Why is it important to select the right category?
Categories are the backbone of accounting systems. Categorising transactions correctly is essential to give you an accurate view of:
- the financial health of your business, so you can make the best decisions
- your tax bill, so you don’t overpay or underpay
Keeping your transactions in the correct categories within the Countingup app also ensures your financial reports and tax estimates are more accurate.
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 should check them.
You can get the meaning of a category by tapping the ‘i’ icon next to it in the category picker.
Learn more about how to categorise your expenses here.
Alternatively, you can give access to your accountant so that they can check your transaction categories for you.
What are the category types and what do they mean?
There are five category types. They determine the accounting report the category is in. Find more about accounting reports here.
Income: Amounts your business has received from sales or other income.
Expense: Amounts you spend to produce the goods or services you sell (e.g. advertising, staff and premises costs).
Asset: Things your business owns, including things owed to your business. For example equipment, your account balance or outstanding sales invoices.
Liability: Things your business owes but hasn’t paid for yet. For example an outstanding invoice from a supplier or an unpaid loan.
Equity: How much your business is worth at a point in time. It’s the amount your business owns (assets) minus the amount your business owes (liabilities).
Can I customise my categories?
In the future, we want to allow you to file taxes from the app. In order to make this easy for you, we need to keep our categories aligned with HMRC tax return fields. This is why we don’t currently support you in adding your own categories.
For sole traders, the categories in the app have a strict mapping with HMRC categories.
For limited companies, HMRC guidance is not as strict, so we have added cost categories to give you more granularity on your spending.
Will there be any more categories?
Yes, you can tell us which categories you need and why by answering a 2-minute survey here. We are constantly improving the product to make it easier for you to run your business.