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Location tracking
Class isn’t everything

Tracking by Class is a powerful way to improve the level of detail in your

company reports. However, clients with operations in more than one site
often need to track performance and profitability by location.
So they need an additional way to track their transactions.

How can QuickBooks Online help?

Location tracking in QuickBooks Online Plus and Advanced allows clients to

categorize transactions by where they were made. This could be a
department, building, city—or even a state. You can use this data to monitor
each location’s performance and compare figures from multiple locations.
Want even more comprehensive reporting data? Combine Location tracking
with Class tracking and you can compare the profitability of activities at each
location.
The QuickBooks Online ecosystem is constantly evolving to meet
your needs.

Your current experience may differ from what you see here.
Continue training

Learning outcomes
In this lesson, we‘ll cover:

 Using Location tracking in QuickBooks Online Plus and Advanced

Topics

 When to use Location tracking

 How Location tracking works

 Enabling and setting up locations

 Using Location tracking

 Running reports by location

 Things to note when you run a report by location

 Reclassifying transactions categorized by location

 Using journal entries

 Considerations when using Location tracking

 ProAdvisor challenge

When to use Location tracking

How do you know if your client can benefit from Location tracking?
Here are two examples of how businesses can use locations and classes for
business reporting.
Select each tab to learn more.
 Retail business
 Construction business
Clients can use Location tracking to track activities by more than just
geographic location.
For example, a construction business is using Class tracking to track activity
types such as design, construction, and repairs. With Location tracking
enabled, the business can also compare activity types: whether they were
done for their commercial or residential customers.

How would Location tracking help?

Let’s say the company made a total profit of $2,000 from their design work.
With Location tracking enabled, they can see that design work for their
commercial customers generated $3,000 toward that profit, whereas design
work for their retail customers made a $1,000 loss.
The client can now decide if that area of work is still viable.
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How Location tracking works

Location categories can be geographic, such as properties or towns. Location
tracking can also be used to categorize transactions by department or
division. By assigning a location to transactions and activities, clients can see
which activities in each location are profitable and which aren’t. They can
also run reports on individual locations or groups of locations and compare
activities by location.
Select each question to learn more about Location tracking.
What if a client wants a more detailed level of reporting across locations?
Can the client add more levels of sub-locations?
What is the guidance for setting up locations in QuickBooks Online?
Keep the following guidelines in mind when setting up locations in
QuickBooks Online:

 Any company can have only five hierarchical levels of sub-locations, including
the top level. Sub-locations count toward QuickBooks Online Plus usage limits
 A location can have only one parent. You may not assign a sub-location to
multiple parent locations. If you wanted several locations to have a specific
 sub-location, you would have to create a sub-location under each parent
location
 With Class tracking, you can assign a class to each line. However, with
Location tracking, you can only have one location per transaction. This is
because location affects both sources and targets. This means that if you run
a balance sheet by location and use the normal workflow, it will balance.
When you enter journal entries—where there is no source—you need to make
sure each location has a debit and credit with the same dollar amount

ProAdvisor tip

How you set up locations directly impacts reports, so think carefully about
the hierarchy you set up for your clients.
QuickBooks Online Advanced also allows clients to set up sales-related client
users by location and then filter them according to company location.
Continue training

Knowledge check
See what you can recall so far.

How can a construction company with sites in 3 locations benefit

from Location tracking? Select all that apply.
 They can identify which locations contribute most to overall profits
 They can run reports to identify which locations spend more on
certain raw materials (such as cement)
 They can generate reports to show which locations contribute more
profit across a particular activity (such as scaffolding)
 They can put a different location on different lines of a transaction


They can add unlimited levels of sub-locations to locations (for

example, departments within an office)
Check Answer
That’s right.
Location tracking will allow this construction company to run reports to help
them identify the most profitable locations, the locations where they spend
the most, and even which locations are the most efficient for each job.
Continue training
Enabling and setting up locations
Getting started with locations is pretty straightforward. As with all
categorization work for clients, you’ll need to think carefully about the
structure of their business and the levels they need to get the information
they want. There’s a fine art to getting the right amount of detail in a report,
but taking the time to get this right at the outset makes things much easier
later.
Let’s look at how you can set up locations for a client.
Watch the video to see how it’s done. The individual steps are below
for you to follow.

