Best Practices

October 26, 2025

8 min read

Books Automator Team

Using QuickBooks Classes & Locations for E-commerce Channel and Product Reporting

Unlock advanced reporting by using QBO's Class and Location tracking features. Accurately segment revenue and expenses to see profitability by sales channel or product line.

Unlock E-commerce Profitability: Beyond the Basic P&L

As an e-commerce entrepreneur, you’re juggling product development, marketing, sales, fulfillment, and customer service. Your online store is bustling, orders are flowing in from various channels, and your bank account balance is, well, changing. But when you look at your Profit & Loss (P&L) statement, does it truly tell you which channels are most profitable? Which product lines are your cash cows, and which are merely breaking even?

If your current QuickBooks Online (QBO) reports leave you with more questions than answers about your e-commerce performance, you’re not alone. Many small business owners struggle to gain granular insights into their multi-channel sales. The good news? QuickBooks Online’s Classes and Locations features, when combined with smart automation, are powerful tools designed to bring unparalleled clarity to your financial reporting.

This post will guide you through leveraging these often underutilized features to transform your bookkeeping from a necessary chore into a strategic asset. We’ll dive into practical setup, automation strategies, and best practices to help you understand your e-commerce business at a deeper, more profitable level.

Section 1: Decoding Classes & Locations for E-commerce Success

Before we dive into the “how,” let’s clarify what QuickBooks Classes and Locations are and why they’re indispensable for e-commerce businesses.

QuickBooks Online Classes: A “Class” in QBO allows you to track income and expenses for different segments of your business. Think of them as labels you apply to transactions to categorize them horizontally across your P&L.

For E-commerce: Classes are perfectly suited for segmenting your business by sales channel (e.g., Shopify, Amazon FBA, Etsy, eBay, Your Direct Website, Wholesale) or by product line/category (e.g., Apparel, Home Goods, Digital Products, Subscriptions).

QuickBooks Online Locations: “Locations” are designed to track income and expenses for different physical sites, departments, or even legal entities within your business. They provide a vertical segmentation, allowing you to run a full P&L for each designated location.

For E-commerce: While “Locations” might sound less intuitive for an online business, they can be incredibly useful for:
- Multiple Warehouses/Fulfillment Centers: If you store inventory in different physical locations (e.g., your own warehouse, a 3PL, Amazon FBA warehouse).
- Distinct Business Units/Brands: If you operate multiple distinct brands under one legal entity, each with its own P&L needs.
- Geographical Regions: For businesses with significant operations or tax implications in different states or countries.

Why are they crucial for e-commerce? Imagine trying to determine the true profitability of your Amazon sales versus your Shopify store without these tools. You’d be manually sifting through bank statements, guessing at allocation, and spending hours in spreadsheets. With Classes and Locations, you can generate a “Profit & Loss by Class” or “Profit & Loss by Location” report with a few clicks, instantly revealing the financial performance of each segment. This granular insight is the foundation for informed decision-making – where to invest more, where to cut back, and which areas need optimization.

Important Note: Classes and Locations are features available in QuickBooks Online Plus and Advanced subscriptions. If you’re on Simple Start or Essentials, you’ll need to upgrade to unlock these powerful capabilities.

Section 2: Building Your E-commerce Reporting Framework

Setting up your Class and Location structure is a critical first step. It requires some thoughtful planning to ensure it aligns with your reporting needs.

Step 2.1: Defining Your Classes – Channels or Product Lines?

This is often the biggest decision. Will you track by sales channel or by product category? The best approach depends on your primary analytical goals.

Option A: Classes for Sales Channels (Recommended for most multi-channel sellers) This is generally the most common and beneficial setup for e-commerce businesses looking to understand channel profitability.

Examples:
- Amazon FBA
- Shopify Store
- Etsy
- Website Direct (for sales not through a platform, e.g., custom orders, B2B)
- Wholesale
- eBay
Benefit: Instantly see which platforms are generating the most revenue, incurring the most fees, and ultimately, delivering the highest net profit. This helps you optimize your marketing spend and channel strategy.

Option B: Classes for Product Lines/Categories If you have a diverse product catalog and your primary goal is to understand which types of products are most profitable, this might be a better fit.

Examples:
- Apparel - T-Shirts
- Apparel - Hoodies
- Home Goods - Candles
- Home Goods - Decor
- Digital Products - Ebooks
- Digital Products - Courses
Benefit: Pinpoint your most profitable product categories, guiding inventory decisions, product development, and pricing strategies.

Can you use both? Yes, but not simultaneously on the same transaction for the “Class” field. However, you can use sub-classes (e.g., Amazon FBA:Apparel). Alternatively, you can use a combination: use Classes for Channels and then leverage Product Categories within your QBO Items list for additional product-level reporting, or explore Tags for even more granular, non-financial segmentation. For simplicity, we recommend starting with Channels as your primary Class structure.

How to set up Classes in QBO:

Click the Gear Icon (⚙️) in the top right corner.
Under “Lists,” select All Lists.
Click Classes.
Click the New button.
Enter your desired Class Name (e.g., Amazon FBA). If creating a sub-class, check “Is sub-class” and select the parent class.
Repeat for all your e-commerce channels or product lines.

