How to Create an Expense Category

Before recording any expenses in the system, it is important to set up your expense categories. These categories help organize and classify all expenses for better tracking and reporting.

Follow the steps below to create a new expense category:

Step 1: Access the Expense Categories Page

  1. Navigate to the software sidebar.

  2. Locate the Expenses dropdown menu.

  3. Click on Categories.

  4. The list of existing Expense Categories will appear.

    • You will see a default category named Operational Expenses.

    • This default category can be edited but cannot be deleted.

Step 2: Create a New Expense Category

  1. Click on the Create button located at the top right corner of the page.

  2. The Create Expense Category form will load.

  3. Fill in the required fields:

    • Category Name

    • Note (optional)

    • Status

      • By default, the status is set to Active.

      • You may change it to Inactive if you no longer want to use the category in the future.

Step 3: Save the Category

  • After completing the form, click Save to create the expense category.

  • If you want to clear the form and start over, click the Reset button at the bottom.


Importance of Creating Expense Categories

Setting up expense categories is crucial for effective financial management. Here’s why:

  • Improved Expense Organization
    Categorizing expenses allows you to keep all financial records neat, structured, and easy to navigate.

  • Accurate Financial Reporting
    Categories ensure that reports such as profit & loss, expense summaries, and tax reports are accurate and meaningful.

  • Better Decision-Making
    Understanding where money is being spent helps you identify wasteful spending and adjust budgets accordingly.

  • Enhanced Budget Control
    Categories make it easier to assign budgets to specific areas and track spending against those budgets.

  • Faster Record Entry
    Having categories set up before recording expenses speeds up data entry and reduces errors.

  • Regulatory and Audit Compliance
    Well-organized expense categories make audits smoother and help maintain clean financial records.