Using Classes in QuickBooks to Your Advantage
July 24th, 2008 NancyAn executive director new to her position showed me the QuickBooks set-up she had inherited from her predecessor and his bookkeeper today. The “profit and loss by class” report was four pages wide - in landscape format! It was so wide, you couldn’t really make any sense out of the report. So what good was it really?
QuickBooks has only a few ways to sort data - accounts, classes, and customer:job combinations - and while they are inadequate for many nonprofits’ needs, it’s also true that many people don’t realize how they can best use what QuickBooks has to offer.
The best way to use classes is to set up one for each program (aka activity). Don’t use them for grants or you’ll end up with a monster report like I saw today! Keep your programs to a maximum of five or six, plus the two you’ll need for reporting to the IRS - Management & General and Fundraising. (Those two are quite useful for managing your organization as well.) You can also make good use of a class for your shared cost pool.
If you really can’t be satisfied with five or six classes, you can set up sub-classes. You’ll get a finer level of detail and when you create a P & L by class, you can hit the “collapse” button to get a report that presents the parent classes instead of all that detail.
The real key to elegant reporting is understanding the logical relationships between classes/activities and “natural” accounts so your reports express meaningful summaries of the sources and uses of your organization’s resources.