QuickBooks creators are generous and they have created a mock site where you can literally try out a lot of their features and see how QuickBooks operate – if it’s a right fit – before you make your purchase. This is awesome! (The Miz style awesome:)
Here is the Sample QuickBooks Online Test Drive File that you can practice in before jumping right in to your own “real” company file. It’s a great way to get a feel of QuickBooks without fear of making a mess of your company file. It does not save any data you put in, and so you’ll need to finish any processes you are doing – in one sitting. When it refreshes, all the work you’ve done in it will be lost, and if left idle for more than 30 minutes it will log you out.
So go ahead and check it out. Let me know how it has helped you. If you have any QuickBooks questions, don’t hesitate to send me your questions.
There are four (4) levels of Quickbooks Online subscription: 1) Simple Start, 2) Essential, 3) Online Plus, (4) Advanced. Class tracking is only available in the Online Plus and Advanced editions.
To Turn on Class Tracking in QuickBooks Online:
Step 1. Click on the Gear icon at top right of screen (your company name) and select Account and Settings under the Your Company tab
Step 2. Click the Advanced button in the left menu bar, then click the pencil icon at Categories to edit preference.
Step 3. Check the box at Track classes (You may also want to check the box at Warn me when a transaction isn’t assigned a class)
Step 4. Click Save.
Now when you go to create your Invoices, bills, checks etc. the class option will be available for use.
Yesterday while consulting with my newest client , the renowned owner of an upscale beauty Salon here in New York City, she asked a question that I was not expecting to hear asked. Meaning, I thought this would be something everyone knew the answer to. I mean, I did give her an answer, you know explained fully, but not before pausing and digesting it. So, I had to poll my Facebook group on this one, as I often do. Lo and behold, a whopping 68% did not know the difference. I was wrong! I know we all have things in different fields of studies that we are not knowledgeable about but as far as the extent of common knowledge, what is and isn’t, do vary. So, in light of finding that out, I have decided to answer this specific question, “Should I be issuing customers sales receipts or Invoices in QuickBooks?” here so that others may be able to find the answer. That’s what I am about here at Step by Step QuickBooks Tutorial!
So, here’s the deal! If you are a business offering goods and/or services on credit to your customers, or allow for partial payments/payment deposits, then you should create and issue your customers Invoices. This will allow you to track your customers balances for Individual Invoices in the accounts receivables ledger, as well as have a comprehensive view of your total outstanding customer receivables. The Invoice connects the sales transactions to accounts receivables; the sales receipt on the other hand, does not.
If you require full payment at time of sale/service, then you should issue your customers Sales Receipts. Sales Receipts do not affect accounts receivables and thus will not allow for the tracking of any customer balances.
Businesses, such as my client’s beauty salon, that operate on a “buy/now pay/now” basis, do not need to Invoice their customers since they will not need to track payments owing to them – there won’t be any. Instead, they should issue sales receipts which is for the total amount of the sale. Thanks to today’s technological advancement, these businesses have the option of using a Point of Sale system, and most can be linked to an accounting software such as Intuit’s QuickBooks, and have the transactions easily downloaded to QuickBooks instead of manually.
So there you have it! Use an Invoice when you need to track customer balances, and a Sales receipt when you do not.
If you try to write a check to a vendor who has an open bill in QuickBooks Online, a tab will open to the right showing the open bills for that vendor, and asking if you wish to add the bill to the check (as shown in screenshot below). When you click Add, the payment will automatically link to the bill which will zero it out from the vendor balance as well as the accounts payable.
If you attempt to write a check for a vendor who has an open bill in QuickBooks Desktop versions – Pro, Premier, or Enterprise, you will get a warning (as shown in screenshot below) or similar. If you continue to write the check for a bill instead of using the pay bills feature, not only will that bill remain open and unpaid in QuickBooks, but you will have doubled your expenses for that particular expense or cost of goods sold account.
NOTE: It’s never a good idea to change transactions for past periods, so if you have already filed your taxes based on the information you have in QuickBooks, you will need to speak with your CPA or tax preparer prior to making any changes to those periods that have already been reported.
