Topics: accounting strategies, accounting, quickbooks tips
The ability to sort accounting transactions by user-defined divisions and classes in QuickBooks is a great way to track and analyze what areas of your business are the most profitable. Unfortunately, many businesses and accounting specialists aren’t taking full advantage of this option because they don’t clearly understand the difference between divisions and classes and how to use them. Hopefully the following examples will clear up some of the confusion.
If you want your accounting or outsourced bookkeeping and controller services to provide separate profit and loss reports for different areas of your business, creating divisions will allow them to do that. Here are examples of divisions setups in QuickBooks for different industry models:
As you can see with the mechanical contractor example, how you choose to divide your services is totally up to you and may be different from one business to another. By selecting a division when creating an invoice, the revenue from the invoice will be appropriately tagged for that division. Select a division when entering a vendor bill to log costs of materials or services specific to that task. With this process in place, a business can then run Division Profit & Loss Reports, showing the income, costs and gross profit on distinct roles within the company.
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