Doesn't every business want to know how they are making money? Do you want to analyze how and why you are making money or not making money?
We all continue to try to grow sales. Knowing where every dollar the business earned came from would be valuable information to a business owner and a marketing/sales manager.
The feature is not very apparent, and it takes a little forward thinking to realize how to set it up, but using QuickBooks Online to track a business's income sources is a feature that many users overlook.
I will discuss the why and how of tracking income sources in QuickBooks.
Why tracking sources of income important
I can't think of a business where tracking sources of income would be insignificant. Without this information, you are running your business blind.
Knowing the source of every dollar we have made has been valuable to us and our long-term business plan.
We constantly analyze sales numbers and income sources to ensure they align with our long-term growth and sales plan.
It is also interesting to note that our most significant percentage of overall sales is no longer a marketing strategy. Why? We no longer believe in it.
Our numbers are influenced by outdated marketing tactics; we have adjusted our marketing and sales plans and objectives.
How to track income sources in QuickBooks Online
As I said earlier, class tracking is not a built-in function of QuickBooks Online, and you have to think a little to figure it out. You can read more about it here.
To turn on the class tracking feature in QuickBooks Online:
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Click on the Gear icon at the top right corner of the screen and select Account and Settings.
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Click on the Advanced section, edit the Categories section, and turn track classes on.
How do you apply this to tracking your income sources?
It's pretty easy. Every time you create an invoice or add a deposit, assign it a class; your various classes should be your sources of income.
The level of detail is really up to you; we get pretty detailed, and we also like using subclasses.
For example, we have a referral as a class and several subclasses under referral, each with the name of the individual or business that referred us to the company.
That makes scheduling your "thank you lunches" pretty easy.
Once your classes are set up as income sources, you can run a report that will combine everything.
- Run a Profit and Loss by Class.
- Select your date range and enjoy knowing where every dollar came from.
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