To correct Vendor Balances in the Desktop versions – QuickBooks Pro, Premier or Enterprise, due to the Write Check feature Being Used Instead of the Pay Bills feature, follow these steps:
Open the checks that were paid for each bill, and change the account from the expense used to Accounts Payable (as shown in screenshot below).
Next, go to Vendors, then Pay Bills and click to the left of each transaction to checkmark them (as shown in screenshot below) (One is the bill and the other is the check).
Change the date to reflect date of check used to pay this bill.
Click OK, Save or Save and Close.
Now when you look at your vendor balance, those amounts should not be included. Also, if you look at your Accounts Payable on your balance sheet, those amounts should not be there. If there are a lot to be done, you may edit all the checks and change their accounts to “Accounts Payable” first, then go to “Pay Bills” and select them all. Just be sure the “Totals” amount in the “Pay Bills” window is zero before hitting that Ok, Save, or Save and Close button.
NOTE: If a portion of the individual bills were paid with the “Write check” feature and the other portion with the “Pay bills” feature, the above-mentioned solution will work as well. Just ensure that the checks you are editing and changing from their respective expense account to Accounts Payable, are the ones that do apply to the respective vendor/vendor bill. Also, whatever you do, do not delete any checks or payments for any period that was already reconciled. It will definitely throw off your reconciliations!
Remember: A bill will remain in open/unpaid status after writing a check if you used the QuickBooks “Write Checks” feature rather than the “Pay Bills” feature to pay it. This is so because the two Accounts Payable features – Enter Bills and Pay Bills, work together. If you use Write Checks with Enter Bills, the check will not be linked to the bill, and the bill will remain in open/unpaid status.
Here are Two (2) General Guidelines to Follow When Deciding How to Make Payments:
If you pay bills as they arrive and do not need to see reports on how much you owe vendors, use Write Checks.
If you prefer to pay bills all at once for example on the same day each month, and you want to see reports on how much you owe vendors, or if you usually make partial bill payments, then use Enter Bills and Pay Bills which are both linked to Accounts Payable.
Use the above-mentioned method to correct your vendor balances, and remember to always use the “Pay Bills” feature if you used the “Enter Bills” feature, and not the “Write Check” feature – moving forward.
This is one of the most common questions I get asked by new QuickBooks Online users, and you may be surprised to know that more often than not, both bank and QuickBooks balances are never matched simultaneously. However, if you have updated your bank downloads, reviewed and added them all to the QuickBooks register for a specific period or timeframe, and your balances are not matching there may be cause for concern. Here are three main reasons why your actual bank balance does not equal the bank balance in QuickBooks Online.
You or someone else may have manually added some transactions to QuickBooks and then added them again from the download screen. (This is one reason why it is important to establish and use only one method of inputting your transactions in QuickBooks which is either a) adding transactions via the QuickBooks banking download option, or b) manually adding individual transactions. Adding transactions via the download option is my personal preference and recommendation, as it saves time as well as minimize data entry errors. Subsequently, if you are reconciling your account and realize there are transactions missing that were not downloaded, you can manually enter those missing transactions that are on your bank or credit card statement but not in QuickBooks. It’s very rare for this to happen, but it does!)
You have manually written check(s) directly in QuickBooks and those checks have not yet been presented to your bank to be cashed. (This will cause your QuickBooks balance to be less than your actual bank balance by the check or checks amount.)
You have received and applied customer payment(s) to their Invoices in QuickBooks, and also deposited them to the bank account in QuickBooks; however, you have not yet deposited those payments to your actual bank account or you have but they are not yet recorded by your bank. (This will cause your QuickBooks balance to be more than than your actual bank balance by the total of the deposit(s). (When you receive customer payments, you want to apply them to their respective Invoices for the dates that you receive them; however, you may not always deposit them to your actual bank account on the date that you receive them. This is where the undeposited funds account comes in; use the undeposited funds account to house those customer payments until you actually deposit them to your real bank account. When you have made the deposits to your actual bank account, use the Bank Deposit option at the plus sign top right of screen (as shown in the screenshot below) to transfer those payments in the undeposited funds account to the bank account in QuickBooks.)
