How to See Profitability by Class, Location, or Project in QuickBooks Online

Understanding where your business is making (or losing) money is essential for making informed financial decisions. QuickBooks Online (QBO) provides tools to track profitability based on different categories – Classes, Locations, and Projects – so you can see which areas of your business generate the most revenue and which may need adjustments.

In this post, we’ll talk about the difference between Classes, Locations, and Projects, how to set up and use them in QBO, and what reports you can run to track profitability.

Classes, Locations, and Projects – What’s the Difference?

QBO allows you to categorize income and expenses using Classes, Locations, and Projects. While all three help track profitability, they serve different purposes:

📌 Classes – Best for tracking different departments, product lines, or revenue streams within a business. Example: A landscaping company may have “Residential” and “Commercial” classes.

📌 Locations – Ideal for businesses operating in multiple locations, stores, or regions. Example: A retail business with stores in different states can track performance separately.

📌 Projects – Used to track specific jobs or contracts. Example: A contractor working on multiple client projects can track expenses and income per project.

Each method helps business owners analyze financial performance from different perspectives.

How to Set Up Classes, Locations, and Projects in QuickBooks Online

Before running profitability reports, make sure these features are enabled in QBO.

Step 1: Enable Class & Location Tracking

1. Click Gear Icon (⚙️) > Account and Settings.

2. Go to the Advanced tab.

3. Find Categories and turn on Track Classes and/or Track Locations.

4. Click Save, then Done.

Step 2: Enable Projects

1. Click Gear Icon (⚙️) > Account and Settings.

2. Go to the Advanced tab.

3. Find the Projects section and turn it ON.

4. Click Save, then Done.

Once enabled, you can start assigning transactions to Classes, Locations, or Projects.

How to Assign Income & Expenses to Classes, Locations, and Projects

Assigning Transactions to Classes

When entering an Invoice, Bill, Expense, or Check, select a Class for that transaction.

Example: A marketing agency with "SEO," "Social Media," and "PPC Ads" as Classes can categorize each expense accordingly.

Assigning Transactions to Locations

When creating an Invoice or Expense, select the Location to track revenue and expenses by business branch.

Example: A restaurant chain can track profitability for "Downtown," "Suburb," and "Airport" locations separately.

Assigning Transactions to Projects

When creating an Invoice, Expense, or Time Entry, select the relevant Project to ensure costs and revenue are properly tracked.

Example: A construction company working on multiple client jobs can track income and costs per project.

Reports to Track Profitability by Class, Location, or Project

Once your transactions are categorized, you can run reports to analyze profitability.

1. Profit & Loss by Class Report

   Go to Reports > Search "Profit and Loss by Class"

What it shows:

• Revenue and expenses broken down by each Class

• Helps you identify which departments, product lines, or services are most profitable

💡 Tip: Filter the report by date range to compare different time periods.

2. Profit & Loss by Location Report

   Go to Reports > Search "Profit and Loss by Location"

What it shows:

• Revenue and expenses by business location

• Useful for multi-location businesses to compare profitability between branches

💡 Tip: If certain locations are less profitable, analyze costs and adjust pricing strategies.

3. Project Profitability Report

   Go to Projects > Select a Project > Click Project Reports

What it shows:

• Total income, expenses, and net profit for a specific Project

• Helps determine if individual projects are making or losing money

💡 Tip: If a project is not profitable, review billable expenses to ensure all costs are invoiced.

Common Mistakes to Avoid

1. Not Assigning Transactions Correctly: Always select the correct Class, Location, or Project when entering income and expenses.

2. Mixing Up Classes and Locations: Use Classes for different business segments and Locations for physical locations.

3. Forgetting to Run Reports Regularly: Check profitability reports monthly to make data-driven business decisions.

How We Can Help

Tracking profitability by Class, Location, or Project in QBO can reveal hidden insights about your business. Our team can set up Class, Location, and Project tracking correctly, ensure transactions are categorized properly, and help you analyze profitability reports. Contact us today!