What benefit do tags offer over other methods of transaction tracking in QBO?

QuickBooks Online has proven to be such a lifesaver for small businesses. It offers numerous different ways for businesses to track their revenue, expenses, as well as their profitability. The program continues to work on improving their user experience, using different add-ons that come in handy for business owners. One recent addition is Tags, which has has helped businesses to manage their finances in a more strategic manner.

What are Tags?

There has been considerable confusion regarding what Tags are, and the purpose they can serve. Well, let me simplify it for you.

Tags are customizable labels that assist users to classify their transactions to be more understandable and give needed metrics or information. They can be used across different transactions (both money in and out). Tags create a much-needed layer of flexibility in record keeping of their business.

Not simple enough? Ok. They are labels that can give better financial data to help with decision making for the business.

Tags are somewhat like Classes, Locations, and Custom Fields, but Tags do not have to be used for every single transaction to give insight.

Why are Tags helpful?

Tags are often ignored by businesses because they seem to be redundant. However, they can be highly rewarding in terms of better analysis, and better sorting functionality across the business. Here are a few reasons as to why Tags are so helpful:

· Better Insights: This is perhaps the greatest advantage of using Tags in QuickBooks Online. Let’s take a small florist as an example. Having separate Tags for all different kinds of flowers or occasions, can help the florist determine what products or occasions are most profitable, and focus efforts on them.

· Better Categorization: In a normal course of business, there can be hundreds or thousands of transactions that take place in any given period. In this regard, the sheer volume of transactions are often difficult to individually categorize (and the goal is to keep your Chart of Accounts clean, less is more). But say a business wanted to track costs by marketing campaign or travel costs per trip or per salesperson, Tags can be used for these purposes.

· Stronger Internal Control: Small and medium sized companies often overlook the importance of having strong internal controls. Tags, if used smartly, can add a much-needed layer of internal control in the business. At the end of the week (or month), business owners can revisit these Tags to check for any flagged items, which can be verified. This helps protect the business against possible losses.

· Cost-effective solution: Although businesses also have the option to opt for Classes, they are not in all subscription levels and therefore to utilize them, can cost significantly more. Tags are universally available across all QuickBooks Online versions, and therefore, this might prove to be considerably cost effective for businesses.

Regardless of the business model or industry you are in, Tags will add considerable value and can be implemented in QuickBooks Online with relative ease for better financial reporting.

In case you have any trouble setting up or implementing Tags or want to make best of use of them for your business; Sand Dollar Bookkeeping is here to help.

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For more information please email or call 239.823.3937.

#Bookkeeping #QuickBooks #QuickBooksTags #ProAdvisor #Financialliteracy

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Where is your money coming from? Where is it going? You can use tags in QuickBooks Online to find out.

QuickBooks Online offers numerous ways to help you track your sales, expenses, and profitability. If you’re using QuickBooks Online Plus or Advanced, you can create and assign Classes to transactions to differentiate between, for example, store departments or product lines. Some of the site’s reports are designed specifically for these tools, like Sales by Class and Profit and Loss by Class.

You can assign Categories to products and services to gain insight into your sales and inventory. 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.

What Are Tags?

Then there are Tags, which are fairly new to QuickBooks Online. These are customizable labels that you can assign to transactions (invoices, expenses, and bills). They’re more flexible than the tools we’ve already mentioned – 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

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

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.

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 click on the Transactions link in the toolbar, then click 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.