How to Ensure Your Actual Bank Account Balance and QuickBooks Bank Balance are in Synch
In addition to the above-mentioned, if you track your cash flow on a daily basis, you will always be able to see what is causing your QuickBooks bank balance and your actual bank balance to be out of synch. Also, it is imperative that you reconcile your bank and credit card accounts regularly – at least on a monthly basis. Reconciliation is one of the most important aspect of accounting, and as such, reconciling your bank and credit card accounts on a monthly basis is the foundation of keeping healthy data and maintaining accurate books. Here are some mistakes that reconciliation can help you uncover:
Missing transactions
Duplicate transactions
Transactions entered in error
Transactions entered to the wrong period or bank/credit card account
Incorrect transaction amount entered in QuickBooks
Incorrect or no opening bank balance entered in QuickBooks
Transactions previously reconciled have been changed or deleted
So, there you have it! The three (3) main reasons why your QuickBooks bank balance and your actual bank balance are not matching, and what you can do about it. Feel free to leave your questions or comments below.
As a finance professional working on the front line with many startup business owners and entrepreneurs, these are two of the most common questions I get asked – a lot! And the short answer is – it depends. Whether or not QuickBooks Online is a good fit for your business will depend on the type of business you have and what you will need to get done with the software in order for your business to be fully functional. QuickBooks Online has many benefits on its own, and there are many third-party applications available that are designed to extend QuickBooks reach. However, there are instances where the Online version of QuickBooks will not be the best solution for your business. Let’s take a look at some of those instances.
When is QuickBooks Online not Right for My Business?
I operate a Manufacturing business and require various units of measure
My type of business require detailed job costing
I operate a business with very robust inventory needs
I need to have multiple users with very detailed user permissions
I need to be able to progress Invoice and receive partial purchase orders
I require rigorous, customized reporting capabilities
If your business does not fit into the above-mentioned list, and the below describes your business, then QuickBooks Online can definitely work for you.
When is QuickBooks Online Right for My Business?
I run a service-based business or a product-based business with light inventory needs
I want to work on the go and be able to access my information with my iPhone, iPad, Android, or other mobile device like a tablet
My business has one or more locations
I need to have multiple people access and use QuickBooks simultaneously
Anytime, anywhere access as long as there is an internet connection
Capacity to integrate with multiple third-party software applications
Automatic updates and upgrades
Data is backed up automatically
Easy data access from a tablet or smartphone
Automatic bank and credit card transactions download from multiple financial institutions
Capability that allows your CPA and/or bookkeeper to access your data
Multiple built-in business reports to help track business finances
Ability to accept payment for your products/services online via your Invoices
Free technical support
Are there any downsides to using QuickBooks Online?
Yes, although not many, there are downsides to using QuickBooks Online. Here are a few of the most common:
Accessing multiple screens at one time can be difficult. (You can use multiple windows in your browsers to keep what you are using open, but it will sign you out if left inactive for long periods.)
If your Internet goes out or Intuit’s servers go out, you will not be able to access your company file at all.
You cannot backup your data, and keep a copy of your file.
QuickBooks Online Interface is constantly changing, and although change is good, it can be a bit annoying. (You can use QuickBooks today and it’s one way with the navigations where they’re use to being, and you logon tomorrow and they are somewhere else. Maybe not such a big deal!)
Is QuickBooks Online Secure Enough to Protect My Information?
QuickBooks Online has the same security and encryption that banks have. According to the fine print on the QuickBooks Online website, it has 128-bit Secure Sockets Layer (SSL), which is the same encryption technology used by some of the world’s top banking institutions to secure data that is sent over the Internet. So as a matter of safety, it is safe to say QuickBooks Online is safe to use.
