Class Features in QuickBooks, its management, and its application go a long way in ensuring you make the most out of your QB account. But, what is a Class Features and how can we better understand it? This and a lot more will be further discussed in the article ahead. We are well acquainted with the fact that there is various business that comprises more than one department or is located in more than one city, town, or country.
Likewise, there is various business, like Non-Profit Organizations that comprise more than one project and funds. Hence, there arises a need to be able to organize and manage the various facets and aspects of the same, business. This is where the Class Feature in QuickBooks comes to play. Let us delve deeper into the concept.
PROFIT AND LOSS STATEMENT BY DEPARTMENT
Moreover, the owner or the management of such an organization usually desires reports from their finance department that allow them to further analyze, assess and understand where their business is heading off to. To be more precise, the Class Management feature helps the owners understand the Profit/loss aspect of each department. Also, one gets a clearer picture of the various investment that is going into a certain aspect of a business in question.
PROFIT AND LOSS STATEMENT BY LOCATION.
Similarly, the same report is a crucial part of analyzing the Profit/Loss of a specific department based on location. This helps the management analyze the profits generated from a branch at a specific location and also the investment that goes into it. There are times when a certain branch of a specific location tends to offer more of a profit as compared to the other locations. Hence, the reports allow the management to analyze ‘what’s going on right over there?’
PROFIT AND LOSS STATEMENT BY PROJECT
As for the specific report statement categorized according to the PROJECT, one needs to know what are funds spent on a certain Project and how much expenditure have we ‘done’ over it. This way one can easily understand and analyze the Profits and Losses that one can expect out of a specific project of a company or organization.
So, you see, these are the various aspects of a business where we need to be able to apply the class feature in QuickBooks. Now let us see how.
WHAT IS CLASS FEATURE IN QuickBooks?
Firstly, we need to understand that the Class feature in QB is much like the Chart of Accounts, as discussed in other articles. Essentially, this feature allows you to be able to create different or multiple CLASSES that need to be assigned to certain transactions. This also comprises the Class Tracking Feature that enables the users to be able to clearly define multiple segments and also to be able to track the bank accounts ‘linked’ to them.
This includes INVOICES, JOURNALS, BILLS, RECEIPTS, and various other documents of a similar aspect. Hence, one can easily acquire the ‘segment-wise’ reports with the help of the CLASS FEATURE of QuickBooks. Overall, one can easily track the various aspects of their business with the help of ‘meaningful’ breakdowns.
How to Active The Class Feature in QuickBooks Account
To be able to activate the class feature in QB, you need to follow the below steps:
- Go to EDIT on the main menu bar of the Home page of QB
- Click to activate the drop-down menu list and scroll below to click on PREFERENCES
- Go to ACCOUNTING
- Click on MY PREFERENCES
- Here you need to ‘click tick’ on the following boxes: USE ACCOUNT NUMBERS, USE CLASS TRACKING FOR TRANSACTION, PROMPT TO ASSIGN CLASSES,
- Now navigate to the right-hand side and click on OK.
- This will enable the QB to activate the CLASS FEATURE.
As you can see in the image above, if you click on the LIST from the Main Menu, the CLASS LIST will emerge and be visible within the list.
THE CLASS LIST: FEATURES WITHIN
Now, let us take a look at what comprises the CLASS LIST once it has been activated in the QB.
- As you can see from the Image above, this is a BLANK WINDOW to start with. It is here that we need to create the NAMES as required for our specific needs and requirements. To be able to create a new class we need to:
- Click on CLASS
- Click on NEW from the drop-down list that emerges
You will be redirected to the form like so:
Fill in the boxes and the blanks as required in the spaces offered within the form.
- Write the name of the CLASS> click OK
- This will allow a class to be created
- Likewise, you can go ahead and create the other departments also as required by the various aspects of your business. Hence this way you can easily create the CLASS LIST, using the names relevant to your business accordingly.
