How to categorise transactions

Every transaction your business makes has a story. Categorising it puts that story in the right folder so your Profit & Loss and Balance Sheet tell the truth, not a fairy tale.

Why categorisation matters

Your categories link directly to your chart of accounts, which drives all your reports.

• Income categories feed into the top line of your Profit & Loss.
• Expense categories reduce profit.
• Asset and liability categories appear on your Balance Sheet.

If you record personal withdrawals as expenses, your profit will look smaller than it really is. If you log an asset as an expense, your Balance Sheet won’t show what your business actually owns.

How to categorise a transaction in stub

You can categorise transactions directly from your bank feed in either Income or Expenses.

1. Go to your transactions

From the Insights dashboard, click Uncategorised income or Uncategorised expenses to jump straight to the transactions waiting to be sorted.

Or, go to Income or Expenses in your left-hand menu.

You’ll see your connected bank accounts on the right-hand side.

Click the Bank accounts tile to open your account view, then click Categorise.

2. Choose a transaction

You’ll see a list of transactions by date.Select one to open the categorisation window.

3. Pick a category

Click the three dots (⋯) next to the transaction and choose the right category from the list.

• Income options include Sales, Interest Earned, Invoice Payment, Tips & Donations, and Asset Sale.
• Expense options include Advertising & Marketing, Fuel, Cleaning, Contract Workers, Software & Subscriptions, Bank Charges, or Inventory.

TIP: If the purchase will last more than a year, for example a laptop or a camera, use Asset purchase instead of an expense.

4. Add extra details

Add a short description, such as “Pick n Pay stock” or “MTN airtime.”Select or add a supplier or customer.

Click + VAT to apply the right rate if you’re registered.You can also add tags, notes, or attach a receipt or invoice.

5. Save

Click Save.The transaction moves out of “Uncategorised” and updates your reports automatically.

Example:
You buy shampoo stock for R1,200. Categorise it as Inventory, not Office Supplies.
You receive payment for an invoice. Categorise it as Invoice Payment.
You withdraw R2,000 for personal use. Categorise it as Drawings, not an expense.
You buy a salon chair. Categorise it as an Asset purchase, not Equipment Rental.

Special cases to watch for

Some transactions need a little extra care:

• Customer invoice payments: use Invoice Payment to link to the right invoice.
• Supplier bill payments: use Supplier Payment to close the bill.
• Transfers between accounts: use Inter-account transfer so it doesn’t count as income or an expense.
• Owner’s personal spend: log it as Drawings, not an expense.
• Loans: split the repayment into principal (which reduces your liability) and interest (which counts as an expense).
• Assets: record them in Assets, not Expenses, then depreciate them over time.

Tips for clean, consistent categorisation

• Clear out uncategorised transactions weekly so reports stay accurate.Be consistent. Rent should always be Rent, not sometimes Office and sometimes Overheads.
• Check VAT codes carefully to avoid over- or under-claiming.
• Think ahead. Clean categories now make tax season and reporting much easier.
• Use clear descriptions your future self will understand. “Shoprite cleaning products” is better than “Purchase.”