Classes or separate company files: which fits two businesses?
Use separate company files when the two businesses are separate legal entities, like two LLCs. Use classes or locations inside one file when it's one company with two brands, two shops or two departments. Start from the legal setup, then pick the QuickBooks tool that matches it.
Here's how the two setups compare in QuickBooks Online.
| Question | Classes or locations in one file | Separate company files |
|---|---|---|
| Best fit | One company with two brands, shops or departments | Two LLCs or corporations |
| QuickBooks Online plan needed for classes | Plus or Advanced | No classes needed |
| Paid subscriptions | One | One for each company |
| Bank and card accounts | Shared by both businesses in one file | Each file connects only its own accounts |
| Main report for each business | Profit and Loss by Class | Each company's own set of statements |
| Money moving between the businesses | A transfer inside one set of books | Recorded in both files as an amount owed |
| Keeps a separate set of books for each business | No, both share one set | Yes |
What counts as two businesses in QuickBooks?
For the books, treat two legal entities as two businesses, even when one person owns both. IRS Publication 538 says no business is separate and distinct unless a complete and separate set of books and records is maintained for each business. That passage is about using a different accounting method for each business, but it shows how the IRS thinks about separate books.
A class is a tag on transactions inside one set of books. Intuit's guide to class tracking describes it as a way to track income, expenses, or profitability by business segment. Both segments still share one company file, one list of accounts and one bank feed, which is why classes don't turn two LLCs into two sets of books.
Already running two LLCs? The guide to bookkeeping for two or more LLCs in South Jordan covers the bank accounts and the money that moves between them. This post is about the QuickBooks side.
When are classes or locations enough?
They're enough when it's one company with more than one line of business. Intuit says classes track transactions by departments, product lines, or any other meaningful segments, and its location tracking page says locations are for different locations, offices, regions, outlets, or departments of the same company.
A common case is one LLC trading under a second name. The Utah Division of Corporations DBA page says a DBA may be owned by an entity that wishes to transact business under an assumed name. With a class for each brand, Intuit's reports by class include Profit and Loss by Class, so you see each brand's profit without paying for a second subscription.
Check your plan before you build anything. Intuit's usage limits page lists 40 combined classes and locations on QuickBooks Online Plus, unlimited on Advanced, and none on Simple Start or Essentials. Intuit's own advice is to keep it simple, since too many classes can be time consuming to work with.
A South Jordan check before you add a second name
If your business holds a South Jordan city license, look at the name on it before you sell under a second brand. The city's business license FAQ quotes city code: it is unlawful to engage in business using a name other than the name in which the city issued or renewed the license. The same FAQ says a license is issued to the address on the application, so ask the city how that applies before a second shop opens.
What do separate company files involve?
More admin, but cleaner books. Intuit's page on adding another company file says each company you create requires its own separate paid subscription. You can keep the files under one sign-in and switch between them from Settings, and Intuit says the data remains completely separate.
Two details catch owners out. Bank and credit card accounts connected to one company are not visible in another, so each LLC needs its own bank feed set up in its own file. Users set up in one company also don't get access to the others automatically, which helps when a partner or your CPA only needs one of them.
Which one should you pick for your situation?
Go by how the businesses are formed first. These are the common cases.
| Your situation | What to use |
|---|---|
| Two LLCs or corporations, even with one owner | A separate company file for each |
| One LLC selling under a second brand name | One file with a class for each brand |
| One company with two shops or outlets | One file with location tracking |
| One company with two brands and two shops | Classes for brands and locations for shops, inside the Plus limit |
| Two LLCs already mixed in one file | Split them into separate files at a clean month end |
How do you turn on class tracking in QuickBooks Online?
It takes a few clicks in Account and settings, on Plus or Advanced.
- Go to Settings, then select Account and settings.
- Select Advanced, then Categories.
- Turn on Track classes.
- Choose one class for the entire transaction, or one for each row if a single sale covers both brands.
- Tick Warn me when a transaction isn't assigned a class, so nothing slips through untagged.
Those steps come from Intuit's turn on class tracking page, which also covers the plans that include it.
Two businesses in one QuickBooks file?
Book a complimentary discovery call with Melanie. It takes about fifteen minutes, and it's a good time to ask which setup fits your books.
When is it worth handing this to a bookkeeper?
One brand and one bank account is easy to run yourself. The work grows once there are two entities, money moving between them, or a lender asking for one company's numbers on its own.
That's the kind of business Ivory Balance Books works with from South Jordan. Monthly bookkeeping keeps each company file categorized and reconciled, and monthly financial reports arrive by the 10th. If two LLCs already share one file, ask about historical cleanup on the call. There's more about Melanie's practice on the South Jordan bookkeeper page.
