FreshBooks makes it easy to keep track of your spending by organizing your business’ expenses into Operating Expenses and Costs of Goods Sold (COGS) categories and subcategories. These categories and subcategories follow Generally Accepted Accounting Principles (GAAP), which are commonly found on tax forms for claiming your business’ expenses. You can also create custom subcategories for your business’ unique reporting needs.
FreshBooks’ default expense categories are equal to the default accounts in the Chart of Accounts (available on Plus, Premium and Select plans). Default subcategories are included to provide even more granularity in your reporting.
Cost of Goods Sold (COGS) are expenses related to producing a product or delivering a service. COGS help you find the monetary value of the products or services you sell, which are covered more in detail in this COGS blog post.
All COGS expense categories are their own accounts in the Chart of Accounts
Categorize expenses as COGS by assigning it to an existing COGS expense category
Categories are listed with an icon next to them, and subcategories are listed underneath a category
Default categories and subcategories can only be edited or archived if you have access to Advanced Accounting
In the Profit and Loss report, expenses and COGS are displayed by subcategory under their respective sections (Less Expenses and Less Cost of Goods Sold)
Use the Expense report to find expenses under a specific Operating Expense or COGS category
Any expenses that are not automatically categorized will be labeled as Uncategorized Expenses until you can assign them a category to remember for the future. Search for all Uncategorized Expenses by using the Advanced Search and selecting Uncategorized Expenses as the category to search by
Custom Subcategories
You can create a custom subcategory to organize and report on expenses specific to your business’ unique needs. Custom subcategories are similar to default subcategories:
Expenses can be assigned directly to a custom subcategory
Custom subcategories are listed under their parent category on the Profit and Loss report, similar to default subcategories
Custom subcategories can be edited or deleted
Create a Custom Subcategory
Watch this quick tutorial or use the below steps to create a custom subcategory:
While editing an expense, select the Choose a category and enter in the custom subcategory
Select the + Create (Subcategory name) button
For the Expense Type, choose between Operating Expense or Cost of Goods Sold
Next, in Group Under Parent Account, if you’ve selected the Operating Expenses Type, choose the Category / Parent Account to assign this custom category to (choosing the Cost of Goods Sold Type defaults to Cost of Goods Sold parent account instead)
Select Save to finish
This new subcategory will now appear on the dropdown list as an option.
To edit or delete your custom subcategory, edit the expense and in the category dropdown, select Edit… next to the custom subcategory, from here you can either:
Edit - Update the name of the subcategory or reassign it to a different parent account
Delete – Select the Delete link and any expenses assigned to this custom subcategory will be reassigned to the parent category that it was previously under
Default Categories and Subcategories
Your account comes with the below default categories and subcategories:
Expense Category
Expense Subcategory
Advertising
None
Car and Truck Expenses
Gas
Mileage
Repairs
Vehicle Insurance
Vehicle Licensing
Contractors
None
Education and Training
None
Employee Benefits
Accident Insurance
Health Insurance
Life Insurance
Meals and Entertainment
Entertainment
Restaurants/Dining
Office Expenses and Postage
Hardware
Office Supplies
Packaging
Postage
Printing
Shipping and Couriers
Software
Stationery
Other Expenses
Bank Fees
Business Insurance
Commissions
Depreciation
Interest - Mortgage
Interest - Other
Online Services
Reference Materials
Repairs and Maintenance
Subscriptions/Dues/Memberships
Taxes and Licenses
Wages
Personal
None
Professional Services
Accounting
Legal Fees
Rent or Lease
Equipment
Machinery
Office Space
Vehicles
Supplies
None
Travel
Airfare
Hotel/Lodging/Accommodation
Taxi and Parking
Uncategorized Expenses
None
Utilities
Gas and Electrical
Phone
Cost of Goods Sold
Cost of Billed Expenses
Cost of Shipping and Handling
FAQs
How do I change or update the category on multiple expenses?