How to Bill a Department on QuickBooks

Using QuickBooks to bill departments involves using the Class feature.

Billing separate departments for expenses or items is a process that involves preparation and planning. Doing so involves using a poorly understood feature of QuickBooks known as "Class." The "Class" feature of QuickBooks has been called the "Mighty Putty of QuickBooks." In initially using the "Class" feature, it can be used for keeping track of revenue streams and expenses of different store locations, revenue and expenses for each partner or shareholder in the company or any one of a number of different classifications. Once chosen, however, the class feature cannot be altered to include additional classifications.

Instructions

1. Activate the class feature in your QuickBooks company file. Click on the "File" button on the top menu bar and scroll down to the "Preferences" tab. When the "Preferences" window opens, click on the "Accounting" tab located on the left side of the window. And then on the "Company Preferences" tab in the top center of the window. Look for the box next to the phrase, "Use Class Tracking" and click in that box and the lower box as well labeled "Prompt to Assign Classes."

2. Write out a logical schematic plan of each department you'd like to track in QuickBooks. This will involve breaking out each section of your business into departments that make up the financial structure of your business. A retail store may have departments for men's wear, shoes, women's wear, household goods and more. Each section of your business that has expenses or revenues should be represented in this plan of each department. Include even departments that don't receive revenue such as the shipping, human resources and janitorial as well. Once the list is complete turn back to the QuickBooks company file.

3. Click on the "Lists" button on the top menu bar. Scroll down to the "Class List" and click on it. When the class list window opens notice there are only two boxes here. One is to enter the "Class Name" the other to create a "Subclass of" another class. Enter each department you've outlined into the "Class Name" box and click "OK".

   Using the "Subclass of" would be for stores with one department and many different items or expenses in that same department. A retail store may create one "Men's Clothing" department and sub-classes for "Shirts," "Suits" or "Shoes."

4. Click on the "Home" icon on the top menu bar and with the home screen open, click on "Enter Bills" icon. A bill has two tabs on it, one for expenses the other for items. Enter the vendor you wish to bill to a department in the vendor box. Choose the expense account and the amount of the bill and note the column labeled "Billable." Do not use this as this is for expenses that are billable to a customer, not a department. The column next to it is the "Class," click on it and choose which department is responsible for this bill.

5. Click on the "Reports" button located on the top menu bar. Click on the "Company & Financial" tab and look for the "Profit and Loss by Class Report." Click on that report. Adjust the dates for the period in which you want to bill the department in the upper "From" and "To" boxes. Click on the "Collapse" button in the menu bar underneath the icon bar. The resulting report will detail all revenues and expenses for each department. You will be able to tell at a glance which department needs to be billed for which expenses.

References

• CPA 911: Using Classes Effectively
• Intuit QuickBooks Support: Entering Bills