Quickbooks supports the use of categories to organize transactions. Categories make it easier to track your business’s expenses. Rather than keeping all your expenses grouped together, for instance, you can split them up into relevant categories. Quickbooks doesn’t require the use categories, but leveraging this feature can make a world of difference in your financial accounting efforts. How do you add new expense categories in Quickbooks exactly?
Steps to Creating a New Expense Category
You can find the option to add new expense categories in your chart of accounts. To get started, log in to Quickbooks and click the “Accounting” menu, followed by “Chart of Accounts.” Next, click “New” in the top-right corner. You can then choose “Expense” or “Other Expense” under the “Account Type” option. When finished, select a detail type for the expense and enter a name for the new category. You’ll also see a field for number and description. To complete the process, click “Save and Close.”
Keep in mind, Quickbooks Self-Employed doesn’t support the creation of expense categories. If you use Quickbooks Self-Employed, you’ll have to choose from one of the software’s default categories.
How Expense Categories Work
Expense categories work by allowing you group similar transactions together. You can create categories for your business’s various products or services. Alternatively, you can create them for your business’s expenses. Categories are simply used for classification purposes. In Quickbooks, they allow you to group similar types of expenses together.
There’s really no wrong way to use expense categories as long it helps you track your business’s expenses. If you operate a retail store, for example, you may want to create an expense category for utilities and another expense category for inventory purchases. With these expense categories, you can quickly see how much money your business has spent on utilities and inventory over an extended period. Without expense categories, utilities and inventory would be grouped together, thereby making it difficult to distinguish between these two expenses.
An expense category is a method by which you can group similar business-related expenses together in Quickbooks. Like other categories, Quickbooks doesn’t require them. Expense categories is an optional feature that won’t affect your business’s recorded transactions. Nonetheless, they can prove useful if your business has a lot of expenses, particularly different types of expenses.
Did this tutorial work for you? Let us know in the comments section below!