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 april@sanddollarbookkkeeping.net or call 239.823.3937.
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