I have a client with two companies with separate Tax ID's and two separate checking accounts. One is for management of licensing fees and the other sells the products and equipment. Since it is a relatively new company, there are a lot of cash flow issues. I know I can use classes and have two checking accounts under one file but is that the best way, or should I set them up as two separate QB files and just try to manually keep up with all the transfers, etc. Ultimately, they want to be able to report each company separately.
Since they are separate companies with separate tax IDs, each company should be set up as a separate file in QuickBooks. Classes would be used if they were separate departments in the same company.
You also need to be careful with how you handle transferring funds between them. You will need to set up Loan Payable and Loan Receivable accounts. One company can't just give money to another company, especially if they are incorporated. I understand that cash flow can be an issue but at minimum there needs to be some type of loan set up and paid back when one of the companies lends money to the other.