TO INCLUDE THE LOCATIONS FOR THE REQUIRED DEPARTMENT IN THE CLASS LIST
Now, in case you need to categorize the department and acquire the CLASS LIST according to the LOCATION they are situated at, you can do so too. For this you will need to:
- Go to CLASS located at the bottom left-hand side of the CLASS LIST WINDOW
- Click to have the MENU list emerge
- After the NEW CLASS window emerges you need to click tick on the box: SUBCLASS OF
- This will have a Menu list emerge from which you need to click and select the required option suitable for your department.
- Click on OK located on the right-hand side
- And you are done.
- Thus, you have created a SUB CLASS UNDER THE REQUIRED CLASS (North Region as in the example below)
Likewise, you can go ahead and create as many SUB CLASSES as required, accordingly by following the same steps as above.
The creation of the CLASS LIST and the subsequent Sub class go help us in the better recording of the expenses. This can be checked in the following way:
TO CHECK THE EXPENSES AFTER THE CREATION OF THE CLASS LIST
As you can see as displayed in the image above, in the tabular form there is a CLASS column at the far right-hand side of the table.
It is here, once you select the CLASS in the column, you will be able to get the entire list of all the departments created by you. It is from here, that you can select the required DEPARTMENT and check as required.
The above Window emerges once the department of your choice has been selected. It is here that you can view your calculations and other details related to that particular department.
THE BENEFITS OF USING THE CLASS FEATURE
So, now that you know how to activate the CLASS FEATURE, let us take a look at some of the benefits of the same:
- THE FINANCIAL REPORTING:
One of the most important and basic applications of the CLASS FEATURE is to be able to analyze financial reporting. This is done by being able to keep a track of the more complicated financial aspects and transactions in a business. Thus, with the help of class reporting, one can easily work on the various components of the business.
- BETTER UNDERSTANDING OF THE PERFORMANCE:
One of the major benefits of the CLASS FEATURE is that it makes tracking the performance of the employees an easy task. This helps keep a track of the strengths and the weaknesses of the business and allows you to make the required changes in the Employee base accordingly.
- ASSESSING THE STAFF TURNOVER:
The class feature can help a business decide if the staff for a certain department needs training. This can occur in case the revenue is less as compared to the initial cost. Hence with the CLASS REPORT, one can easily find which department is at fault and requires training according to the turnover.
- MANAGING THE RISK OF THEFT:
As in the case of certain businesses where numerous transactions take place, it can get a tedious job to keep track in case of certain ‘theft’ as and when it occurs. However, with the CLASS FEATURE by your side, you can easily track a decline in revenue and also detect the trail of theft.
- DECIDING ON THE FIXED ASSET PURCHASES:
It is necessary that needs to invest in some kind of fixed asset, as in the case of the Restaurant business. This is the case when these assets need to be replaced after a certain period. With the help of the CLASS FEATURE, one can easily plan the appropriate asset replacement.
BEST TIPS ON HOW TO USE THE CLASS FEATURE
So, how do you make the most of the CLASS FEATURE, and what do about it? Well here are some of the basic tips on doing so:
- Make sure that every transaction comprises at least ONE class. After, this it is easy to be able to assign every expense done of the revenue and expenses to the class. This makes it easier for the analysis of profit and loss by the class
- It is recommended that you create an overhead class. This is the cost that cannot be directly traced to a certain product or service.
- It is recommended that you eliminate or remove the CLASSES that are not relevant or required. This makes the reports ‘cleaner’ and easier to analyze.
- It is advised to use the Generic classes. This helps to simplify the profits and the losses accordingly.
Thus, you can see that, we can easily create the SUB CLASS for all or any CLASS in the list as required. This helps the user to be able to easily track the departments according to the SUB CLASS, (region-wise as in the example above). In case you need to check the expenditure of the departments according to the region, it is very easy to be done with the help of the CLASS FEATURE that has been activated.
The CLASS FEATURE is the representation of the meaningful aspects and portions of your company, which can include STORE DEPARTMENT or PRODUCT LINES. Once activated the CLASSES can be easily assigned to a certain or all transactions.
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