As your business grows, its financial records will grow with it. Conventional wisdom should you to believe that the more products or services your business sells, the more transactions — both income and expenses — you’ll have to record for it. In Quickbooks, there are several ways to organize and track related segments of your business’s financial records, the most common of which include the use of classes and types. Unless you’re familiar with them, though, you might be wondering how classes and types differ from each other. Below, you’ll learn more about the nuances between classes and types in Quickbooks.
What Are Classes?
In Quickbooks, classes are used to categorize and track transactions. If you run a chain of retail stores, for example, you may want to create a separate class for each location in which your business’s stores operate. With location-based classes such as this, you’ll be able to see exactly which locations drive the most revenue and which locations drive the least revenue.
Of course, there are countless other ways to use classes in Quickbooks. A landscaping company, for instance, may set up a class for residential landscaping services and a class for commercial landscaping services. By separating residential and commercial services into separate classes, the landscaping company will have a better idea of which audience generates the most revenue.
To create a class, log in to Quickbooks and, from the main menu, click “Lists,” followed by “Class List.” Towards the bottom of the page, you should see an option for “Class.” Click this link and select “New” to create the new class.
What Are Types?
Types, on the other hand, are used to categorize and track customers, vendors or jobs. As a business owner, you probably have multiple customers, vendors and/or jobs. Rather than grouping them all together, you can separate them using types. Types work like classes by allowing you to categorize and track elements of your business’s financial records. The difference is that classes are used to track transactions, whereas types are used to track customers, vendors or jobs.
To create a type in Quickbooks, log in to the accounting software and, from the main menu, select “Lists,” followed by “Customer & Vendor Profile Lists.” Next, choose the type that you’d like to create, at which point you can follow the instructions.
Keep in mind that you won’t see types on your transactions. They’ll only appear in your internal records.
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