So the first thing you need to do is identify the specifics that you must have in a software, then decide if QuickBooks Online is right for you. You can test drive a QuickBooks Online company file for free which is a great way for you to try out QuickBooks Online before you make your purchase. Feel free to play around with the sample data as much as you want to, as you will not be messing anything up. Click on this QuickBooks Online Test Drive link and enter the security verification code as shown on the screen. Any data that you enter will not be saved after you close the browser, or refresh the page.
Also, it’s important to note that there are three subscription types of QuickBooks Online available; QuickBooks Online Simple Start, QuickBooks Online Essentials, and QuickBooks Online Plus. See comparison chart below (Double click image to view enlarged):
If QuickBooks Online will not do the tasks you require, and you cannot find a software application that will, then you should use one of the desktop versions of QuickBooks. Also, bear in mind that QuickBooks Online is constantly being updated, and although it may not be a good fit for your business now, you should keep checking back to see if it has caught up to what you are looking for. Technology is constantly changing, and so is QuickBooks Online.
Watch CPA Michelle Long break down the differences between QuickBooks products:
Like pretty much anything else, if you don’t establish the foundation, you will not have anything to build on. If you do not know the basics of accounting, then whatever you attempt to do that relates to accounting, will be futile. Getting the numbers right, can either make or break your business, and if you are like me you want to make your business – not break it.
The first thing we need to do is define accounting and bookkeeping:
Accounting is an entire system of recording information based on specific principles, analyzing those information, and advising on the action to take based on those information. It is often broken down into two parts: the actual entering of the transactions (bookkeeping) and the analysis, interpreting, and communicating of those data (accounting). Thus, accounting is the process of making sense of information previously compiled, and producing financial models using that information. In other words, bookkeeping compiles, while accounting analyze, interprets, and communicate the information to its owner(s). Accounting entails: preparing adjusting entries – recording expenses that have occurred but are not yet recorded in the bookkeeping process, preparing financial statements, analyzing costs of living or business operations, completing income tax returns, assisting the individual or business owner in understanding the impact of financial decisions. Accounting is either accrual or cash basis; however, GAAP only accepts accrual method of accounting.
Bookkeeping is the process of recording daily transactions in a consistent, systematic way so as to output the results in reportable formats from which good business decisions can be made. It consists of: recording financial transactions – posting debits and credits, producing invoices, making purchases and paying bills, maintaining and balancing subsidiaries – general ledgers, and historical accounts, and generating payroll.
Accounting operates on a double entry basis; meaning for every debit, there is a corresponding credit and vice versa, and the entire accounting system is based on a single accounting equation: ASSETS = EQUITY + LIABILITIES. Assets, being what you own, Liabilities, being what you owe, and Equity being the difference between the two, which is what you have left.
The next thing we need to do is to lay out the principles:
Accounting principles are general rules and concepts that govern the field of accounting. These general rules, referred to as basic accounting principles and guidelines, form the groundwork on which more detailed, complicated, and legalistic accounting rules are based. For example, the Financial Accounting Standards Board (FASB) uses the basic accounting principles and guidelines GAAP as a basis for their own detailed and comprehensive set of accounting rules and standards. Generally Accepted Accounting Principles (GAAP) consists of three important sets of rules: (1) the basic accounting principles and guidelines, (2) the detailed rules and standards issued by FASB and its predecessor the Accounting Principles Board (APB), and (3) the generally accepted industry practices.
GAAP is exceedingly useful because it attempts to standardize and regulate accounting definitions, assumptions, and methods. Because of generally accepted accounting principles we are able to assume that there is consistency from year to year in the methods used to prepare a company’s financial statements. And although variations may exist, we can make reasonably confident conclusions when comparing one company to another, or comparing one company’s financial statistics to the statistics for its industry.
Again, accounting is based on principles, and since the bookkeeper usually records the information, he or she will need to know what constitutes the principles in order to accurately complete the bookkeeping task. Accountants and CPA’s rely heavily on bookkeepers for accurate information, and often work closely with bookkeepers to ensure that they do get correct information. If the bookkeeping is incorrect, then more often than not, the accounting is also incorrect and the business will suffer as a result. In addition, the Chart of Accounts, which is the backbone of the accounting system, needs to be structured correctly with each account linking to its accurate account type – expense, income, asset, liability, or equity. So what are the principles?
