Class Tracking in QuickBooks Online: Classes vs Locations

Class tracking is a QuickBooks feature that tags each transaction with a segment of your business, so you can run a Profit and Loss by Class and see what each department, location, program or revenue line actually earned. It comes with QuickBooks Online Plus and Advanced, and it is not in Simple Start or Essentials. Turn it on at Settings (the gear icon), then Account and settings, then Advanced, then Categories, then Track classes. Plus caps you at 40 classes and locations combined; Advanced has no cap.

Last updated July 2026.

What is class tracking in QuickBooks?

A class is a second label on a transaction, sitting on top of the account. The account says what kind of money it was (Fuel, Payroll, Service Income). The class says which part of the business it belonged to. No dollar moves, no account changes, and nothing reaches a tax return. It only changes how you can slice the report afterward.

Say a landscaping company bills $1.4 million a year and the P and L shows 38 percent gross profit. True, and useless. Recurring maintenance runs at 46 percent while install work runs at 22 because crews chase overtime on big jobs. Two classes, Maintenance and Install, on every invoice and every crew cost, and that argument ends in one report. Other common splits:

• Nonprofit program reporting, where the board wants program, management and general, and fundraising kept apart.
• A two location restaurant that needs Uptown and Riverside read separately.
• Properties or units, each carrying its own rent and repairs.
• Departments with their own budgets in a company big enough to have them.

If you run several legal entities, classes are the wrong tool. Separate entities need separate company files, as covered in our guide to bookkeeping for multiple businesses in QuickBooks. Classes segment one company's books; they will not produce filing ready books for a second corporation.

Which QuickBooks plans include class tracking?

QuickBooks Online Plus and Advanced. Simple Start, Essentials and Solopreneur do not have it, and you need to be an admin on the file to switch it on. If you are on Essentials and need a segmented P and L, upgrading to Plus is the only real path. Nothing inside Essentials produces the same report.

The number people get wrong: Plus allows 40 classes and locations combined. Not 40 of each. One shared pool of 40 across both lists, so 28 classes leaves you 12 locations. Inactive names keep counting until you clear them, which surprises firms that tidied a class list years ago. Advanced has no limit on either list. Check where you stand at Settings, then Account and settings, then Usage; once you hit the cap QuickBooks blocks new names until you make some inactive.

How do I turn on class tracking in QuickBooks Online?

1. Select Settings (the gear icon), then Account and settings.
2. Open the Advanced tab and edit the Categories section.
3. Check Track classes.
4. Choose One to entire transaction or One to each row in transaction.
5. Optionally check Warn me when a transaction isn't assigned a class.
6. Select Save, then Done.

Track locations is the separate toggle right underneath, in the same Categories section, and turning one on does not turn on the other. Leave the warning checked. It is a small nag when you save a transaction with an empty class field, and it is the cheapest way to keep the Not Specified column from filling up.

Pick row level classing unless you are certain you will never need it. It lets one invoice carry $3,200 of install revenue and $850 of maintenance on separate lines, and lets a single credit card charge split across two programs. Whole transaction classing forces you to break that invoice in two. You can still class an entire transaction at once by putting the same class on every row.

What is the difference between classes and locations?

Two independent lists that behave the same on reports and differently on entry. The mechanical difference that matters: a location applies to the whole transaction, while a class can apply per line. One check cannot be split across two locations, but it can be split across two classes. Locations can also be relabeled as Business, Department, Division, Location, Property, Store or Territory; the Class field is always called Class.

Because the lists are independent, you can run them as a grid. A restaurant group tags location (Uptown, Riverside) and class (Dine In, Catering, Retail), then reads profitability either way or both at once. A property manager makes the building the location and the work type the class, which is the same shape as the reporting behind our property management statement conversion workflow. That grid is the honest reason to use both lists, and the 40 combined cap is what keeps it from getting out of hand.

Classes vs projects vs tags: which should I use?

These get treated as interchangeable and they are not. Classes and locations are for ongoing segments that will still exist in three years. Projects are for jobs that start and finish. Customers are for who paid you.

