Back in 2019 we told you 'first' that tagging was on its way to QuickBooks Online and almost nobody believed us, it was kind of like when we told you mileage reporting was on its way too. Just because we tell you things 'months-and-months' in advance (because we have 'a great big crystal ball') is no reason to not believe us!!!
Well anyway, then just under a year ago Liz and I gave you even more details about 'Tags for QuickBooks Online' because they had just been released as a 'Beta' feature. I also gave you a 'history of tagging' in that article, and I do mean "a history", going all the way back to 'caveman' (and I guess, 'cave-woman') days.
But the reality is that even though I harped a lot about how tagging as "a system without control, or some fundamental guidelines as to how the tags should be used, might become not much more than 'graffiti'," (paraphrased). These tags were apparently liked so well by those who really want to tag their accounting with graffiti that they are here to stay because they are now an actual feature across all the QBO SKUs, so almost all QBO users should have tags available to them by now, or very soon will have.
Tags give you a way to... well, 'tag' things, so that you can track them without impacting the accounting (hopefully). This means if the 'sky is blue and you want to tag it red' then tag it red...., NO, really it means that QBO users can 'tag' most 'Money-in' and 'Money-out' transactions when posting them either manually or during the 'bank feeds'. So, if a QBO user wants to 'tag' an expense
Using 'tags' on a QuickBooks Online Expense transaction to tracking 'user' preferred information.
QBO-Tags_Jan-2021_Fig-01
QuickBooks has also give users a new 'Tags' tab under Transactions that allows users to view and manage tags on transactions where tags have been used.
QBO-Tags_Jan-2021_Fig-03
From the 'tags tab' QBO Users can:
- See Money-In/Money-Out based transactions within their tag groups
- Manage their tags and tag groups
- Easy run reports regarding tagged transactions
- Batch add/remove tags to their transactions
When I say, run reports regarding tagged transactions, QuickBooks also has included two (2) new reports that are 'tag' specific, a new 'Profit and Loss by Tag Group' (example shown below) report and a Transaction List by Tag Group report. These reports will be great assuming the data is factual which means that users are consistent in their tagging.
New Profit & Loss by Tag Group Report
Tag-P&L-Report_Jan-2021
Until now, there have always been some rules that we applied when using QuickBooks, especially related to categorization. One such rule for example has been, "once a class, always a class." If you ever used the class feature within a QuickBooks company file (Desktop or Online), then you always used the class feature on every single transaction, you never left a transaction 'unassigned' with regard to class. This made certain that every transaction could be properly tracked back to 'Reports by Class'. In other words, it avoided "un'-class'-ified" transactions.
But users who wanted 'tags' seemingly didn't want the rigidity of such 'accounting rules' in the first place, they wanted their own flexibility and so the freedom of 'tags were born.' And as I paraphrased from my earlier article a few paragraphs back... 'any system without control, or some fundamental guidelines on how the tags should be used, becomes not much more than 'graffiti'.'
So, even with all the 'great' functionality that QuickBooks has built into the tags features, the real question will be, "how long can day-to-day QuickBooks users' keep their 'tag' data clean?" In other words, how long can they remain consistent with keeping transactions properly tagged?
Accountant's and Bookkeepers may not worry about this initially. They may view tags as a way to simply keep the users out of the real accounting classification mechanisms like 'accounts', 'class' and 'projects', etc. But, I predict it won't be too long before users are asking, "why doesn't my 'tagged' data related to job costs correspond to your 'projects' reports, or P&L by class?"
That's when the accountants and bookkeepers are going to be forced to dig into all that 'tagged' data and reconcile between 'tag reporting' and 'real accounting', because those users will be certain that 'they are right' and 'you (the accountant or bookkeeper) are the one that is wrong'.
So, as I said, "Tag, who... is it?"