QuickBooks Online Tip: How to Categorize Transactions
One of the most important (and often overlooked) parts of using QuickBooks Online (QBO) is properly categorizing your transactions.
When your expenses and income are categorized correctly, your financial reports are clear, your taxes are accurate, and your stress levels drop.
Here’s how to do it right—without getting overwhelmed.
✅ Why Categorization Matters
Helps you track profitability by expense and income type
Ensures you're not missing deductions come tax time
Keeps your books clean and ready for reporting or funding
🧾 How to Categorize a Transaction in QBO
Go to the Banking tab
Find the transaction feed from your connected bank/credit card accounts.Review each transaction
Look at the description, vendor, and amount.Choose the correct category
QBO will suggest a category, but you can change it. Use categories that align with your chart of accounts (e.g., "Office Supplies," "Advertising," or "Client Income").Add a memo if needed
Helpful for future reference or audits.Use bank rules for recurring transactions
Set rules for vendors you use often to automate the process and save time.
🛠️ Pro Tips
Create subcategories for more detail if needed
Avoid the “Uncategorized” buckets — that’s where chaos lives
Revisit your categories monthly to stay on track
Use the “Profit & Loss” report to spot miscategorized expenses or income
FAQ
What happens if I miscategorize a transaction?
It can distort your reports and cause you to miss deductions. Regular reviews help catch these mistakes early.
How do I know which category to use?
Use your chart of accounts as a guide. When in doubt, ask your bookkeeper or reference QuickBooks help articles.
Should I categorize personal expenses?
If they’re in your business account by mistake, categorize them as “Owner’s Draw” or “Personal” — but avoid mixing accounts in the future.
Is this something DBR can help with?
Absolutely. We offer QBO training, cleanup services, and a full support community.
📚 Want ongoing support, walkthroughs, and expert feedback?
Join the DBR Bookkeeping Skool Community to get hands-on help with categorization, QuickBooks, and clean bookkeeping:
👉 https://www.skool.com/dbr-bookkeeping-8561/about
Let’s start Doing Business Right.
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