In QuickBooks Online, the tag feature seems to be underused by a lot of bookkeepers, despite the simplicity of using it. The reason why could be due to redundancy in the eyes of some, or the lack of necessity in the eyes of others. So we will be taking a look at what the tag feature is along with how to make the best use of it.
To start with, we need to define what tags are. These are labels that can be applied to transactions, allowing you to use them on invoices, expenses, or bills. They do not affect the transactions themselves but serve as an additional method of tracking information about them. And it is within this last part that the true benefit lies.
Tags can both be grouped up and compiled in reports, allowing for a method of tracking how much you expend and how much you receive so long as it has been tagged before. That makes it a lot easier to pick out specific entries or categories without needing to have a sub-account for each instance, which contributes to bloating the Chart of Accounts. For example, let us say you have a sub-account for tracking your marketing and advertising expenses but wanted to know how much you were spending on specific areas, such as a podcast or digital advertising.
If you didn’t have sub-accounts for splitting these two different kinds of expenses within that category, you would need to manually seek them out and then compile them from the report. That would be time-consuming, to say the least. However, if you had tagged them previously then you could easily compare them as part of being in the same tag group but under a different category.
Now, they do have some limitations. They don’t work on clients or items, so you will have to rely on standard reports for those. And even with group tags, it doesn’t replace the use of locations and class for more in-depth reports. But the simplicity and the fact that it doesn’t affect the transactions make it much more accessible even for those who aren’t proficient with bookkeeping to use.
So tag often and get the most out of QBO. Follow our blog for more helpful bookkeeping advice, and don't hesitate to Contact Us. We'll help keep your books in the black.
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