Configuring class and location tracking in QuickBooks enables businesses to categorize transactions by departments, projects, or physical sites, providing deeper financial insights. Both features are available in QuickBooks Online (Plus/Advanced) and Desktop, though setup steps differ slightly between versions. Classes are ideal for tracking internal segments like departments or product lines, while locations help manage multiple physical sites or branches. Proper configuration requires enabling these features in settings, creating relevant categories, and consistently assigning them to transactions.

Key findings from the sources:

• Enable tracking through Account and Settings (Online) or Preferences (Desktop) ^[1][2]
• Classes vs. Locations: Classes track internal segments (e.g., departments), while locations track physical sites (e.g., stores) ^[4][5]
• Reporting: Customize Profit & Loss reports to display data by class or location ^[6]
• Limitations: QuickBooks Online Plus allows up to 40 classes/locations; Advanced has higher limits ^[3]

Configuring Class and Location Tracking in QuickBooks

Enabling and Setting Up Tracking Features

To begin using class and location tracking, you must first enable these features in QuickBooks. The process varies slightly between QuickBooks Online and Desktop, but both require administrative access. In QuickBooks Online, navigate to the Gear Icon > Account and Settings > Advanced > Categories, where you can toggle Track classes and/or Track locations ^[1][3]. For QuickBooks Desktop, go to Edit > Preferences > Accounting > Company Preferences and select Use class tracking ^[2][10].

Once enabled, you can create classes or locations by:

• Navigating to Lists > Class List (Desktop) or Gear Icon > All Lists > Classes/Locations (Online) ^[10]
• Selecting New to add a class or location, then entering a name (e.g., "Marketing Department" or "Downtown Store")
• Assigning a parent class (if using sub-classes) or marking a location as a sub-location for hierarchical organization ^[5]

Key considerations during setup:

• Naming conventions: Use clear, consistent names (e.g., "NY Office" instead of "Location 1") to avoid confusion in reports ^[4]
• Hierarchy: QuickBooks supports sub-classes and sub-locations for multi-level tracking (e.g., "Retail > Women’s Apparel") ^[5]
• Limitations: QuickBooks Online Plus caps classes/locations at 40; Advanced allows up to 100 classes and unlimited locations ^[3]
• Exclusive tracking: Some integrations (e.g., xtraCHEF) require choosing either class or location tracking, not both simultaneously ^[7]

After creating classes or locations, assign them to transactions by:

• Selecting the class/location dropdown in invoices, bills, or expense entries ^[9]
• Using batch tools to reclassify multiple transactions at once (available in QuickBooks Online Advanced) ^[9]

Assigning Classes and Locations to Transactions

Consistent assignment of classes and locations to transactions ensures accurate financial reporting. In QuickBooks Online, classes and locations appear as dropdown menus in transaction forms (e.g., invoices, expenses, or sales receipts) ^[1]. For example, when creating an invoice, you can:

• Select a class to categorize the sale by department (e.g., "Consulting Services")
• Assign a location to tie the sale to a specific branch (e.g., "Chicago Office") ^[4]

Key rules for assignment:

• One per transaction: Each transaction row can have one class and one location (if both are enabled) ^[5]
• Mandatory fields: Make classes/locations required in Preferences to prevent unassigned transactions ^[2]
• Payroll limitations: Direct location tracking for payroll expenses isn’t supported; use the Memo field to note locations for employees ^[6]

For bulk assignments, use these methods:

• Bank transaction rules: Automatically assign classes/locations to imported transactions based on payee or amount ^[1]
• Batch reclassify: In QuickBooks Online Advanced, use the Reclassify Transactions tool to update multiple entries at once ^[9]
• Third-party tools: Integrations like xtraCHEF allow mapping classes to invoice line items during sync ^[7]

Reporting by Class and Location Generate customized reports to analyze performance by segment:

1. Navigate to Reports > Profit and Loss
2. Click Customize and select Rows/Columns > Class or Location ^[6]
3. Run reports like: - Profit and Loss by Class: Compares revenue/expenses across departments - Balance Sheet by Location: Shows assets/liabilities per branch - Sales by Location: Tracks revenue by physical site ^[5]

Example use cases:

• Retail chains: Compare profitability of different store locations ^[4]
• Agencies: Track billable hours by client (using classes) ^[8]
• Property management: Assign expenses to specific properties (using locations) ^[5]