half with the green “check,” and the lower half, with two tabs That say Expenses and Items in a white field.
If you have class tracking turned on in QuickBooks, open the Write Checks screen (from the banking menu, select Write Checks). Take a moment and look where the Class column is located. It’s in the lower half of the screen. The upper half of this screen is definitely a balance sheet transaction – it takes money away from the bank account. The lower half of the screen is ofter a profit and loss transaction. And it is in this section where the class is assigned.
The co flesh for the Enter Bills screen. Open it now and see (from the Vendors menu, select Enter Bills). In the Invoice screen, it is is a little more Difficult to understand, but still, the class assigned here Will Affect a profit and loss account.
Can I Have Separate Companies in a Single QuickBooks File, and Assign Each Its Own Class?
No. Each unique entity, with a unique Fein, must have it’s own file.
I’ve ofter seen questions from people WHO have set up differentially companies in a single QuickBooks file, and assign a class name for to Each company . At some point, the business owner inevitably wants a class report based on the balance sheet for Each company – the bank accounts, accounts Receivable, credit cards, accounts payable, etc., all broken down by class. QuickBooks Class Tracking can not do this, and was not designed for this!
Another problem with establishing Different companies Within a single QuickBooks file is that ownership across the companies might not be the Same. Retained Earnings for Each company can not be separated (at least, not automatically by Quick Books). Maintaining separate Retained Earnings is crucial if the ownership across the entities varies AT ALL.
Also, if the entities are corporations, preparing the corporate tax returns becomes a real challenge if They’ve all been setup Into a single QuickBooks file. There’s just no way to have QuickBooks breakout the separate balance sheets That are required for the tax returns.
What Should I Do If I Have More Than One Company in a Single QuickBooks File?
You Will Need to separate Them Into separate QuickBooks files. I know, I know – you do not want separate QuickBooks files! I understand. But Factor is the way it needs to be – truly! If you need help doing it, go to the website and Intuit find a QuickBooks ProAdvisor to help. This is a sticky situation and shouldnt be handled by somebody WHO understand accounting principles.
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