If your locations share one legal entity and one set of books, tag every transaction with its location. In QuickBooks Online that's a class or a location, available on the Plus and Advanced plans. In Xero it's a tracking category, with up to two active at once and up to 100 options in each. If each location is its own entity, give it its own file instead.
When do you need either?
Only when several locations share one set of books. If each location is its own legal entity with its own file, the file already separates them, and classes or tracking categories are for something else, such as programs or service lines.
When locations share a file, every report by location depends on every transaction being tagged. Untagged income is the most common reason location reports stop matching the bank.
What does QuickBooks Online offer?
Two tools, both on the Plus and Advanced plans. Simple Start and Essentials don't have them. Check your plan in your account's subscription settings before you design around them:
- Classes can be set on each line of a transaction, so one invoice can split across programs. They're meant for the profit and loss, not the balance sheet.
- Locations (QuickBooks' own feature, capitalized here to tell it apart from your locations) apply to a whole transaction. They're the natural fit for "which location is this," since a sale rarely belongs to two locations at once.
A common setup for multi-location businesses is locations for the site and classes for the program or service line.
What does Xero offer?
Tracking categories. You can have up to two active at once, with up to 100 options in each. Each line can carry one option from each category.
With two categories, the usual layout is one for location and one for program or service line. If you need a third dimension, it has to live somewhere else, such as a naming convention or a reporting tool.
What's a good starter layout?
| Business | Location tag | Second tag |
|---|---|---|
| Career school | Location: Denver, Phoenix, Portland | Program: Welding, HVAC, CDL |
| Clinic group | Clinic: North, South, Downtown | Service: Hygiene, Restorative, Ortho |
| Home services | Branch: Boise, Reno | Line: Install, Repair, Maintenance |
Add a "Shared" option for costs that belong to no single location, then allocate them on a schedule rather than guessing line by line.
How do you keep the tagging clean?
- Set the tag where the transaction is created, not afterwards. If invoices come from a CRM or a billing tool, make sure it passes the location through.
- Run a monthly report of untagged income and expenses and clear it to zero.
- Don't rename options mid-year. Add a new one and retire the old one, so last year's reports still read correctly.
Plans and features change. Check Intuit's and Xero's current documentation before you set up, and check with your accountant before you restructure the books.
Paycove posts each payment and recovered card fee to the right location's QuickBooks or Xero file, so nobody tags them by hand.
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