Revenue Principle
The revenue principle, also known as the realization principle, states that revenue is earned when the sale is made, which is typically when goods or services are provided. A key component of the revenue principle, when it comes to the sale of goods, is that revenue is earned when legal ownership of the goods passes from seller to buyer. Note that revenue isn’t earned when you collect cash for something.
Cash Basis accounting is not accepted by GAAP standard. However, since GAAP is a standard and not the law, small businesses that earn revenue within a specified threshold, are not publicly traded, and do not carry Inventory may opt to use the cash basis method of accounting.
Expense Principle
The expense principle states that an expense occurs when the business uses goods or receives services. In other words, the expense principle is the flip side of the revenue principle. As is the case with the revenue principle, if you receive some goods, simply receiving the goods means that you have incurred the expense of the goods. Similarly, if you have received a service, you have incurred the corresponding expense. It doesn’t matter that it takes a few days or a few weeks to get the bill. You incur an expense when goods or services are received.
Matching Principle
The matching principle is related to the revenue and the expense principles. The matching principle states that when you recognize revenue, you should match related expenses with the revenue. The best example of the matching principle concerns the case of businesses that resell inventory. For example, if you own a natural juice stand, you should count the expense of each juice sold on the day you sell those juices. Don’t count the expense when you purchase the juices or the ingredients; count the expense when you sell them. In other words, match the expense of the item with the revenue of the item.
Accrual-based accounting, which is a term you have probably heard, is what you get when you apply the revenue principle, the expense principle, and the matching principle. In a nutshell, accrual-based accounting means that you record revenue when a sale is made and record expenses when goods are used or services are received.
Cost Principle
The cost principle states that amounts in your accounting system should be quantified, or measured, by using historical cost. For example, if you have a business and the business owns a building, that building, according to the cost principle, shows up on your balance sheet at its historical cost. You do not adjust the values in an accounting system for changes in a fair market value.
Objectivity Principle
The objectivity principle states that accounting measurements and accounting reports should use objective, factual, and verifiable data. In other words, accountants, accounting systems, and accounting reports should rely on subjectivity as little as possible. An accountant always wants to use objective data – even if it’s bad, rather than subjective data – even if the subjective data is arguably better.
Full Disclosure Principle
Full disclosure states that if certain information is important to an investor or lender using the financial statements, that information should be disclosed within the statement or in the notes to the statement. It is because of this basic accounting principle that numerous pages of “footnotes” are often attached to financial statements. As an example, let’s say a company is named in a lawsuit that demands a significant amount of money. When the financial statements are prepared it is not clear whether the company will be able to defend itself or whether it might lose the lawsuit. As a result of these conditions, and because of the full disclosure principle, the lawsuit will be described in the notes to the financial statements. A company usually lists its significant accounting policies as the first note to its financial statements.
Continuity Assumption
The continuity assumption or going concern principle assumes that a company will continue to exist long enough to carry out its objectives and commitments and will not liquidate in the foreseeable future. The importance of the continuity assumption becomes most clear if you consider the ramifications of assuming that a business won’t continue. If a business will not continue, it becomes very unclear how one should value assets if the assets have no resale value. If a business will not continue operations, no assurance exists that any of the inventory can be sold. If the inventory cannot be sold, what does that say about the owner’s equity value shown in the balance sheet? If the company’s financial situation is such that the accountant believes the company will not be able to continue on, the accountant is required to disclose this assessment.
Unit-of-measure Assumption
The unit-of-measure assumption assumes that a business’s domestic currency is the appropriate unit of measure for the business to use in its accounting. In other words, the unit-of-measure assumption states that it’s okay for U.S. businesses to use U.S. dollars in their accounting. The unit-of-measure assumption also states, implicitly, that even though inflation and, occasionally, deflation change the purchasing power of the unit of measure used in the accounting system, that’s still okay.