Tags deserve a warning. Intuit began retiring them in 2025, closed off new tag creation, offered a migration into custom fields, and scheduled the historical data for deletion. If an older article told you to use tags for department reporting, that advice has expired.

Projects versus classes trips people up most. If you build custom homes, each home is a project: it starts, it ends, and you want cost to complete on that address. If you also want to know whether new construction beats remodels as a line of business, that is a class sitting on top of the projects. Our walkthrough of job costing in QuickBooks covers where one stops and the other starts.

How many classes should I create and how should I name them?

Fewer than you want to. Eight classes applied consistently beat 35 that half the transactions ignore, and on Plus you are spending from a 40 item budget anyway. Treat every class as expensive.

The most common mistake is a class list that mirrors the chart of accounts: Payroll, Rent, Insurance, Marketing. That is duplication, not segmentation. Your accounts already say what the money was; classes say where it belonged. If a proposed class name would work as an expense account, it is the wrong class name.

Name classes for how you want the finished P and L to read out loud. If the sentence you want is that maintenance made 46 points and install made 22, the classes are Maintenance and Install. A nonprofit reporting Youth Programs, Housing, Fundraising and Administration needs exactly those four, not fourteen grant names; grants belong in customers or projects. Sub classes help when a segment genuinely has parts (Install, with Residential and Commercial underneath), and the report subtotals the parent. Two levels is the limit before consistency dies, and every name still counts against your 40.

How do I run a profit and loss by class report?

Go to Reports and search for Profit and Loss by Class. Set the date range and run it: the standard P and L with one column per class and a Total on the right. The other class reports live in the same place, notably Sales by Class Detail and Purchases by Class Detail, which are what you drill into when a column looks wrong.

Two settings make it readable. Show active rows and columns only, so empty classes stop cluttering the page, and add the percent of income column so you compare margins rather than raw dollars. Then export to Excel, because the moment an owner sees segment margins they want them next to last year. Once the segments are clean, that same export is what you build a lender ready set of financial statements from, which is usually the real reason the client asked for classes.

Set one expectation early: there is no dependable balance sheet by class in QuickBooks Online. Balance sheet accounts inherit whatever class touched them, and transfers, opening balances and most journal entries carry none, so the columns will not tie. Class tracking is a Profit and Loss tool here. Splitting cash or receivables by segment means a spreadsheet allocation, or the general ledger detail exported and pivoted by hand.

How do I assign a class automatically from a bank rule?

This is what makes class tracking survive contact with a real month. Bank rules set the class at the same time they set the category, so a downloaded transaction arrives already segmented. If you have not built rules yet, start with our guide to setting up bank rules in QuickBooks Online, then add classes to the rules you already run.

Go to Transactions, then Rules, then New rule. Name it, choose money in or money out and which accounts it covers, and set the conditions. In the assignment section set Transaction type, Payee and Category as usual, then select + Assign more to expose the Class and Location fields, pick the class, and save. The rules worth building first are the vendors that only ever serve one segment: the nursery that only supplies install jobs, the distributor that only delivers to the Riverside kitchen, the utility account for one building.

Three limits. Rules only run on transactions arriving through the bank feed or an imported bank file, so invoices, bills and journal entries still need the class set another way. Rules apply going forward, not to transactions you already accepted. And a rule set to auto add pushes transactions straight into the register with whatever class it guessed, so leave auto add off until you have watched a rule behave for a month. The wider workflow is in our guide to categorizing transactions in QuickBooks.

What is unclassified in my profit and loss by class?

The Not Specified column holds every transaction in the period with no class on it. A small residue is normal. A Not Specified column holding a quarter of your expenses means the report cannot be trusted yet, and handing it to an owner in that state does more harm than showing nothing at all.

Click the amount to drill into the transactions behind it and set the class on each. For a large pile, the Reclassify Transactions tool in QuickBooks Online Accountant changes class on a batch at once, which we walk through in the guide to reclassifying transactions in QuickBooks. It will not touch a closed period, so check your closing date first. The usual sources, in the order I find them:

• Everything dated before class tracking was switched on. Classes are not retroactive.
• Bank feed items accepted quickly with the class field left blank.
• Payroll postings, which land unclassed unless payroll is configured to assign classes.
• Accrual and depreciation journal entries booked by the accountant.
• Bills and invoices, since bank rules never reach those.
• Card payments and owner transfers, which usually should stay unclassed because they are balance sheet moves.

