Why is it important to select the right category?
Keeping your bookkeeping up to date can really help you maximise your profit at year end. It is an important part of ensuring your tax bill is correct and you are not overpaying (or worse, underpaying) HMRC.
Additionally, it will impact any financial reports or analysis you or your accountant does on the financial health of your business. Selecting the right categories means you get a more accurate view of how your business is performing.
How does Countingup help you to select the right category?
Countingup automatically categorises your transactions as soon as they happen. It’s one of the ways we save you time, but it’s not perfect, so you may want to update some of the categorisations following these steps:
- Open the Countingup app
- Tap on the category below transaction
- Select the category and tap to confirm
Alternatively, you can give access to your accountant so that they can do this for you.
What are the category types and what do they mean?
There are 5 category types.
Income: Money earned from the sales of products or services.
Cost: spend to produce the goods or services sold (e.g. advertising, staff and premises costs).
Asset: Something owned that carries an expected future benefit (e.g. cash or equipment).
Liability: A debt or obligation that the business owes (e.g. loan).
Equity: What your business is worth. (e.g. personal transfer).
Can I customise my categories?
We've had a lot of requests for custom categories but in order to save you time when you have to submit your tax returns to HMRC, we have decided to only include categories defined by HMRC for Making Tax Digital (don’t forget you can always add a photo to your transactions or a note to describe the transaction further).
Will there be any more categories?
Yes. One of the improvements we’ve made is to add types of categories which tidies up the interface and enables us to add and improve categories. We’ll keep working on this and we’ll be releasing new categories soon!