Taxonomic sufficiency (TS) has been proposed for assessing community composition and environmental impacts as a way to balance the need to indicate the biology of the organisms present with time and effort needed for species identification. TS has been applied most often to marine and freshwater macroinvertebrates, but tests of its usefulness are lacking for other freshwater groups. We analyzed the effects of taxonomic resolution, functional groupings, and data transformation on multivariate community patterns in periphyton, macrophytes, macroinvertebrates, and fishes, and on the quantification of biodiversity and environmental gradients. The applicability of TS differed strongly among taxonomic groups, depending on the average taxonomic breadth of the species sets. Numerical data resolution had more pronounced effects on community patterns than taxonomic resolution. Richness was strongly affected by data aggregation, but diversity indices were statistically reliable up to order level. Taxonomic aggregation had no significant influence on ability to detect environmental gradients. Functional surrogates based on biological traits, such as feeding type, reproductive strategy, and trophic state, were strongly correlated (ρ = 0.64–0.85) with taxonomic community composition. However, environmental correlations were generally lower with data aggregated to functional traits rather than to species. TS was universally applicable within taxonomic groups for different habitats in one biogeographic region. Aggregation to family or order was suitable for quantifying biodiversity and environmental gradients, but multivariate community analyses required finer resolution in fishes and macrophytes than in periphyton and macroinvertebrates. Sampling effort in environmental-impact studies and monitoring programs would be better invested in quantitative data and number of spatial and temporal replicates than in taxonomic detail.