Separate Entity Assumption
The separate entity assumption states that a business entity, like a sole proprietorship, is a separate entity, a separate thing from its business owner. And the separate entity assumption says that a partnership is a separate thing from the partners who own part of the business. The separate entity assumption, therefore, enables one to prepare financial statements just for the sole proprietorship or just for the partnership. As a result, the separate entity assumption also relies on a business being separate and distinct and definable as compared to its business owners. For legal purposes, a sole proprietorship and its owner are considered to be one entity, but for accounting purposes they are considered to be two separate entities.
Time Period Assumption
The time period assumption principle assumes that it is possible to report the complex and ongoing activities of a business in relatively short, distinct time intervals such as the three months ended March 31, 2016, or the 13 weeks ended April 1, 2016. The shorter the time interval, the more likely the need for the accountant to estimate amounts relevant to that period. For example, the property tax bill is received on December 16 of each year. On the income statement for the year ended December 31, 2015, the amount is known; but for the income statement for the three months ended March 31, 2016, the amount was not known and an estimate had to be used. It is also very important that the time interval (or period of time) be shown in the heading of each income statement, statement of stockholders’ equity, statement of cash flow, and all other reports. Labeling one of these financial statements with “December 31” is not good enough. The reader needs to know if the statement covers the one week ended December 31, 2015 the month ended December 31, 2015, the three months ended December 31, 2015, or the year ended December 31, 2015.
Of course you do not need to know all of this in order to accurately use an accounting software, but knowing the basics and having an understanding of the elements of accounting, will allow you to enter information correctly and subsequently have accurate numbers from which to run your business as well as file its taxes. Also, the way you set up your Chart of Accounts and enter data will need to be modified to reflect the type of business entity, but the basics – debits, credits, purchases, sales, income, expenses, assets, liabilities – remain the same.
To print payroll checks in QuickBooks Online, you will need a payroll subscription in addition to having a QuickBooks Online subscription.
To Print Employees Paychecks in QuickBooks Online:
Click the Gear Icon at top right of screen (your company name) and select Payroll Settings under the Settings column to start configuring your pay checks. (You will only see this option if you have subscribed for payroll)
Next click Preferences then Paycheck Printing Settings option to configure how the checks will print.
Select the preprinted check option – if you are using preprinted checks from Intuit, and check the appropriate Print 1 stub or Print 2 stubs.
Click Ok, and you will be taken to the Printer Setup screen.
Next, setup your employees by adding them in the Payroll Setup under Employees. Here you can configure their hourly rates, and choose whether to pay via direct deposit or paper check. You can also configure their deductions, and see a sample view of their paycheck on the right of screen.
Click Done at bottom right. You will now be taken to the current pay period screen. In this section, you can enter the employee’s hours, and change the pay date. You can click the Preview button at bottom right to display the current pay period’s paychecks, total amounts, with employee taxes and net pay.
If all looks well, click the Submit payroll button at bottom right and the paychecks will now be ready to print.
Enter the check number(s) and click Finish payroll.
How to Locate and Reprint a Paycheck in QuickBooks Online
Click on Reports in left menu bar to take you to the report screen.
Click on the “Go to report” search bar, and type in Paycheck. The Paycheck List will now be generated.
Click on the Paycheck List to run the report. When it loads, go ahead and adjust the date range to display the period with the check(s) you need to print.
Now, checkmark the boxes to the left of the check(s) you need to print, then click the Batch action dropdown at top left and select Print.
You can also go to the individual employee to locate and print their paycheck. Just go to Employees in left menu bar, click the dropdown to the right of the employee and select Run report. Now, click the Customize button at top right, then Filter to choose date and Run report.
You probably had some checks that were marked “To Print” in the desktop edition, but were never printed. No worries though, this can be taken care of pretty simply by one of two methods.