1. Select the Gear icon and then Account and Settings

2. Select the Advanced tab in the left-hand navigation
3. Select the Categories section to expand it
4. Use the slider to turn on Track locations

You can now use the Location label dropdown to choose the type of location
to use for the Location tracking category in QuickBooks Online. Labels include
business, department, division, location, property, store, and territory.
5. Once you’ve selected a label, select Save
6. Finally, select Done

Now we can add some locations.

1. Select the Gear icon and then select All lists

2. Here, you can see that a new selectable option—Locations—is available, so
select it
3. Select New to add a location

A pop-up screen appears, giving you options to specify unique settings on

sales forms for that location. You can specify the form title, company name,
address, email, and phone number.
4. Now set the Location. This isn’t a sub-location and for the moment we can
leave the other options blank, so select Save

Back on the main screen, you can see the first location is set up, so you can
now add a sub-location to it.
5. Select New again. Then, in the pop-up, add the sub-location name
6. This time, check the Is a sub-location checkbox

If the sub-location’s telephone number and address are different from the
default address and telephone number in Account and Settings, you can edit
these fields so that they appear correctly on sales forms.
7. Select This location has a different address where customers contact
me or send payments and add a new address
8. Then do the same for the phone number for the bottom option
 Note that if you specify these settings for a location, it will override what’s in
the company settings.
9. Select Save for the new sub-location. You can see it on the Location Lists
screen
[Link] let’s enter a second sub-location for a company office in the same
parent location, using the same method

We’ve now set up two operating locations that can be used to categorize
transactions.
Continue training

Knowledge check

Which of the following statements about setting up Location

tracking in QuickBooks Online are true? Select all that apply.
 Each company can have only three hierarchical levels of sub-
locations, including the top level


A location can have only one parent. You may not assign a sub-location
to multiple parent locations
 You are limited to the number of hierarchical levels of locations
 You can assign locations to each line on a transaction
Check Answer
That’s right.
Nice job!
Continue training

Using Location tracking

Let’s look at how to use Location tracking when adding or editing
transactions.
Location tracking allows you to filter and view reports and manage groups of
transactions by location. For example, you can limit the Bank Deposit page
to show only customer payments for each location. This lets you see all the
payments received for one location and deposit them as a group to that
location’s bank account.
Similarly, you can filter the Pay Bills screen by location and pay bills just for a
particular location.
Continue training

Running reports by location

Now let’s look at what information you can get when you run a report by
location.
Select the tabs to learn more.
 Profit and Loss by Location report
 Customized Balance Sheet
Unlike Profit and Loss, there is no default Balance Sheet by Location Report.
However, because locations affect the source of the transaction, you can
customize a Balance Sheet to show locations by choosing Locations from the
Display columns by dropdown.
Continue training

Things to note when you run a report

by location
Not all transaction types support a Location field. In most cases, you can’t
avoid using these transaction types. However, they can lead to unbalanced
locations on a Balance Sheet report customized to show locations.
The following transaction types don’t support a Location field:

 Transfers (instead, use a Deposit or Expense transaction to indicate the funds

being transferred from the “from account” to the “to account”)
 Sales tax payments
 Sales tax and payroll adjustments
 Paychecks
 Receive payments
 Pay bills

Let’s look at unexpected results related to the last two: Receive payments
and Pay bills.
Unexpected results with receiving payments
Unexpected results with paying bills
Accounts payable activity is usually recorded through bills and bill payments.
Because bills have a Location field, the bill payment transaction (which has
no Location field) usually picks up the location of the bill being paid.
So what can go wrong?
You will get unexpected results if the bill payment is applied to multiple bills
that have different locations, or if the location is assigned to the
bill after the payment has been made.
How can you avoid this?
Filter the Pay Bills screen for one location at a time, allowing you to show
only bills due for each location.
Then pay bills for each location individually.
If the actual payment needs to be for the total amount due to the vendor,
like on the A/R side, record multiple payments in QuickBooks Online and
match those payments to the actual payment when it comes through bank
feeds.

