Class tracking is a great way to get the most out of your QuickBooks with very little extra effort. A "class" is simply an extra field filled out on each invoice and bill that allows you to categorize your income and expenses, and hence profit, in a way that is meaningful to your business. For example, a plumbing or electrical contractor could separate his profit by residential, commercial, and building. The great thing about classes is that they are completely customizable.
Sometimes deciding which categories to choose can be the most challenging part.
In my opinion, there are two things that classes should not track:
1.) Categorize by what you are selling. For example, it's tempting for a hair salon to set up classes that track hair styling, nails, and massages. But these can easily be tracked through a well organized Item List.
2.) Categorize by how you acquired your customer (i.e. newspaper ad, referral, networking, etc.). You can track this through the Customer Type field inside each customer's information.
So the challenge is how can you categorize your business's profits in a way that goes beyond those listed above? In my experience the best classes split out your profits by either target markets or operational aspects, such as time, location, or procedures.
Here are a few ideas:
A book store could have classes for Walk-Ins, Internet Sales, and Book Clubs.
A retail chain could have a class for each franchise or branch location.
A restaurant could use classes for Breakfast, Lunch, and Dinner.
My husband's speed shop uses classes based on "departments":
Front Counter, Shop, Dyno, and Trackside Support.
I track classes based on my client's industry, such as Interior Design,
Contractor, Marketing, and Retail.
As you can see, the information you can learn from comparing your revenue, expenses, and profits across these categories can be very helpful for making decisions about your business.
Take our restaurant example from above. By class tracking, this restaurant could easily determine that they are actually losing money by being open for breakfast. With this information they may decide to either change their breakfast marketing efforts or close for that time of day, and as a result increase their profits. Our book store example above may realize that they make much more profit per square foot from internet sales than from walk-in customers. Knowing this, they may decide to convert more space to storage and shipping for sales online. This is where bookkeeping transforms from busy work to the important navigational tools needed for your business.
I am always available for one-on-one consultations to help you determine the best classes to track.
Here's to a spectacularly profitable business!
Join me for a FREE QuickBooks Class!
Saturday August 1st, from 10:00 am - 1:00 pm
Forsyth County Public Library - Downtown Branch
This three hour class is a great introduction to QuickBooks, either for a professional looking to increase their employable skills or for a business owner needing to learn an accounting software. Computers seats are full, but there are still many seats available for those who have a laptop with the QuickBooks software. Even without a computer, this FREE class is a great way to learn the basics of QuickBooks.
Starboard Accounting & Consulting provides bookkeeping, QuickBooks consulting, and payroll for small businesses throughout the Triad area of North Carolina.
