> ## Documentation Index
> Fetch the complete documentation index at: https://docs.pluvel.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Categorize transactions

> Organize your transactions for accurate financial records.

A transaction without a category is just a number. Is that $127 from AWS an operating expense or a cost of goods sold? Is that $500 from "Smith, J." revenue or a loan repayment?

Categorization turns raw transactions into useful financial data. It's what makes your P\&L accurate, your tax deductions legitimate, and your business insights meaningful.

## Why categorization matters

**Accurate reports** — Your Profit & Loss, Balance Sheet, and other reports depend on correct categorization.

**Tax deductions** — Expenses need proper categories for tax time. Office supplies vs. meals vs. equipment — each has different tax treatment.

**Business insights** — See where your money actually goes. Which categories eat up the most cash?

## Categorize a transaction

<Steps>
  <Step title="Go to Banking">
    Click **Banking** in the sidebar to see your transaction list.
  </Step>

  <Step title="Find uncategorized transactions">
    Uncategorized transactions are highlighted. You can filter to show only uncategorized items.
  </Step>

  <Step title="Click on a transaction">
    Open the transaction detail panel.
  </Step>

  <Step title="Select a category">
    Choose from your chart of accounts. Common categories:

    **Income:**

    * Sales Revenue
    * Service Revenue
    * Interest Income

    **Expenses:**

    * Office Supplies
    * Software & Subscriptions
    * Professional Services
    * Meals & Entertainment
    * Travel
    * Advertising
  </Step>

  <Step title="Add details (optional)">
    * **Memo** — Notes about the transaction
    * **Vendor/Customer** — Link to a contact
    * **Receipt** — Attach documentation
  </Step>

  <Step title="Save">
    Click **Save**. The transaction is now categorized.
  </Step>
</Steps>

## Bulk categorization

For multiple similar transactions:

1. Check the boxes next to transactions you want to categorize
2. Click **Bulk Actions** → **Categorize**
3. Select the category
4. All selected transactions are updated

This is useful for categorizing a month's worth of a recurring expense at once.

## Bank rules

Set up rules to automatically categorize recurring transactions:

1. Go to **Settings → Bank Rules** (or click **Create Rule** from a transaction)
2. Define the condition:
   * If description **contains** "AWS"
   * If amount **equals** \$9.99
   * If vendor **is** "Spotify"
3. Define the action:
   * Categorize as "Software & Subscriptions"
   * Add vendor "Amazon Web Services"
4. Save the rule

New matching transactions are categorized automatically.

[Learn more about bank rules →](/features/accounting/bank-rules)

## Split transactions

Sometimes one transaction covers multiple categories. For example, an Amazon order with office supplies and cleaning supplies:

1. Open the transaction
2. Click **Split**
3. Add line items:
   * \$45.00 → Office Supplies
   * \$22.00 → Cleaning & Maintenance
4. Save

The transaction now appears correctly in both categories.

## Common categories

### Income categories

| Category        | Use for                            |
| --------------- | ---------------------------------- |
| Sales Revenue   | Product sales                      |
| Service Revenue | Consulting, freelance work         |
| Interest Income | Bank interest, investment earnings |
| Other Income    | Miscellaneous income               |

### Expense categories

| Category             | Use for                    | Tax notes                           |
| -------------------- | -------------------------- | ----------------------------------- |
| Advertising          | Ads, marketing, promotions | Fully deductible                    |
| Bank Fees            | Service charges, wire fees | Fully deductible                    |
| Contractors          | 1099 payments              | Requires 1099 filing                |
| Insurance            | Business insurance         | Fully deductible                    |
| Legal & Professional | Lawyers, accountants       | Fully deductible                    |
| Meals                | Business meals             | 50% deductible                      |
| Office Supplies      | Paper, pens, etc.          | Fully deductible                    |
| Rent                 | Office rent                | Fully deductible                    |
| Software             | SaaS subscriptions         | Fully deductible                    |
| Travel               | Flights, hotels            | Fully deductible (business purpose) |
| Utilities            | Electric, internet         | Fully deductible                    |

## Handling specific transaction types

<AccordionGroup>
  <Accordion title="Transfers between accounts">
    When money moves between your own accounts (checking to savings), it's a transfer, not income or expense. Categorize as **Transfer** or use the **Match** feature to link both sides.
  </Accordion>

  <Accordion title="Owner's draws / contributions">
    Money you put into or take out of the business:

    * **Owner's Contribution** — Money you invest
    * **Owner's Draw** — Money you take out
      These affect your equity, not income/expenses.
  </Accordion>

  <Accordion title="Reimbursements">
    If you paid with a personal card and reimbursed yourself:

    1. Record the expense with the correct category
    2. Record the reimbursement as **Owner's Contribution** or offset the expense
  </Accordion>

  <Accordion title="Refunds">
    Customer refund? Categorize as negative income (or a refund account).
    Expense refund? Categorize as negative expense.
  </Accordion>

  <Accordion title="Loan payments">
    Principal and interest are different:

    * **Principal** — Reduces your liability (not an expense)
    * **Interest** — Is an expense (Interest Expense category)

    Split the transaction if needed.
  </Accordion>
</AccordionGroup>

## Tips for efficiency

1. **Categorize regularly** — Daily or weekly is easier than monthly
2. **Use bank rules** — Set them up for recurring transactions
3. **Be consistent** — Use the same category for similar expenses
4. **When in doubt** — Check with your accountant or use a general category
5. **Attach receipts** — Makes tax time and audits easier

## What's next

<CardGroup cols={2}>
  <Card title="Create bank rules" icon="wand-magic-sparkles" href="/features/accounting/bank-rules">
    Automate categorization for recurring transactions.
  </Card>

  <Card title="Reconcile accounts" icon="scale-balanced" href="/guides/money/reconcile-accounts">
    Match your books to your bank statements.
  </Card>
</CardGroup>