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Classes, Categories, and Tags, oh my!

Where is your money coming from? Where is it going? You can use classes, categories, and tags in QuickBooks Online to find out. Read more to learn the best uses for each.


QuickBooks Online offers users numerous ways to track sales, expenses, and profitability. So that you have a customized accounting system that suits your business perfectly. This month, we're going to explore three QBO features: Classes, Categories, and Tags.


Classes


Classes is a feature available to QuickBooks Online Plus and Advanced users that allows business owners to track important segments of their businesses, like departments, product suites, etc. This becomes particularly helpful when viewing the Chart of Accounts.

It's best to keep your list of Classes streamlined and minimal; think, "what are the biggest buckets in my business?" and go from there. Some of the platform's standard reports are also designed specifically for these tools, like Sales by Class and Profit and Loss by Class, so you can get the insights you need from your data.


Categories

You can assign Categories to products and services of the same type to gain insight into your sales and inventory. The benefit of using categories is that when it comes time to pull reports, your products and services are organized in a way that makes sense to you.


There’s a different set of Categories that you’ll use when you record bills and expenses. These are important for reporting and tax purposes. You can also add a Location field to sales transactions so you can track sales by stores, sales regions, or counties, for example.

An added benefit of using Categories occurs when running a sales report: QuickBooks will automatically subtotal each category so you can analyze your sales data with greater ease.

Tags

We've touched on the uses and benefits of Classes, Categories, and Locations, but the majority of this month's eNewsletter will be focused on a fairly new feature to QuickBooks Online called Tags. These are customizable labels that you can assign to transactions (invoices, expenses, and bills). They’re more flexible than the tools mentioned above because they allow you to track your money any way you want. They don’t affect your books, and they’re not included in the customization criteria for reports. But there are two reports specifically designed for them: Profit and Loss by Tag Group and Transaction List by Tag Group.

Creating Your Own Tags


Before you create a tag, you need to create a Group. Groups consist of related tags that share a common theme. For example, say you do some event planning. You might have a group titled Events. Individual events might read, for example, Grayson Wedding, Spring Art Show, and Hillman Conference.

Once you’ve given your group a name, you can start adding tags to it.

To get started, click the gear icon in the upper right. Under Lists, click Tags to get to the tool’s home page. (You can also navigate here by first clicking on the Transactions link in the toolbar, then the Tags tab.) Click New, then Tag group. A vertical panel slides out from the right. Enter a name in the Group name field. Click the down arrow to select a color, then click Save.

Enter your tags one by one in the fields labeled Tag name. Click Add after each one until your list is complete. Click the Edit button to make any changes. When you’re finished, click Done. The main Tags page will open again, and you’ll see your new group under Tags and Tag Groups. Repeat to add as many as you’d like, up to 300 tags.

Using Tags

You can add tags to any transaction that contains a field for them.

Let’s look at how you’d use tags in an expense. Click the Expenses link in the toolbar, then New transaction | Expense in the upper right. Click the down arrow in the Payee field in the upper left and select + Add new. Enter Billy’s Bridal in the Name field Leave the Type as Vendor and click Save. Back on the Expense screen, select the Payment account, Payment date, and Payment method for the expense (reference number is optional).

Directly below those fields, you’ll see the Tags field. Click Manage tags if you need to add or edit one; the right vertical pane you saw before will slide out. Otherwise, click in the field below Tags. Your list of tags will drop down. Select Grayson Wedding to move it into the field. You can assign as many tags as you’d like to transactions, but you can only select one tag from each group. Finish the expense and save it.

Go back to the Tags home page, and you’ll see that there’s a link to one transaction in the Events row. At the end of each row is the Action column, where you can run a report, add a tag, and enter or delete a group. Your expense total appears in the Money Out (by tag) box above it.

Tags are a great addition to the tools QuickBooks Online provides to help you track incoming and outgoing funds. If you’re not familiar with the others we mentioned at the beginning of this column and want to learn how to explore them, let us know. We’d be happy to walk you through their use and help you understand how they can make your finances more understandable.

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