Currently, WorkGuru will sync the current tracking category list in full from Xero.  If you need to add, remove or update the categories, these need to be done in Xero and re-synced with WorkGuru.   What you can manage in WorkGuru is the visibility of the tracking categories synced from Xero.

From the accounting settings dashboard (Accounting -> Settings) click on the Manage Reporting Categories link.

The reporting categories dashboard will then allow you to click Mark as Inactive on the category option that is not required in WorkGuru. Marking the top level line marks all options in that category inactive. If you mark all options and the category inactive, it will remove the drop-down from the project/production job.  

If the reporting categories dashboard is not available, confirm you have synced your reporting categories from Xero from the Xero dashboard (Accounting -> Xero).  Note:  This is a point in time synchronisation.  If categories are updated in Xero they will need to be re-synced to WorkGuru.   The re-sync will only add additional options, it will not update.