Continue training

Reclassifying transactions categorized

by location
If clients accidentally attribute the wrong location to a transaction or they’ve
just set up Location tracking and want to assign locations to existing
transactions, you can help them, with the Reclassify transactions tool. Note
that this tool is only accessible to accountant users or clients with a
QuickBooks Online Advanced subscription.
You might think you can change or add a location by selecting the source
account of the transaction because locations are assigned in the header, and
they affect source accounts. However, the Reclassify transactions tool
doesn’t allow you to assign or change locations on the source line, only on
the target lines.
What if there are multiple target lines on one transaction?
In that case, the location will be changed on all lines, even if they post to
different accounts. This is because clients can only have one location per
transaction.
Let’s look at an example.
Your client, Bob from Bob’s Burger Joint, enters a transaction for $3,700,
assigned to Location A and split between two expense accounts:

The Transaction Journal shows that Location A is assigned to every line:

You can use the Reclassify transactions tool to change one line to Location
B, as shown here:
Because there is only one location per transaction, the Transaction Journal
now shows Location B on all lines of the transaction:

Continue training

Using journal entries

Journal entries are the only transactions that allow you to add multiple
locations. They don’t have a source, but every line on a journal entry is a
target. Because of this, it’s important to remember that all lines on a journal
entry that adjust a specific location should balance in order for the Balance
Sheet to remain in balance. So you must debit and credit the same total
amount to a particular location on a journal entry.
Here’s an example of a balanced journal entry:
You could also use journal entries when you need to add more than one
location to a transaction.
Continue training

Considerations when using Location

tracking
Keep the following in mind when you’re working with transactions and
Location tracking is enabled.
Select each question to learn more.
Which transactions aren’t supported by Location tracking?
What do you need to look out for with billable expenses?
Do you need to assign a location to all transactions that support Location
tracking?
How do you decide whether to categorize by Class or Location?
If you believe that Location tracking might benefit one of your clients, run
some tests using the sample company. Set up Location tracking in the
sample company based on how your client would use Locations and Classes,
then run some test transactions. That way, you can see whether you get the
results and the reports you need.
To help you decide whether to categorize transactions, products, or services
using either Classes or Locations, ask your client the following questions:
Do they need to run a balance sheet by category? Use Location tracking

Do they need to put more than one category on a transaction? Use Class tracking

Do they need a reminder to enter the categorization? Use Class tracking

Note: If you’re using any third-party apps that sync data to QuickBooks
Online, explore whether they sync data to/from the Location category. Any
third-party apps that use QuickBooks Online’s platform would call this
category the DepartmentRef field. If you’re unsure, you can always contact
the app provider and ask whether that field is part of their app.
ProAdvisor tip

Select and download the Location tracking hints and tips resource for
more information, including best-practice workflows for sales and accounts
payable.
Continue training

Take our ProAdvisor challenge

Now that you’ve learned about

using Locations, it’s time to see how
you’d do as a ProAdvisor.
Complete the following task to help
a sample client, Craig’s Design and
Landscaping. Craig has just started
a new branch of his operations and
wants to track its profitability, so
you agree to help him set up new
locations and add a transaction
for his new business branch.

