If your QuickBooks reports tell you the business made money last month but you can’t tell which department, project, or location drove that profit, classes and locations are the fix. They let you tag transactions with additional detail so you can slice your Profit and Loss statement into the segments that matter to you.

Think of classes and locations as two independent labels you can attach to every transaction. Classes track one dimension of your business. Locations track another. A restaurant group might use classes for revenue type (dine-in, catering, delivery) and locations for each physical restaurant. A property management company might use classes for each rental property and locations for the city or region. The key is deciding what you want each one to represent before you start tagging transactions.

You need QuickBooks Online Plus or Advanced to use these features. They’re not available on Simple Start or Essentials. To turn them on, go to Settings, then Account and Settings, then Advanced, and enable “Track classes” and “Track locations.” You can also choose whether to require a class on every transaction, which I strongly recommend. Leaving it optional means transactions will slip through without a class, and your reports will have an “Unclassified” bucket that makes the data unreliable.

Once they’re enabled, every time you create an invoice, enter a bill, record an expense, or write a check, you’ll see fields for class and location. Assign the correct ones every single time. Consistency is everything. If even 10% of your transactions are missing a class, your P&L by Class won’t reflect reality. You’ll look at it and think one project is less profitable than it actually is because revenue or expenses landed in the wrong bucket.

For the reporting side, go to Reports and search for “Profit and Loss by Class” or “Profit and Loss by Location.” These reports show columns for each class or location with revenue, expenses, and net profit broken out. You can see at a glance which department is carrying the business and which one is dragging it down. This is the kind of visibility that helps you make real decisions about pricing, staffing, and where to focus your energy.

A few common mistakes to avoid. Don’t use classes and locations for the same thing. They’re two separate dimensions, so use them to track two different things. Don’t create too many classes or you’ll drown in columns that are hard to read. And don’t start halfway through the year without going back to tag older transactions. Partial data is sometimes worse than no data because it looks complete but isn’t.

If you run multiple locations, manage several projects at once, or operate different service lines under one business, this setup is one of the most valuable things you can do in QuickBooks. It turns a single company file into a detailed view of where your money actually goes. For businesses across Central Florida running complex operations, proper inventory accounting in Orlando and segment tracking like this can be the difference between guessing and knowing.

Setting this up correctly the first time saves a lot of cleanup later. If you’re not sure how to structure your classes and locations for your specific business, or if you’ve already been using QuickBooks without them and need to retrofit the data, that’s something a QuickBooks Online setup and training session can solve quickly. The configuration takes a couple of hours. The clarity it provides lasts as long as you run the business.