New: Tax-Friendly Categories for your Expenses

by Melina Stathopoulos | September 11/2012 | categorization, expenses

When you log into your FreshBooks account today, you may notice that your expense categories have been updated. Below you will find an outline of why your categories have been updated (to help file your taxes!), and what you need to know if it looks like your old categories have disappeared (fear not, they are found under “other expenses” and all your prior work categorizing your expenses is intact!).

Why have my default categories changed?

As mentioned above, today FreshBooks is rolling out tax friendly categories to make filing your taxes much easier for you, your accountant and your government. These new default categories organize your expenses so they are mapped to categories found on common tax forms in countries such as the US, Canada, the UK, Australia and New Zealand. In addition, FreshBooks now lets you add your own subcategories to the existing defaults provided, enabling you to keep an even more detailed record of your business expenses.

What happened to my old categories?

Don’t worry, all your painstakingly captured prior categories are perfectly preserved; they have just been moved into the new category/subcategory format and now appear under the category “Other Expenses.” You can maintain your prior structure or easily transition to the new tax friendly categories by re-categorizing your old expenses (in bulk) by following instructions found on our FAQ page.

What are these subcategories all about?

If you have a lot of expenses, being able to subcategorize this is pretty handy. Subcategories let you get specific about your business expenses while still keeping things rolled up into the main business expense reporting category for your taxes. For example, “Travel” is a common expense category on tax forms, but by filing your travel costs under subcategories such as “Hotel”, “Airfare” or “Taxi & Parking” you’ll have the ability to segment where your money is really going, and track the details closely using the Expense Report in FreshBooks.

What else do I need to know?

One change you may notice is that you’ll no longer find the “Categories” subtab under the main Expenses tab. Instead you’ll see the category dropdown list now offers you all of these functions (such as editing or creating a new expense). Adding, deleting, and renaming subcategories can be done in-line while you are logging an expense.

To categorize an expense, you can either click in the category field to get the dropdown list of categories/subcategories or just start typing and select the category/subcategory you want from the auto-suggest list.

If you have any questions about Expenses (or anything else) don’t hesitate to call on the FreshBooks Support team to give you a step-by-step walkthrough.

PS – this all works with the new FreshBooks iPhone app. If you haven’t seen it, download it here.

http://www.freshbooks.com/our-team.php#melina Melina Stathopoulos

@e: Glad to hear you are liking the new categories!
http://www.freshbooks.com/our-team.php#melina Melina Stathopoulos

@Amber: Thanks for your comments and suggestions. The pie chart on the Overview is indeed not very useful if you are using categories exclusively under one parent category. I’ve passed this feedback on to the rest of the product team. Thanks also for your feedback on the Expense Report. Both the subtotals and totals for each category are still included on the report, we’ve just had to move them around as you’ve described to accomodate a nested category format. However perhaps making the totals for each subcategory bold would help with readability–thanks for the suggestion. Also, API users can indeed specify the parent category that an expense should fall under–if you need more details on this please email me at Melina at freshbooks.com. Thanks very much for your comments and patience.
http://www.freshbooks.com/our-team.php#melina Melina Stathopoulos

@Declan: Thanks for the feedback. We are working on shortening the P&L report now, and I’ll post an update here shortly. Stay tuned!
http://www.freshbooks.com/our-team.php#melina Melina Stathopoulos

@Elisa: Certainly! To get totals for all of your expense categories and subcategories, just go to the Reports tab, and then select “Expense Report” from the left-hand side. This will show you the total for all your spending in the selected period. I hope this helps!
http://www.angelrox.com julian

regarding COGS – it seemed like the old P&L would take an expense category off the bottom of the P&L when it was marked as a COGS – right now the $ amount isn’t showing up but the category still is (we expenses that are not default for COGS) will you guys add this to the bug list – i’d like to not see these 0 valued categories in other expenses and add a +1 for making the pie chart work again – thx!
http://www.freshbooks.com/our-team.php#melina Melina Stathopoulos

@Marion Caitlin: You can certainly attach a photo of your receipt to an expense (and to an invoice as well), but you will still need to input the details of the expense into FreshBooks manually (i.e. Currently we can’t read the contents of the receipt and create an expense for you automatically). If you have in iPhone you can also check out our mobile app which makes receipt upload even easier. I hope this helps!
http://www.freshbooks.com/our-team.php#melina Melina Stathopoulos

@julian: Yes, thanks for pointing that out. We noticed that, too and we’re looking into getting it fixed now! Also, I hear you on the pie chart. Thanks for your feedback!
http://www.freshbooks.com/our-team.php#melina Melina Stathopoulos

@Mike, @Declan, @julian, @Brianne:

Just wanted to let you know that we released an update to the P&L report today. You will no longer see entries for expense categories that do not contain any expenses for the selected reporting period (i.e. no long lists of empty categories).

We’ve also addressed a bug where expense categories that were added to COGS were still showing up in the main list of expenses.

I hope this helps, and thanks very much for leaving your feedback here.
http://www.vusisindane.com Vusi Sindane

I think you guys could have planned this better. I’m trying to balance by books for month-end and I’m bombarded with all these categories I’m not using and I can’t even allocate my old categories as sub-categories of the new categories you guys are FORCING us to use.

I think this is the first terrible move by Freshbooks!! At the least, you should give us an interface to re-organise ourselves now that you’re forcing us to work your way rather than the way we want to work.
http://www.freshbooks.com/our-team.php#melina Melina Stathopoulos

@Vusi Sindane: Thanks for your comment and sorry to hear you’re unhappy with the new categories.

Please know that you can absolutely keep using your old categories–they are still there and you don’t have to change anything at all about the way you categorize your expenses or how you do your monthly reporting. You do not need to use the new categories if they aren’t useful to you.

In fact, the only place where the new categories show up in FreshBooks is when you are assigning a category to an expense using the dropdown list. However you can also just start typing the name of the category you’ve always used and it will autocomplete for you–this way you don’t have to see the new categories at all.

Previously the new categories did show up on the P&L report but as per my comment update earlier this week, this report no longer shows categories that are unused.

I hope this helps, but if you’re having problems please drop me a line at Melina at freshbooks.com
http://www.chatrevolve.com chatroulette

I need to get my spending in order. The tax categories is a great idea.
http://twitter.com/csrSocialite Margaret Marie Brown

Awesome! Thank you – this is incredibly helpful. Maybe now I have more incentive to use it