How do I set up classes and locations in QuickBooks?
Classes and locations are tracking dimensions that let you slice your financials beyond the basic chart of accounts. Before setting them up, understand what each does so you use the right tool.
Classes categorize transactions by type of work, department, or profit center. A contractor might use classes for service lines like Remodeling, New Construction, and Maintenance. A professional services firm might track Marketing, Operations, and Administration. When you run a profit and loss report filtered by class, you see performance for that segment alone.
Locations track where work happens or which branch generated the revenue. If you have offices in Boston and Worcester, locations let you see each office’s numbers separately. Some businesses use locations for crews or regions instead of physical addresses.
To enable these features in QuickBooks Online, go to Settings (the gear icon), then Account and Settings, then Categories. Turn on Track classes and Track locations. You can also choose whether to require a class or location on every transaction. Requiring them forces consistency but can slow down data entry if you have transactions that genuinely don’t fit a category.
Once enabled, go to Settings, then All Lists, then find Classes or Locations. Click New to create each one. Keep the list short and meaningful. Five to ten classes usually covers most businesses. More than that and people start guessing which one to pick, which defeats the purpose.
Name them clearly. “Residential” and “Commercial” are better than “Class 1” and “Class 2.” If you have subcategories, QuickBooks lets you nest them. Residential could have Remodels and New Builds underneath.
When entering transactions, you’ll see dropdown fields for class and location. Assign them consistently. If your bookkeeper categorizes some invoices and you categorize others, you’ll get inconsistent data. Pick one person to own it or establish clear rules everyone follows.
The real value shows up in reports. Run a Profit and Loss by Class to see which service lines make money. Run Sales by Location to compare branch performance. Without these dimensions, you only see the business as a whole.
If you’re not sure how to structure classes and locations for your specific situation, QuickBooks setup done by someone who understands your business model saves trial and error. Many local bookkeepers can review your operations and recommend a structure that actually matches how you manage and make decisions.
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