A class in QuickBooks is a single-purpose tool to classify income and expense transactions. Class tracking is not used for balance sheet accounts. It’s also not a way to group customers, jobs, or vendors. To do that, use a Type, which can be managed on the Lists->Customer & Vendor Profile Lists menu selection.

A variety of industries use job costing to track expenses in pursuit of a more accurate picture of their business expenditures. A clear view of the time, labor and overhead that goes into each project allows you to make more informed decisions in the future. Lesson 1: Set a strong foundation for your system in QuickBooks - Avoid the biggest mistake people make when setting up QuickBooks for Job-Costing! Review the fundamentals of the Chart of Accounts and item list.

To use class tracking, it first must be enabled on the Accounting sub-menu of the Company Preferences tab on the Edit->Preferences menu selection; just check the box for Use class tracking. To have QuickBooks request the appropriate class for a transaction, check the box for Prompt to assign classes. Keep in mind that class tracking is a single purpose tool – it can’t be used to track unrelated aspects of your business. Proper use of classes depends largely on your business reporting needs. Classes can be used to track: • locations • product lines or service types • partners in a professional services firm • funds for a public sector or non-profit enterprise Since classes can be applied to both income and expense transactions, class tracking enables producing a Profit & Loss statement for each class.

QuickBooks supports sub-classes, or nested classes, up to 5 levels deep. Hi, I work for a non-profit organization that partners with many programs. Basically, what we do here is take their registration fees and pay out their expenses. We have a class list in place that our previous bookkeeper set up, but it’s not properly done. I’d like to set up an extensive class list to track each program we partner with separately.

This would entail making all current classes inactive and essentially re-building the class list from scratch. My question is – we’re right in the middle of our fiscal year. Are there ramifications to changing the class list mid-way through?

Should I wait until we start our next fiscal year? We’d discourage an extensive active class list. First, you can rename or merge classes if the current names don’t fit, and that will only interrupt your current FY reporting if you merge classes, because you’ll lose the details of the separate classes. Classes are hierarchical in that you can have parent and child classes.

If you’re going to have a lot of classes, make use of a structure so that you don’t make transaction entry overly complicated. On the ramifications of changing classes in the middle of your FY, when you report on any program, you’ll have to be sure to select all of the classes that apply. If the classes are currently inactive, that means you’ll need to re-activate them to report on them. Beyond reporting in the middle of the year, changing classes will complicate reporting over several years, because the class used in an earlier year will now be inactive. Therefore, you’re best served by editing your current classes to match your needs as closely as possible and to use sub-classes to refine what you have if necessary. I’m using Classes to track project funds for a non-profit.