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1. Tracking department budgets within a larger company-wide budget can be challenging, especially when General Ledger (GL) accounts are shared across departments. Since you’re using QuickBooks Online (QBO), you can implement a structured approach to manage and track micro-budgets for your departments effectively. Here’s a detailed guide:

   Setting Up Your Budget Management Structure

   1. Utilize Classes for High-Level Branch Budgeting:

   2. As you mentioned, you are already using Classes for branch budgeting. This approach is effective for high-level categorization and understanding the financial performance of broader segments.

   3. Create Sub-Budgets for Departments:

   4. Since QBO does not support transaction splitting between departments directly using Departments or Tags, you may need to get creative by using a combination of Classes and some custom tracking mechanisms like memo fields or additional line items.

   Steps to Track Budgets by Department

   A. Use Classes for Branches and Departments:

   • Structure Classes:
   • Keep using Classes for the primary branch structure.
   • Create subclasses under each branch specifically for each department if not already done. This will help differentiate expenses related to each department.

   B. Allocate Budget Using Classes:

   • Allocate Percentages:
   • When you allocate a percentage of the total spend, such as the 1% for meals and entertainment, divide this allocation across your department subclasses.

   C. Implement Tracking with QBO Features:

   1. Use Sub-Classes to Track Departmental Expenses:

   2. Assign expenses to department subclasses when entering transactions. For example, for a meals and entertainment expense, split the transaction line items for each department subclass to match their respective budget allocation.

   3. Utilize Custom Reports:

   4. Generate custom budget vs. actual reports using Classes and subclasses to monitor the department spending relative to their assigned budgets.
   5. Analyze these reports to ensure that departments are staying within their allocated budgets.

   D. Enhance with Custom Solutions:

   • Vouchers or Memos:

   • Use memo fields in transactions to include additional details such as department identifiers if splitting directly using classes is too cumbersome or not feasible due to overlap in certain transaction types.

   • Communication:

   • Regularly distribute budget vs. actual reports to department heads to keep them informed about their spending relative to their budget allocations.

   E. Consider Third-Party Integrations:

   • Explore Apps:
   • Consider integrating third-party applications available in QBO

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