Let’s say you are a business that has several locations. The use of classes will let you separate the costs from each location so you can see how each one is doing instead of lumping all costs together. In this case, you can set up a class for each location.
What if you are a non-profit organization? In this case, you will need to separate your activities into three categories: program, fundraising, and management & general for filing your informational returns. Using classes in QuickBooks lets you easily do this. You would set up a class for each one.
You can set up class tracking by doing the following. Go to “Edit Preferences”, then “Accounting”, and finally the “Company” tab. Then you can click on “Use Class Tracking”. Just below that selection, you can also ask to be prompted to assign classes when you are making an individual transaction. This is a good choice.
Once you start using classes, you are able to better understand your costs and be able to make better decisions. You may start asking why one store location has certain costs out of line with the other stores. Maybe there are good reasons, maybe not. But classes gives you the ability to know what questions to ask.