Step 2.2: Defining Your Locations – Physical vs. Operational Segments

For many e-commerce businesses, a single “Location” might suffice, or you might not use Locations at all if you don’t have distinct physical sites or operational units. However, if you manage inventory across different warehouses or use multiple fulfillment partners, Locations become incredibly valuable.

Examples:
- Main Warehouse
- Amazon FBA (if you want to track FBA as a distinct operational unit, separate from your own warehouse)
- 3PL Partner A
- Shopify Fulfillment Network
- Brand X (if you run multiple distinct brands under one QBO account)

How to set up Locations in QBO:

Click the Gear Icon (⚙️) in the top right corner.
Under “Lists,” select All Lists.
Click Locations.
Click the New button.
Enter your desired Location Name (e.g., Amazon FBA Warehouse).
Repeat for all your relevant locations.

Best Practice: Keep your Class and Location lists concise. An overwhelming number of categories will make reporting more complex, not less. Start with your most critical reporting needs and expand only when necessary.

Section 3: Automating Data Entry and Reporting for E-commerce

Manually assigning Classes and Locations to every transaction from every sales channel would defeat the purpose of streamlining. This is where bookkeeping automation tools and integrations become your best friends.

Step 3.1: Integrating Your E-commerce Platforms with QuickBooks Online

The true power of Classes and Locations for e-commerce lies in their integration with your sales channels. Specialized apps are designed to pull sales, refunds, fees, and other transaction data from your e-commerce platforms and automatically map them to the correct accounts, and crucially, the correct Classes and Locations in QBO.

Key Integration Tools & How They Work:

A2X Accounting (for Amazon, Shopify, Etsy, eBay, Walmart, etc.):
- Function: A2X is a highly specialized tool that reconciles your marketplace payouts. Instead of bringing in every single order, it summarizes your sales, returns, fees, and other adjustments into a concise journal entry or invoice for each payout period.
- Class/Location Mapping: Within A2X, you can set up rules to automatically assign a specific QBO Class (e.g., Amazon FBA) and/or Location (e.g., Amazon FBA Warehouse) to all transactions related to that marketplace’s payout. This is a game-changer for Amazon FBA, where a single payout covers numerous transactions.
- Benefit: Eliminates manual data entry, ensures accurate reconciliation, and automatically categorizes your complex marketplace transactions by Class/Location.
Synder (formerly CloudBusiness - for Shopify, Stripe, PayPal, Square, Amazon, Etsy, etc.):
- Function: Synder offers robust two-way sync for various payment processors and e-commerce platforms. It can import individual transactions or summaries.
- Class/Location Mapping: Synder allows you to create detailed rules. For instance, you can set up a rule that any sale imported from your Shopify store is automatically assigned the Shopify Store class. Similarly, you can assign a Main Warehouse location to all Shopify sales if that’s where they’re fulfilled from.
- Benefit: Comprehensive sync for multiple platforms, flexible rule-based classification, and can handle both individual transactions and summarized data.
QuickBooks App Store Integrations:
- QBO’s own app store offers direct integrations with popular platforms like Shopify, PayPal, and Square. While some of these might offer basic mapping, they often lack the advanced Class/Location assignment capabilities of dedicated reconciliation tools like A2X or Synder. Always check their specific features for Class/Location support.

Step-by-step for Automation (General Example with A2X/Synder):

Connect your e-commerce platform (e.g., Shopify, Amazon Seller Central) to your chosen integration tool (e.g., A2X, Synder).
Connect the integration tool to QuickBooks Online.
Configure mapping rules within the integration tool:
- For each sales channel, set a default Class (e.g., Shopify Store for all Shopify sales).
- If applicable, set a default Location (e.g., Main Warehouse for Shopify sales, Amazon FBA Warehouse for Amazon sales).
- Map specific income accounts (Sales Revenue, Shipping Income), expense accounts (Shipping Expense, Marketplace Fees), and other accounts.
Review and Post: The tool will typically generate transactions (e.g., invoices, sales receipts, journal entries) in QBO, pre-populated with the correct accounts, Classes, and Locations. Review them, and then post.

Step 3.2: Handling Other Transactions

While automation handles most sales, you’ll still have other transactions:

Bank Feed Transactions: For expenses paid directly from your bank account (e.g., marketing spend, software subscriptions), you can manually assign a Class and/or Location when categorizing the transaction in QBO’s Banking tab. For recurring expenses, QBO’s “Rules” feature can often be set up to automatically assign these.
Bills/Invoices: When entering bills from vendors or creating invoices for wholesale clients, remember to assign the relevant Class/Location to each line item or the entire transaction.

Step 3.3: Running Your Granular Reports

Once your data is flowing in with Classes and Locations assigned, generating insightful reports is incredibly simple:

Go to Reports in QBO.
Search for “Profit & Loss by Class” or “Profit & Loss by Location.”
Run the report. You’ll instantly see a detailed P&L for each Class or Location you’ve defined.
You can also customize other reports, like “Sales by Class Detail,” to get even more specific insights.

