For multiple-state accounting, you typically need to track sales, payroll, and both property owned and rented by state. I’m not going to get into too much detail here, but you need this level of granularity because state business tax returns require you to apportion your taxable income using state-level sales, payroll, and property data. (For more information about this, ask your accountant.)
To track sales, payroll, and property data by state, you can either use classes for each state or set up a Chart of Accounts that supplies state-specific income, payroll expense, rent expense, and asset accounts. After you set up this Chart of Accounts, all you have to do is use the correct state’s class or accounts to record transactions.
If you do business in both Washington and Oregon, for example, you record sales in Oregon as Oregon sales and sales in Washington as Washington sales. You’d treat other income accounts and all your payroll expense accounts the same way. If you use class tracking for sales in different states, you don’t need duplicate accounts for each state.