How to Categorize Business Expenses Automatically?
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Categorizing business expenses is the first step to understanding your finances, making it easier to track spending, create budgets, and make informed decisions.
With powerful AI tools, you can automatically organize expenses from receipts, invoices, and bank statements into tax-ready reports, ready for an accountant or other tax software.
Learn how to categorize your expenses with ReceiptsAI and save hours of manual data entry.
1. Most Common Expense Categories for Freelancers and SMEs
Choosing the correct expense category is important for accurate bookkeeping, especially since tax deductions require an expense to be both ordinary and necessary for your business. To simplify this, ReceiptsAI provides a set of default categories common for freelancers and SMEs.
Common Expense Categories for Freelancers and SMEs.
Pro Tip: Industry-Specific Categories
Choosing the right categories also depends on your industry. Categories should be easy to understand and relevant to your business. ReceiptsAI let's you create custom categories.
2. Categories Tailored for Your Business
Creating Custom Categories
Creating custom categories allows you to track specific expenses. This personalization makes it easier to monitor budgets, and build a financial reporting structure that truly reflects your operations.
Choosing Categories from Templates
Templates let you get started quickly with predefined categories for common business expenses in your industry. You can still create your own categories to further tailor expense categorization to your business.
Pro Tip: Choosing the Right Category Names
Use short, descriptive, and distinctive names. With easy to understand names, it will be easy to set up more accurate categorization with AI.
How to Get Started with Customization:
- Login to ReceiptsAI
- Select the Profile Icon
- Navigate to the Settings Menu
- Select Categories
This menu lets you add, delete, or edit custom categories for your expenses. You can also select from our templates which select common expenses per industry.
3. Automatic Categorization with AI
There's no need to categorize each expense yourself. We created ReceiptsAI so you can save yourself hours of manual work and data entry.
Once you are happy with your categories, you can start uploading your receipts, bank statements, and invoices, and ReceiptsAI takes care of the rest. ReceiptsAI uses powerful AI OCR and AI Classification models that will accurately categorize your expenses automatically. Of course, you can review and modify the categorization as needed.
4. Catching Errors before they happen
Streamlined Manual Review Process
Automated expense categorization can be highly accurate and can be used to cross check your own bookkeeping or ERP system. However, while categorization is automated and precise, we've also ensured that you can manually review categorization quickly and make changes. You can sort by expense type, date, or document, and view all the transactions in a given category to ensure the AI is categorizing expenses correctly. This also makes it easy to track down any errors, missed expenses, or catch discrepancies in your bookkeeping or ERP system.
Setting Up Custom Rules
If you prefer to categorize expenses differently than the automatic categorization, you can set up custom rules to ensure expenses are sorted exactly as you want. This can be especially useful for highly unusual transactions or business-specific transactions.
When setting up custom rules, you can let ReceiptsAI automatically update existing transactions to match the rule, maintaining consistency.
5. Tracking Business Expenses with AI
Once your expenses are categorized, you can start tracking spending and making more informed decisions. ReceiptsAI provides a powerful and lightweight analytics tool to help you quickly monitor your spending. You can also export your categorized expenses to Excel or CSV for further and more detailed analysis.
Powerful and Lightweight Analytics
ReceiptsAI's built in analytics dashboard provides a quick overview of your spending with totals for each category. You can filter by date and document types to view totals in any given time period.
You can drill down further and view all the transactions in a given category or subcategory. This is especially useful for tracking down any errors, missed expenses, or catching discrepancies in your bookkeeping.
Export Expenses to Excel
You can also export your categorized expenses to Excel or CSV. This makes it easy to perform further analysis or share your data with your accountant or other software.
The entire process, from Receipt to Excel, only takes minutes. Simply upload your expenses, and you can quickly export exactly what you need.