Sweeping the leftovers into a class called Overhead is legitimate as long as you do it deliberately and say so. Shared rent, the office manager's salary and the liability policy really do belong to the whole company, and forcing an arbitrary split across programs invents precision that is not there. Decide the rule once, write it into the month end close checklist, and apply it every month next to the reconciliations.

Can I delete a class I no longer need?

Not once it has been used. QuickBooks Online only lets you make it inactive, at Settings, then All lists, then Classes, then Make inactive. The class stays on every historical transaction and keeps appearing on reports covering those dates, often with the word deleted beside the name, because prior period reports have to keep saying what actually happened. Renaming is usually smarter than retiring: a rename updates history everywhere, while a retirement leaves a ghost column on last year's P and L forever.

How does class tracking work in QuickBooks Desktop?

Desktop has its own class tracking and it predates the online version. Turn it on at Edit, then Preferences, then Accounting, then the Company Preferences tab, and check Use class tracking for transactions. Check Prompt to assign classes underneath for the reminder when something is saved without one. You need to be the admin, and the preference covers the whole company file.

It is available in QuickBooks Desktop Pro, Premier and Enterprise. Build the list at Lists, then Class List, and report at Reports, then Company and Financial, then Profit and Loss by Class. There is no 40 item cap on Desktop, which is exactly why Desktop files so often arrive with class lists that need pruning before a conversion. Desktop also offers a Balance Sheet by Class with no online equivalent, though it only allocates cleanly when transactions were entered a particular way.

You cannot classify a month you have not imported

All of this assumes the transactions are in the file. A segmented P and L for a period with three missing statements is not a segmented P and L, it is a guess with columns. The gaps are predictable: an account the bank feed will not connect, a card the owner never linked, or a period further back than the 90 days QuickBooks will download.

Our converter turns a PDF bank or credit card statement into a .qbo file QuickBooks imports natively, so those transactions land in For review where your class rules can act on them. Start at the bank statement to QuickBooks Online import page. Rebuilding several months at once goes fastest in this order: import everything, then set up classes and bank rules, then make one pass with the reclassify tool. Nonprofits carrying program restrictions will find the nonprofit statement conversion workflow closest to how their funds behave.

Frequently asked questions

Which QuickBooks Online plans have class tracking?

QuickBooks Online Plus and Advanced only. Simple Start, Essentials and Solopreneur do not include classes or locations, and no add on enables them. You must be an admin on the file to turn the setting on. QuickBooks Desktop Pro, Premier and Enterprise all have their own class tracking built in.

How many classes can I have in QuickBooks Online Plus?

Plus allows 40 classes and locations combined, not 40 of each. The two lists share one pool, so 25 classes leaves room for 15 locations. Inactive names keep counting until you clear them. Check your usage at Settings, then Account and settings, then Usage. QuickBooks Online Advanced has no cap on either list.

What is the difference between a class and a location?

Both segment the Profit and Loss, but a location applies to the entire transaction while a class can apply per line once row level classing is on. Locations can be relabeled Store, Property, Division, Department, Business or Territory. Most firms use location for physical sites and class for revenue lines or programs.

Can a bank rule assign a class automatically?

Yes. When creating or editing a rule under Transactions, then Rules, select + Assign more in the assignment section to reveal the Class and Location fields, then choose the class. The rule applies to matching bank feed transactions going forward. Rules never touch invoices, bills or journal entries, so those need classing another way.

Why does my Profit and Loss by Class show a Not Specified column?

Not Specified holds transactions with no class assigned. The usual causes are activity dated before class tracking was enabled, bank feed items accepted with the field blank, payroll postings and journal entries. Click the amount to drill in and assign classes, then turn on the warning so new transactions stop landing there.

Should I use classes or projects for job costing?

Use projects. A project tracks income, cost and time for one job that starts and ends, and it has its own profitability view. Classes are for ongoing segments that outlive any single job, such as new construction versus remodels. Plenty of contractors run both: a project per job, a class per line of business.