How to categorize transactions in QuickBooks Online

Categorizing transactions in QuickBooks Online is the process of assigning a category to each transaction. This helps you to keep your books accurate and organized, and it also makes it easier to track your finances and make informed business decisions.

There are many different categories that you can use in QuickBooks Online, but some of the most common ones include:

• Income: This category includes all of your income transactions, such as sales, commissions, and interest.
• Expenses: This category includes all of your expense transactions, such as rent, utilities, and supplies.
• Assets: This category includes all of your assets, such as cash, accounts receivable, and inventory.
• Liabilities: This category includes all of your liabilities, such as accounts payable, loans, and credit card debt.
• Equity: This category includes your owner's equity, which is the difference between your assets and liabilities.

When you categorize a transaction, you are essentially telling QuickBooks Online how to classify that transaction. This information is then used to generate reports and financial statements.

For example, if you categorize a transaction as "Income", it will be included in the "Income Statement" report. If you categorize a transaction as "Expense", it will be included in the "Expense Statement" report.

To categorize transactions in QuickBooks Online, you can follow these steps:

1. Go to the Transactions tab.
2. Select the transaction that you want to categorize.
3. In the Category field, select the category that best describes the transaction.
4. If you don't see the category that you need, you can create a new one.
5. Click Save.

Here are some tips for categorizing transactions in QuickBooks Online:

• Use specific categories. The more specific the category, the better. This will help you get more accurate reports later on.
• Use consistent categories. Make sure to use the same categories for similar transactions. This will make it easier to find and track your transactions.
• Review your categories regularly. As your business grows, you may need to add new categories or remove old ones.

Here are some of the most common categories in QuickBooks Online:

• Income: This category includes all of your income transactions, such as sales, commissions, and interest.
• Expenses: This category includes all of your expense transactions, such as rent, utilities, and supplies.
• Assets: This category includes all of your assets, such as cash, accounts receivable, and inventory.
• Liabilities: This category includes all of your liabilities, such as accounts payable, loans, and credit card debt.
• Equity: This category includes your owner's equity, which is the difference between your assets and liabilities.

By categorizing your transactions correctly, you can keep your books accurate and organized. This will make it easier to track your finances and make informed business decisions.