In this presentation, we will set up classes within QuickBooks classes that we will then use to track tax deductions within our business file within QuickBooks. Here we are on the homepage, we currently have the open windows open. In order to open the open windows, you want to go to the View drop down and select the open windows list. Before we go into the classes, let's first think about what the classes are going to do by going to the reports drop down over here and go into the company and financials. And we're really looking at the profit and loss type reports. If we go through the profit and loss reports, you'll see one that is standard of course, and then one that is by class.

The profit and loss by class is what we are now going to use in order to track different items. Those items in our case that are going to be related to deductions may possibly not be business deductions, but other deductions we want to track if we go to the profit loss by class And we changed the dates to the dates we're working out, oh 10119 to 1230 119, then we've got our profit and loss. Now everything right now, of course, is unclassified because we haven't added classes at all. When we add classes, we'll see the profit and loss that will have different classes that we will then add. And then we can break out those things that are going to be within a different class. In our case, we're going to break out those things that are going to be deductions that are not business related, and shouldn't really be on the on the profit loss for business and be able to track them in a separate area on an income statement type account in a different class.

Note that the classes are generally for the profit and loss accounts. So with their timing type of items, they're going to be things that deal with timing, so we're going to break out the profit and loss. In other words, not so much on the balance sheet. We're not really looking at balance sheet accounts breaking out into different accounts. We're looking at The profit and loss, which will then roll into the balance sheet in the form of the equity into the equity section. So this these are going to be timing type accounts, we're going to set up a class related to tax deductions, and then be able to pull out those particular items that are tax deduction related, and then they won't be affected here.

So in other words, our net income, if these are all business related items will remain the same in our unclassified area, and then we'll break out in a second second column, those items that will be classified using our classes. To do that, we're going to go to the Edit, drop down, edit, drop down and then go down to preferences. And then within the preferences screen, we want to go to the accounting up top so make sure you're in the accounting. There's going to be two tabs there we want to be in the company Preferences Tab within the Company Preferences Tab, we're going to select in the classes section, use class tracking for transactions, then you have this, the default being checked, is saying, hey, do you want us to prompt you every time you have a transaction. Now, if we only have a few transactions that we use classes for, we may not want this checked.

In other words, our default here is going to be that if we don't assign a class, unclassified is our business class. And then if we do assign a class, those are those more rare kind of cases where we are recording something in the system that has a particular class. So I'll leave the default here, but just note that you may want to take that off if you use in a system where you're keeping where you just have a few things that are going to classify. But it's, it's useful to have this because you do oftentimes need a reminder to make sure that the classes have been selected. So then we'll just going to say Okay, and now classes have been turned on. Next thing we want to do is actually set up the classes that we want.

Now classes can be set up as you go kind of like when we set up vendors. In other words, if we were to go, let's go to the check register banking, use register, and go to the checking account. If we wanted to add a class, we can go to the split transaction down here as we enter the transaction. You'll note now that we have this class section, and there's nothing in the class sections. And we can of course, add a new class every time we go. But we don't we want to be really careful to do that.

Because we only want a very specific number of classes. We don't want to be adding classes all the time. So usually, we just have one or two types of classes. And we don't want to add too many classes, but you can do so add the class as we enter the transaction, just as we would like a vendor, we had a new vendor as we entered the transaction and so on and so forth. But the classes are going to be in the lists as well. So So we will very intentionally go in there and set up a class.

So we're going to go to lists. And we want to go to class lists. So this is a class list, not class lists. This is class lists. So here's a list of classes. And we're going to make a new one down here and make a new class.

So we're going to this is a drop up at the bottom and say, new, and we'll set up our class. Now I'm gonna label the class name something like tax deduction. We don't want to make it too long, because we want to be able to find our class deduction pretty quickly, but I'm just going to make it something like tax deduction personal. And this is an indication to us that yes, this is a tax deduction, but it's not a typical business tax deduction. That's what we're trying to get across with the name if there going to be a personal tax deduction that we want to track here. Because this is where we're good at tracking information.

This is really all there is to creating the class, we could create a subclass, and and so on, but this is really all there is to it. So we're going to say okay, now, we have our tax deduction personal class, that's all we have. So far. If we go back to our checking account, then we can see now that within our classes section, we're in the checking account, we have this new transaction, we have the split screens on within this new section, we just set up classes, we now have the tax deduction, personal. Notice what we don't have then is all of these transactions up here assigned, they're not assigned to a class right now. And that's okay if we want to use that as the default meaning.

Our goal now is we if we go to the profit and loss and the open windows, is to say that we want everything that's unclassified to be normal business classes, and then everything that is in that we're going to break out that shouldn't be in the unclassified will be in in this new class, which will be tax deduction, personal, and that's one way we could set it up. Otherwise, we would want to assign a class to every transaction and we would then need to set up a class That would be something like business to business class, and then the non business deductions. And then and then that way, we would have to assign a class to each item. So this way we'll take a little bit less data entry, although we'll have to use this unclassified category, the unclassified be the default. And then if we assign the class, that's when we want to pull it out of the default and put it into this other class and track it in a separate area for personal tax deductions.