Party time
They are new and great, QuickBooks Online Categories just makes SOOO much sense. So like the celebration of a 'newborn' everyone say hello to the new way to group like services and items together. Intuit recently unveiled the new “Categories” to replace the Parent and Child relationships for Services and Items in QuickBooks Online. So instead of a Service or Item with many sub-items or even layers of sub-items, Categories are now the header in which all the services or items belong.
Image this (it won’t be hard I promise) you are an accounting firm and you have clients whom you provide services to, but you have different types of services for different types of clients and you would like to create reports which details the type of services you provide and how profitable each service is (told you it wouldn’t be hard to image). Now let’s think about what that would look like… First of all let’s say you do some fixed pricing and call that Fixed Bookkeeping/Accounting for ongoing services, and Projects for new and temporary engagements plus, some Tax work, and lastly some Support and Setups. Sound about right? One possibility for setting up that structure would be using each type of work and creating a Category them. So your categories would be:
Categories: Accounting/Bookkeeping Engagements, Projects, Tax, Support, Setups
Now let’s say in each Category you have a type of work you do, so this is where you would place your services. Let’s separate Bookkeeping engagements even further by making Bookkeeping a sub-category with Weekly, Monthly and Quarterly engagements items, now when reports are created we can have a deeper understanding of the work being performed. After recording services you can build a report to show where the greatest income was made, it is easy to see in a report using the new category-based structure.
New Category featured report
Need to set-up Categories in your QBO file for the first time, here are the steps to do it:
Gear > Products and Services > Manage Categories > New Category
Adding Categories to QBO - Step 1
It’s so easy to switch! If you already have items converting items can be done in a few clicks. While in the products and services screen select all the items you wish to place in the category (multiple services can be selected at a time) then Assign Category.
Categories set-up in QBO
Note: Parent items cannot be converted into categories so they will likely need to made inactive to keep from muddying up the items list.
Meaningful Reports
Because you can’t post to a Category it has no value which means it is truly for 'grouping together like items' and allows you to search and build meaningful reports.
What’s powerful is to be able to see how and where the bulk of income in earned and to be able to make management decisions based on those findings. Great reports for inventory and services are located under All Reports > Manage Products and Inventory, you may want to then choose one of my favorite reports "Sales by product/service summary". Every time I open this report after having set-up my categories, it's like a regular party in my QBO file. So everyone is invited to celebrate the new QuickBooks Online 'categories' with me, send me a comment on how you 'love' the new categories too.
A Note from the Editor: I will take 'Editorial privilege' to perhaps 'rain a little' on Liz's QBO Party....and that is to say that I don't think anyone is yet aware how this new feature may impact the ability to return a QuickBooks Online file to QuickBooks Desktop should the need arise. But it makes sense that if the category feature does not exist in QB Desktop, the use of this new feature in the QBO file can only further complicate the return of the file to desktop. So you may want to keep this in mind, especially if you are just converting a file to QBO from desktop for the first time, and there is any possibility that your client might want to 'go back', if they don't like the QBO experience. In these cases I would definitely recommend that you hold off on incorporating the category structure until you are certain your cliient's file will remain in QBO.