Categorization basics
How to sort transactions into categories that stay consistent and make reports meaningful.
Bookkeeping · Version 1 · 2 min read · Reviewed by Meridian Review Team · Sep 15, 2026
What categorizing does
Categories turn a list of transactions into a story: what came in, what went out, and where.
Keep the list short
Start with a small set of categories. Too many categories makes reports harder to read.
Common categories
- Income, by source
- Cost of goods or direct costs
- Software and subscriptions
- Advertising
- Professional fees
- Rent and utilities
- Travel and meals
- Equipment
Rules of thumb
- One purchase, one category.
- When unsure, do not guess. Use an "ask my bookkeeper" label and resolve it at month end.
- Pick a category and use it the same way every time.
Transfers
Moving money between your own accounts is not income or expense. Record it as a transfer.