When you run a limited company, sorting your transactions into the right categories keeps your books accurate and your tax estimates spot-on. The app provides a comprehensive list of categories mapped to standard accounting types: assets, equity, income, expenses, and liabilities. This guide helps you understand what each category means so you can confidently manage your business accounts. đ
Let's break down the categories by their accounting type.
Assets
Assets are things your business owns, or money that is legally owed to you:
Buildings: The cost of purchasing property owned by your business.
Buildings accumulated depreciation: The total drop in your building's value since your business first bought it.
Equipment: The cost of buying business equipment, such as a computer, machinery, or mobile device.
Equipment accumulated depreciation: The total reduction in your equipment's value over time.
Motor vehicles: The cost of buying vehicles to be used by your business.
Motor vehicles accumulated depreciation: The total drop in your business vehicle's value over time.
Plant and machinery: The cost of larger, permanent items such as built-in factory machinery.
Plant and machinery depreciation: The total reduction in value for your plant and machinery assets.
Intangibles: Non-physical assets owned by your business, such as trademarks, patents, or copyrights.
Accumulated amortisation: The total reduction in value for your non-physical assets over time.
Inventory: The value of the stock you currently hold to sell to your customers.
Trade debtors: The total value of sales invoices you have sent out that have not yet been paid.
Cash: The total funds currently held in your business account balance.
Petty cash: Physical cash your business keeps on hand for small everyday expenses.
Prepayments: Things you have paid for in advance before actually receiving the service.
Accrued income: The value of income you have earned but have not yet been officially invoiced or paid for.
Equity
Equity represents the overall financial value of your business:
Capital: Money invested into the business by shareholders, excluding loans.
Dividends: Business profits paid out directly to your company shareholders.
Retained earnings: The cumulative profit or loss your business has made since the day it started trading.
Income
Income tracks the money your business brings in:
Sales: Money received from clients or customers purchasing your products or services.
Other income: Any extra revenue streams, such as interest earned from your business account balance.
Expenses
Expenses are your day-to-day business running costs. Note: Several of these categories are not eligible for tax relief from HMRC, meaning they cannot be used to lower your tax bill.
Admin: General office costs, including stationery and printing.
Advertising: Marketing, promotions, and advertising campaigns.
Amortisation: The drop in value of non-physical assets. Note: This expense is not eligible for tax relief.
Bad debt: Money owed to your business that you know will never be recovered or paid back.
Buildings depreciation: The drop in your property's value over a specific period. Note: This expense is not eligible for tax relief.
Corporation Tax cost: Your calculated Corporation Tax bill before you make the actual payment. Note: This expense is not eligible for tax relief.
Entertaining clients: The cost of hosting or entertaining clients. Note: This expense is not eligible for tax relief.
Entertaining staff: The cost of hosting events, meals, or socials for your employees.
Equipment depreciation: The drop in value of items like computers or phones. Note: This expense is not eligible for tax relief.
Financial charges: Provider fees, such as your monthly account plan and transaction fees.
Interest paid: Interest owed or paid on business loans, late payments, or mortgages.
Motor vehicles depreciation: The drop in value of your business vehicles. Note: This expense is not eligible for tax relief.
Other costs: A fallback category to use only if you cannot find a more precise match for your expense.
Plant & machinery depreciation: The drop in value of large machinery. Note: This expense is not eligible for tax relief.
Premises costs: Running costs for your workspace, including rent, business rates, and utilities.
Professional fees: Costs for expert services, such as solicitors, or filing fees paid to Companies House.
Purchases: Wholesale stock or goods you buy specifically to resell to your customers.
Repairs: General maintenance, fixes, and renewals for your business property or equipment.
Staff: Employee wages and salaries, excluding external contractor costs.
Travel: Business travel costs such as fuel, train tickets, or flights.
Uncategorised: A temporary slot for unrecognized costs. Try to update these quickly to keep your financial reports accurate.
Subsistence: Food and drink costs while you are traveling out of the office on business.
Accountancy fees: Professional fees paid for bookkeeping and accounting services.
Computer hardware and software: Accessories, keyboards, or software subscriptions used for your business.
Mileage and motor expenses: Reclaimed business mileage or general running costs for business vehicles.
Office equipment: Low-cost office items like desks, chairs, or keys.
Postage: Shipping, stamps, delivery fees, and courier costs.
Phone and internet: Your business mobile or broadband bills.
Web hosting: The cost of keeping your business website online.
Charitable donations: Official donations made to charity directly from your business.
Insurance: Business protection premiums, such as public liability, contents, or employer indemnity insurance.
Pension payments: Contributions paid directly into a workplace pension plan.
Subscriptions: Recurring costs like professional trade memberships or business magazines.
Use of home: The proportion of your home utility bills that relates directly to working from home.
Materials: Raw parts or tools bought to manufacture your products or complete a job.
PAYE/NI: Payroll tax and National Insurance payments sent to HMRC. Note: This expense is not eligible for tax relief.
Formation costs: The initial legal fees for setting up your limited company. Note: This expense is not eligible for tax relief.
Liabilities
Liabilities represent money that your business currently owes to others:
Trade creditors: Unpaid supplier invoices or bills you have received but haven't settled yet.
Accruals: The value of services or products you have used but have not yet been officially billed for.
Income in advance: Money customers have paid you before you have delivered the goods or services.
VAT: The amount of Value Added Tax your business owes to HMRC, or outstanding amounts you are reclaiming from them.
Corporation Tax liability: The final amount your business owes to HMRC for Corporation Tax.
Director loan account: Money your business owes to a director, or money a director has borrowed from the company.
Loan: Money borrowed from a bank or third party, excluding directors.
Quick tips for managing categories
If you ever want to check what a category means while sorting your transactions, simply tap the info icon (âšī¸) next to it in the app's category picker. đą
If you still can't find the exact option you need for your business setup, you can share your feedback and let us know what is missing by completing our quick suggestions form here. đ