You can use Classes to categorize transactions in QuickBooks and to generate reports about specific transactions.
For example, if you categorize income and expenses with classes, your tax preparer can use that information to prepare your
tax return. Whether you're a sole proprietor, partnership, or corporation,
your tax return has a section for Cost of Goods Sold. In a construction
company, that's a job-related cost. The Cost of Goods Sold section on the
tax return asks for a summary of your job costs by Labor, Materials,
Subcontractors, Equipment Rental, and Other (LMSE&O). If you break out your
classes into these categories, you can easily produce the reports your tax
preparer will need.
Turn on class tracking.
Open the accounting preferences.
Click the Company Preferences tab.
Select Use class tracking and click OK.
Create the classes you want to track.
Go to the Lists menu and click Class List.
Click Class at the bottom of the list and then click New.
Enter a name for the new class.
If you want more detailed information, such as a breakdown on labor, set up
a subclass. Select the Subclass of checkbox and enter the
appropriate subclass name.
Assign a class for every income and expense transaction. If you enter a
bill, write a check, enter a credit card charge, or create an invoice, click the Class drop-down list and choose a class for every item.
If you're using the QuickBooks payroll feature, assign a class to each
payroll item on a paycheck or to the entire paycheck.
Open the payroll and employees preferences.
Set "Assign one class per" as follows:
Select Entire paycheck to assign a class for an entire paycheck.
For example, if you have a single class for all labor, you can assign the
employee's entire paycheck to that class.
Select Earnings item to assign a class per earnings item. This
lets you assign a different class to each payroll item for the employee. For
example, suppose you want to break down the labor class into Finish Carpentry
and Rough Carpentry. If an employee has done work for both in the same pay
period you can assign each payroll item to the appropriate class.
You assign the class for the paycheck or the payroll items when you generate
information on reports