Your products are the heart of the store, and the way you organise them — especially into product categories — affects far more than just the list of items.
Product categories typically control several things at once:
Accounts — how sales and cost of goods are posted.
Inventory — how goods are treated and valued.
Reports — how you can filter and group your figures.
If the categories are well considered from the start, you get clean reports and correct bookkeeping almost for free. If they are messy, you work against the system afterwards.
Which categories fit your assortment.
Which default settings (VAT, accounts, inventory handling) each category should have.
Read more in Product register setup and Products.