To complete the task, you need to:

 Right-click on the link to Craig’s Design and Landscaping below and

select copy link address
 Open a new browser window in private view (Incognito in Chrome, InPrivate
in Microsoft Edge, Private Window in Safari, etc.), then right-click
and paste the full link into the address bar

Craig’s Landscaping is a practice account and safe space for you to explore
and try out new things without worrying that you’ll make a mistake or break
something. Once you close the browser window, the account is completely
refreshed, so you can start over again.
Craig’s Design and Landscaping
Select the headings to find out more.
The task
Craig’s mainly been providing gardening services for private customers, but
he’s recently hired some additional landscapers to work on corporate
landscapes. He wants to be able to compare the profitability of both
branches of his operation. So far, his new team have completed a few
projects.
What should you do?
Set up two new locations, one called Private gardening and another called
Corporate services.
Then create an invoice for the service Craig has already provided for his first
corporate customer. The customer was Amy’s Bird Sanctuary, and the item
was Weekly Gardening Service at $50.

Now that you’ve learned about

using Locations, it’s time to see how
you’d do as a ProAdvisor.
Complete the following task to help
a sample client, Craig’s Design and
Landscaping. Craig has just started
a new branch of his operations and
wants to track its profitability, so
you agree to help him set up new
locations and add a transaction
for his new business branch.

To complete the task, you need to:

 Right-click on the link to Craig’s Design and Landscaping below and

select copy link address
 Open a new browser window in private view (Incognito in Chrome, InPrivate
in Microsoft Edge, Private Window in Safari, etc.), then right-click
and paste the full link into the address bar

Craig’s Landscaping is a practice account and safe space for you to explore
and try out new things without worrying that you’ll make a mistake or break
something. Once you close the browser window, the account is completely
refreshed, so you can start over again.
Craig’s Design and Landscaping
Select the headings to find out more.
The task
Craig’s mainly been providing gardening services for private customers, but
he’s recently hired some additional landscapers to work on corporate
landscapes. He wants to be able to compare the profitability of both
branches of his operation. So far, his new team have completed a few
projects.
What should you do?
Set up two new locations, one called Private gardening and another called
Corporate services.
Then create an invoice for the service Craig has already provided for his first
corporate customer. The customer was Amy’s Bird Sanctuary, and the item
was Weekly Gardening Service at $50.
How did you do?
If you did it correctly, you should see both Corporate services and Private
gardening in the Location dropdown when adding the invoice.

Our solution
If you didn’t make it to the end or didn’t get the right result, here’s how to do
it.
First, you need to enable Location tracking. To do this:

1. Select the Gear icon and then Account and Settings

2. Select the Advanced tab in the left-hand navigation
3. Select the Categories section to expand it
4. Use the slider to turn on Track locations and leave the Location label
selected
5. Then select Save and then Done

Next, add the two new locations.

1. Select the Gear icon and then select All lists

2. Select Locations
3. Select New to add a location
4. Enter Private gardening for the first location, then select Save
5. Add the next location by selecting New again
6. Enter Corporate services, then select Save

Now add the transaction for the project Craig’s team has carried out.

1. From + New, select Invoice

 2. For the customer, enter Amy’s Bird Sanctuary, then for the
Product/Service, choose Weekly gardening service. Add the amount
of $50
3. From the Location dropdown, select Corporate services
4. When done, select Save

Having trouble?
If you didn’t get the correct answer or you’re not sure how to carry out the
task, make sure that you turned on Locations in Account and Settings and
selected the Location label.
Remember that Location tracking is only available in QuickBooks Online Plus
and Advanced. If you’re having trouble enabling Locations and using
something other than the sample company, the subscription level likely
doesn’t include Location tracking.
Continue training

Summing up
Learning outcomes

Well done. In this lesson, we covered:

 Using Location tracking in QuickBooks Online Plus and Advanced

Knowledge recap
With Location tracking, your clients can track transactions by department,
building, or city—even across different states. They can use this data to
monitor each location’s performance, and to compare the figures from
multiple locations. By adding levels of sub-locations and combining Class
tracking with Location tracking, clients can get an even more detailed view
of their company’s financial health.

Tracking profitability by customers

Knowledge is power

It can be hard for clients with many customers and projects to keep track of
all the jobs they’re doing. They may need additional categories beyond
classes and locations to measure the profitability of each of their jobs.
How can you and QuickBooks Online help?

