Many of today's businesses involve activities in multiple areas. In a retail environment, this might involve food sales versus non-food sales.
In a construction business, this might involve residential and commercial construction or new construction versus remodeling and rehabilitation work. In the agricultural area, this may involve crop production versus animal product production.
As a business owner you may want to track each of your functional areas to determine the profitability of each area. By having this information you can determine if there are steps that can be taken to make a profitable area of your business more profitable. You can also use this information to determine if you should continue to undertake an area of your business that is not generating a profit.
You can track functional areas or divisions of your business by turning on a feature in QuickBooks called Class Tracking. This feature is accessed by choosing Edit from the menu at the top of the program screen and then choosing Preferences on the drop down menu. Once the Preferences window is open select Accounting Preferences. Under the Company Preferences tab you will find the checkbox for turning on Class Tracking.
With the Class Tracking turned on you then need to define your classes. This is done by choosing List from the programs menu. Under the List menu you will find an option for Class List. Select this option to add the areas of your business that you would like to track. You are also able to establish sub-classes under each class area defined. This would be helpful for a company that manages rental properties. You could create a commercial and residential class. Under each class you could create a sub-class for each property managed.
Once the classes, and sub-classes if desired, are established, you post the data to each class by locating the class option in each area of QuickBooks that you can post various types of entries.
With information correctly posted you will then have the ability to process the various reports available in QuickBooks for the entire company, a report showing all classes and totals for the company, or if desired you may run a report for one selected class or sub-class by using the report filtering features located within each report.
If you are interested in taking advantage of this feature for your company, and would like assistance in setting this up, please contact our office at 616-642-9467. One of our qualified staff members can assist you. Dwayne Houghton, CPA and Candice Walsh, are certified ProAdvisors through QuickBooks.