There is a handy tool in the new QuickBooks Online that lets you remove the checks from the list. Simply select all the checks you want to have removed from the list, and check the box at Remove from list
The next method is to print to PDF which will get the checks out of the print list without wasting your ink or paper. After selecting “Print” choose Save as PDF at the bottom left of the Print screen. Name the file and choose a location to save it to. Click Save. (This method is the only one that can be used to clear checks in the desktop editions of QuickBooks.)
Either method can be used, and will not interfere with your data in any way, as printing checks has absolutely nothing to do with your direct financials.
How to Print Multiple Checks/Batch Print in QuickBooks
After you have recorded the bill payments in QuickBooks Online, they can be batched printed from the print checks page.
Click the Plus sign at the top center of a main page
Select Print Checks under Vendors
Check the boxes to the left of the checks you wish to print and click Preview and Print on the bottom
Click Print on the preview page to send the checks to the printer
The main difference between class and account, is that every transaction must have an account assigned to it, while it’s optional to assign a class. So think of the class list as having a second chart of accounts which you can apply to transactions to group them into categories different from those provided by the Chart of Accounts.
Accounts mostly organize transactions into financial categories – income, expenses, receivables, payables etc., but classes let you organize transactions into any categories you want, and you have full control over what those categories are. The Class list is empty when you first create a QuickBooks company file, so you can set up any number of classes you want in it. Most often you’ll use classes for grouping transactions into management information categories as opposed to the financial accounting categories provided by the Chart of Accounts.
As a general rule, use accounts to identify the “what” of a transaction and classes to identify the “why” or “what for”. For example, if you buy Office Supplies for multiple departments and you want to keep track of each department’s use, the “what” is office supplies; the “what for” is the various departments – administrative, sales, production, etc. So office supplies (expense) should be an account and each department should be set up as a class.
Creating lots of sub-accounts is a common mistake among new QuickBooks users; however, it should be avoided at all cost. To illustrate the problem, consider this fragment from a simple chart of accounts:
Office Supplies Marketing Accounting
Now here is the same fragment of the chart of accounts, but with sub-accounts added:
Office Supplies
Administrative Department
Sales Department
Production Department Marketing
Website
Events Accounting
Bookkeeping
Audit Prep
As you can see in the illustration, the account list can become exponentially long which will produce very lengthy, unattractive financial reports. The Classes list in QuickBooks can have up to five levels (classes and subclasses), which gives you more functionality and flexibility in using the class feature. To have class information arranged in reports in a way that provides the most benefit, it does help to give some thought as to how the list should be structured.
To Turn on Class Tracking in QuickBooks Windows – Pro, Premier, Enterprise:
Click on Edit, then Preferences in the main menu to open the Preferences window.
Click on the Accounting icon in the left pane of the Preferences window.
Select the Company Preferences tab in the right pane.
Checkmark the Use class tracking item on the Company Preferences tab.
Click OK to close the Preferences window.
To Turn on Class Tracking in QuickBooks Mac:
Click on QuickBooks, then Preferences in the main menu to open the Preferences window.
Click on the Transactions under Workflow and check the box that says Use class tracking.
Click OK.
To Turn on Class Tracking in QuickBooks Online:
There are four (4) levels of Quickbooks Online subscription: 1) Simple Start, 2) Essential, 3) Online Plus, 4) Advanced. Class tracking is only available in the Online Plus and Advanced editions.
Click on the Gear icon at top right of screen (your company name) and select Account and Settings under the Your Company tab
Click the Advanced button in the left menu bar, then click the pencil icon at Categories to edit preference.
Check the box at Track classes (You may also want to check the box at Warn me when a transaction isn’t assigned a class)
Click Save.
After completing these steps, a Class column will appear in many of QuickBooks’ form windows. In some cases such as for invoices, you may have to customize the form’s template to have the Class column appear.
, the renowned owner of an upscale beauty Salon here in New York City, she asked a question that I was not expecting to hear asked. Meaning, I thought this would be something everyone knew the answer to. I mean, I did give her an answer, you know explained fully, but not before pausing and digesting it. So, I had to poll my Facebook group on this one, as I often do. Lo and behold, a whopping 68% 
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