Before You Start

This guide requires a QuickBooks Plus or Advanced subscription for full functionality. Ensure you have administrator access to enable these features.

Overview

20 min
Setup Time
Intermediate
Difficulty
Monthly
Maintenance

What You’ll Learn

  • How to enable Classes and Locations in QBO
  • Best practices for assigning transactions
  • Running segmented Profit & Loss reports
  • Troubleshooting common reporting errors
  • Tips for consistent staff training

1. Understanding Classes vs. Locations

QuickBooks Online offers two powerful ways to segment your financial data:

Classes

  • Used for ‘what’ a transaction is for (e.g., Department, Project, Product Line)
  • Assign to individual line items on transactions
  • Excellent for P&L by Project/Department

Locations/Tags

  • Used for ‘where’ a transaction occurs (e.g., Store Front, Region, Business Unit)
  • Assign to the entire transaction (header level)
  • Ideal for P&L by Location/Branch

2. Enabling the Feature

Classes and Locations are not enabled by default. Here’s how to turn them on:

  1. 1

    Go to Settings

    Click the Gear icon (⚙️) > Account and settings.

  2. 2

    Select the Advanced tab

    On the left navigation, click ‘Advanced’.

  3. 3

    Enable Tracking

    In the Categories section, find ‘Track classes’ and ‘Track locations’. Toggle both to ‘On’.

  4. 4

    Choose Class Assignment

    For ‘Assign classes’, select ‘One to each row in transaction’ (recommended for detailed tracking) or ‘One to entire transaction’.

  5. 5

    Save Your Changes

    Click ‘Save’ at the bottom right, then ‘Done’.

3. Setting Up Your Class and Location Lists

  1. 1

    Add Your Classes

    Go to Settings (Gear icon) > All Lists > Classes. Click ‘New’ to add your departments, projects, or product lines. You can also create sub-classes by checking ‘Is sub-class’.

  2. 2

    Add Your Locations

    Go to Settings (Gear icon) > All Lists > Locations. Click ‘New’ to add your regions, stores, or business units. Define the display name for forms and reports.

  3. 3

    Assign Default Classes/Locations (Optional)

    For specific vendors or customers, you can set a default class or location in their profile. This will pre-fill on transactions, saving time and ensuring consistency.

Consistency is Key

Establish clear guidelines for your team on when and how to use Classes and Locations to ensure accurate reporting. Review usage regularly.

4. Entering Transactions with Classes and Locations

Once enabled, you’ll see new fields on your transaction forms (bills, invoices, expenses, checks).

{
  "transaction_type": "Invoice",
  "date": "2025-01-15",
  "customer": "ABC Corp",
  "location": "North Store", // Applies to entire transaction
  "line_items": [
    {
      "description": "Consulting Services",
      "amount": 500.00,
      "class": "Project X" // Applies to specific line item
    },
    {
      "description": "Software License",
      "amount": 200.00,
      "class": "Software Sales"
    }
  ]
}

Example of a transaction entry conceptually showing how Classes and Locations are applied.

5. Running Segmented Reports

The real power of Classes and Locations comes from reporting. Navigate to ‘Reports’ and look for these:

Key Reports

  • Profit & Loss by Class
  • Profit & Loss by Location
  • Balance Sheet by Class (if accounts are classed)
  • Custom Reports filtering by Class/Location

Common Issues & Fixes

  • Report is blank: Check if transactions were actually assigned a class/location.
  • Missing data: Ensure all relevant expense and income transactions have been tagged.
  • Inconsistent data: Review your data entry guidelines with your team.
  • P&L doesn’t balance: Look for unclassified transactions in your reports and assign them.

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