Clients can create a hierarchy of sub-customers in QuickBooks Online,

allowing them to keep track of multiple jobs per customer. Clients can easily
run reports on the profitability of each job by categorizing each transaction
(invoices, expenses, and so on) to individual sub-customer.
The QuickBooks Online ecosystem is constantly evolving to meet
your needs.

Your current experience may differ from what you see here.
Continue training
Learning outcomes
In this lesson, we’ll cover:

 Tracking profitability by customers and sub-customers in QuickBooks

Online
Topics

 Job costing and sub-customers

  Setting up sub-customers
 Assigning expenses against customers
 Running reports by customers

Job costing and sub-customers

Let’s start by looking at job costing
Job costing refers to measuring the profitability of a job by tracking direct
expenses against the revenue produced. This allows your client to see how
much money they spent on each job compared to how much they made. If
the client has billable time switched on, they’ll also be able to keep track of
billable time by job. You can learn more about this in the Billable
time lesson.
This information gives clients insight into the factors that most influence
profitability so they can make informed decisions about their business and
increase their profit margins.
How can clients get a more detailed picture?
To track the financial performance of individual jobs, clients can create sub-
customers for their customers and assign invoices and expenses to them.
Sub-customers can represent many things, such as multiple locations of a
project, sub-groups within a larger organization, or a growing list of projects
delivered to a customer.
For example:

 Law firms may add the different cases or matters they work on for
their customers as sub-customers
 Contractors may set up their customers as a parent and their
customers’ locations as sub-customers
 Nonprofits may track their grantors as customers and the individual
grants they receive as sub-customers

The diagram below illustrates how a handyperson might create a hierarchical

structure for one of their real estate customers by assigning the customer’s
properties as sub-customers. They can then track jobs done for each tenant
living at a property by adding another tier to the sub-customer structure.
In the illustration above, the real-estate customer is the top-level (parent)
customer, the properties are sub-customers, and the tenants are a further
level of sub-customer under each property.
How many customers and sub-customers can you add?
For each customer, you can add up to four levels (tiers) of sub-customer. So
each customer is limited to five tiers of hierarchy, including the parent
customer. However, you can add an unlimited number of customers and sub-
customers at each level in the hierarchy.
In the example below, the client has two parent customers (Broad Street
Communications and Commercial Customer), and the Commercial Customer
parent has a number of sub-customers.
Clients can assign multiple sub-customers to a customer, but they can’t link
a sub-customer to more than one customer. If you or a client wanted several
customers to have a specific sub-customer, you would have to create a sub-
customer under each parent customer.
After setting up sub-customers, you or your client can assign financial
activity to the jobs and start job costing.

Knowledge check
Consider the example of the handyperson with several real estate
customers. As we saw, they can assign each of their customer’s properties
as sub-customers and then add each tenant living at a property as a sub-
customer under the property (so as a sub-sub-customer).

What would this structure allow them to do that they couldn’t

before? Select all that apply.
 Track how much time they spent on a specific job
 Track how much they were paid for a specific job
 Track their direct expenses for a specific job
 Track how much profit they made from a specific job
 See the last price at which they sold a product or service to a
specific customer
  Track the customer satisfaction rating on Google for each job
Check Answer
That’s right.

Setting up sub-customers
Let’s set up sub-customers for an existing customer.
Watch the video to see how it’s done. The individual steps are below
for you to follow.
Let’s start by defining the labels for customers and sub-customers.

1. Select the Gear icon and select Account and Settings

2. Select the Advanced tab
3. Select anywhere in the Other preferences section to enable editing
4. Select the required label from the Customer label dropdown. In our
case, we select Customers
5. Select Save
6. Then select Done

Now let’s create a new customer.

