How to Setup and Use Classes in QuickBooks

Our church uses QuickBooks Pro 2009. We have had some "issues" in the past and are currently working on restructuring and reorganizing our records. I am fairly new to QuickBooks, but the questions I have go beyond what I can get from a class, as they are pretty specific to a church/school situation. For example, our church and preschool currently have separate company files, but we think it may be wiser to make the preschool a subsidiary of the church since they are one corporation with one ID #. There are some challenges in doing this. I am also thinking it might be better to have separate company files for each budget year so we can enter transactions for the new budget year while still processing prior year transactions that lag beyond the fiscal year end date; however, there may be a better way to accomplish what we want. Thank you!
Since they are one corporation, I do recommend having both programs in the same QuickBooks file.  You can do this by using classes.

1. Turn on class tracking at Edit -> Preferences -> Accounting -> Company Preferences (you may need to be signed in as the Admin to do this).  
2. Add the classes you want to use at Lists -> Class List. Click on the Class button and select New.  In addition to church and school, you should add a general or administrative class for any transactions that can't be assigned to either program.
3. Make sure to include a class on all your transactions. You can get a list of all the transactions that don't have a class assigned by going to Reports -> Company & Financial -> Profit & Loss Unclassified.
4. You also can get a Profit & Loss by Class report in Reports -> Company & Financial.

You do not need separate company files for each fiscal year. You just need to date your prior year transactions in the prior year. For instance, if your fiscal year is July-June and you receive a bill on 7/15/09 for the month of June, you can simply enter the bill dated 6/30/09 instead of 7/15/09 (make sure to adjust your due date). If you normally write checks without entering bills first, you'll need to change your procedures a little since I don't recommend pre-dating checks. Here is the process for Entering/Paying Bills.

1. Enter your bills at Vendors -> Enter Bills. This will increase your expenses (or assets in the case of prepaid expenses) and increase accounts payable.
2. Pay your bills at Vendors -> Pay Bills. This will decrease accounts payable and decrease cash. Do not skip to write checks because this will increase expenses and decrease cash. You'll be left with an inaccurate amount in accounts payable and your expenses will be double-counted.

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This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. For further information, please consult appropriate professional advice from your attorney and certified public accountant.

Ruth Perryman - QuickBooks Specialist Written by +Ruth Perryman

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