ROI and Time-Saving Benefits:

Eliminate Manual Spreadsheets: No more exporting data and trying to piece together channel-specific P&Ls.
Instant Insights: Get real-time financial performance data at your fingertips, allowing for quicker, more informed decisions.
Reduced Errors: Automation minimizes human error in data entry and classification.
Focus on Growth: Spend less time on tedious bookkeeping and more time analyzing your business and strategizing for growth.

Section 4: Advanced Tips & Avoiding Common Mistakes

To truly master Classes and Locations, keep these best practices and pitfalls in mind:

4.1 Best Practices

Consistency is King: Ensure everyone involved in data entry (yourself, your bookkeeper, virtual assistant) understands and consistently applies the Class and Location assignments. Inconsistent data leads to unreliable reports.
Start Simple, Expand Later: Don’t try to classify every single minute detail from day one. Begin with your most critical reporting needs (e.g., top 3 sales channels) and expand your Class/Location list as your business grows and your analytical needs evolve.
Regular Review: Periodically review your Class and Location reports. Do they make sense? Are there any unclassified transactions? Adjust your automation rules or manual processes as needed.
Leverage QBO Rules: For recurring bank feed transactions, set up QBO rules to automatically assign Classes and Locations. This further reduces manual effort.
Consider Tags for Micro-Segmentation: If you need even more granular, non-financial data (e.g., tracking marketing campaigns, specific product features, or customer segments), QBO Tags can be a powerful complement. Tags are more flexible than Classes/Locations as you can apply multiple tags to a single transaction, but they don’t directly impact financial reporting in the same way.

4.2 Common Mistakes to Avoid

Not Using Automation: Relying solely on manual classification for high-volume e-commerce transactions is a recipe for errors, frustration, and wasted time. Invest in integration tools.
Over-Classifying: Creating too many Classes or Locations can make your reports unwieldy and difficult to interpret. Each Class/Location should serve a clear analytical purpose.
Inconsistent Naming Conventions: Use clear, consistent names (e.g., Amazon FBA not Amazon one time and FBA Sales another).
Forgetting to Assign: Transactions that aren’t assigned a Class or Location won’t appear in your segmented reports, skewing your data. Regularly check for unclassified transactions.
Misunderstanding the Difference Between Classes and Locations: Remember, Classes are typically for functional segments (channels, product lines), while Locations are for physical or distinct operational units. Don’t try to use one when the other is more appropriate.
Ignoring QBO Subscription Level: Trying to implement Classes/Locations on a Simple Start or Essentials plan will lead to frustration as the features aren’t available. Ensure you’re on QBO Plus or Advanced.

Key Takeaways

Clarity is Power: QuickBooks Classes and Locations transform your generic P&L into a strategic dashboard, revealing the true profitability of your e-commerce channels, product lines, or operational segments.
Automation is Essential: For e-commerce, manual classification is unsustainable. Leverage integration tools like A2X Accounting or Synder to automatically assign Classes and Locations, saving time and reducing errors.
Informed Decisions: With granular financial data, you can make smarter decisions about where to allocate resources, which products to promote, and which channels to optimize.
Streamlined Bookkeeping: Move beyond basic compliance and turn your bookkeeping into a proactive tool for business growth.

Next Steps for E-commerce Owners

Assess Your QBO Subscription: Confirm you’re on QuickBooks Online Plus or Advanced. If not, consider upgrading.
Identify Your Core Reporting Needs: What are the 2-4 most important segments you need to track (e.g., Amazon, Shopify, Etsy, or Apparel, Home Goods)?
Plan Your Class & Location Structure: Draft a simple list of Classes and Locations you’ll use.
Research Integration Tools: Explore A2X Accounting, Synder, or other relevant apps in the QuickBooks App Store that connect with your specific e-commerce platforms.
Set Up & Test: Implement your chosen structure and integrations. Run test transactions and reports to ensure everything is working as expected.
Consider Professional Guidance: If this feels overwhelming, reach out to a QuickBooks ProAdvisor or an expert bookkeeping automation consultant (like me!). We can help you design and implement the most effective system for your unique business.

Conclusion

In the fast-paced world of e-commerce, understanding your numbers is not just good practice – it’s a competitive advantage. By strategically implementing QuickBooks Classes and Locations, powered by smart automation, you’re not just streamlining your bookkeeping; you’re building a foundation for sustainable growth and profitability. Stop guessing and start knowing. The insights you gain will empower you to make data-driven decisions that propel your e-commerce business forward.

Ready to Get Started?

Ready to modernize your bookkeeping? Start by identifying your biggest manual processes and researching available automation solutions. The future of efficient bookkeeping is here – and it’s more accessible than ever.

Need help choosing the right automation tools? Check out our integration guides or contact our team for personalized recommendations.

Have questions about bookkeeping automation? Found this article helpful? Share your thoughts and questions in the comments below, or reach out to our team for personalized guidance on your automation journey.