1. From the left-hand navigation, select Sales

2. Select the Customers tab
3. Next, select New customer
4. In the Company field, add the name of the sub-customer. In this
example, we’re adding the address 125 Main Street because the job is
for an existing customer, but at a different property
5. To make it a sub-customer, check the Is a sub-customer box
6. From the Parent customer dropdown that appears, select the
existing customer
7. Next, select whether to bill the parent customer or this sub-customer

In our case, we leave Bill parent customer selected because the

parent customer will be paying for all their sub-customer jobs. If this
option is unchecked, clients would need to select the sub-customer
name on the Receive Payment screen to see the invoice. The client
would not see the sub-customer’s invoice if they selected the parent
customer.

In the Customer center, customer balances due include the balances of

their sub-customers, regardless of which option is selected.
8. Finally, select Save
Assigning expenses against customers
Double-sided items are available in QuickBooks Online Plus and Advanced. If
you have these packages, you should use double-sided items to record all
expenses related to certain sub-customers. To do this, you first need to
adjust your client’s Account and Settings so that they can assign expenses to
sub-customers.
It’s also best to use items on purchase transactions when tracking
profitability by customer. This improves reporting.
Watch the video to see how it’s done. The individual steps are below
for you to follow.

1. Select the Gear icon and then Account and Settings

2. Select the Expenses tab
3. Select anywhere in the Bills and expenses section to allow editing
4. Make sure that the Show Items table on expense and purchase
forms option is selected
5. Make sure that the Track expenses and items by customer option
is also selected

This adds a Customer column to purchase transactions.

To invoice for purchases incurred, turn on Make expenses and items

billable. You can learn more about this in the training on Billable
expenses.

1. Then select Save

2. Then select Done

With these settings in place, you can now assign the following
purchase transactions against jobs: Checks, Bills, Expenses, Vendor
Credits, Purchase Orders, and Credit Card Credits.

Now let’s assign a purchase transaction. To do this:

1. Select + New, then Check

Note that when you open a new Check screen, everything is recorded
in the same way as it was before we made changes to Account and
Settings. The difference is that there is now also a Customer column.
2. Add or select the correct Payee, Bank account, Payment date,
Category (or Item), Description, and Amount
3. Select the Customer dropdown to assign the expense for the job to
the customer or sub-customer
 4. Finally, select Save and close

And we’re done!

Running reports by customers

Now let’s look at how you and your clients can run a Profit and Loss report
for specific customers or jobs.
Select the headings to learn more.
How do you see how much the client made on a job?
From the Business Overview grouping in the Reports center, select
the Profit and Loss by Customer report.
If you want to see the total amount made per job, change the dates to All
dates.

What are the transactions in the Not Specified column of the Profit and
Loss by Customer report?
Transactions in the Not Specified column represent transactions to which
no customer or job was assigned.
If your client wants to track profitability by customers, they should always
assign a customer to transactions. To ensure this happens, set up an
Overhead customer to which you can assign transactions that don’t
specifically pertain to a job.
If you don’t do this, you won’t know whether the transactions in the Not
Specified column were not assigned to a customer intentionally or by
mistake.
How can you run a job profitability report for specific sub-customers?
Yes. There is a default report for Profit and Loss by Customer, but you may
want to filter it for a specific job or jobs.
You can do this by customizing the report and using filters to choose only the
job or jobs you want to see.
You can also change the title in the header to mention the specific jobs in the
customized report.
How can you track the profitability of products and services?
You can customize a Profit and Loss report to show columns by items to track
the profitability of products and services. You can also filter the report by
specific customers and sub-customers to see item profitability just for that
job.
To do this, run a Profit and Loss report and select Products/Services from
the Display columns by dropdown. Again, with the filters in place, it would
make good sense to identify the filters in the title in the header.

Summing up
Learning outcomes

Well done. In this lesson, we covered:

 Tracking profitability by customers and sub-customers in QuickBooks

Online

Knowledge recap
You can now help clients who do several jobs for each of their customers to
track profitability by customers and sub-customers. This allows them to run
customized reports that tell them how profitable each of their jobs is.
Next steps

In the next lesson, we’ll cover setting up and using Projects in QuickBooks
Online.