LessAccounting auto-categorizes incoming expenses (whether from an auto-import, ones you manually import, or ones you manually create) based on transaction title. We do this in three different ways:
We "guess" at categories based on how other businesses in our app categorize that same (or similar) expense. If it's a transaction that our system has not seen before, or if it's an expense that is categorized differently across many different businesses, then we don't categorize it since there's too many options to choose from.
You can also manually categorize expenses, which will help our system "learn" how to categorize it in the future for both you and others in our app. If you manually categorize an expense, we'll start to auto-categorize that same expense any time else we see it. We do this based on matching expense title, ignoring any numbers or special characters.
You can create automatic categorization rules. This is best used for recurring / frequently occurring expenses and deposits, such as monthly subscriptions, favorite restaurants for business meals, bank fees, payments for contractors, and etc. This can definitely save you TONS of time, and is extremely worth the little time you need to spend to set it up.
Go to Accounting > Transactions > then Manage Automation Rules
+ Create An Automation button
Customize the rules and actions that you would like to automate. You can do this for expenses or deposits, based on title, amount, or bank accounts, and can set it to add tags or expense or income categories.
Tips: Under Rule, we suggest changing begins with to contains. That way, no matter where the keyword ends up in the transaction title, we would still be able to catch it.
Read on to understand how LessAccounting learns to categorize your transactions automatically. Take the following transactions for example:
STARBUCKS - LOS ANGELES CA 90210
STARBUCKS - LOS ANGELES CA 90068
STARBUCKS - MANHATTAN NY 10036
The first two will match since taking out numbers and special characters will result in a matching STARBUCKS LOS ANGELES. The last one will need to be categorized manually since it would result in STARBUCKS MANHATTAN. If you categorize this one once, anything else that would match "STARBUCKS MANHATTAN" in the future will subsequently auto-categorize.
Sticking with the Starbucks example, let's say we see STARBUCKS LOS ANGELES on your transactions list. Many businesses have this same expense, and let's say most categorize it as Meals. When we see it for your account, we'll automatically categorize it as Meals too. But if prefer to be more specific, such as wanting to categorize STARBUCKS LOS ANGELES as Coffee, just manually re-categorize it. When we see that expense in the future, we'll categorize it as Coffee. Between us guessing and you telling us your preferences, you should have less and less to manually categorize over time!
You can even review what we've auto-categorized by going to your Transactions Dashboard and clicking Review Auto Categorized Expenses below the Troubleshooting column. This is a good place to re-categorize expenses if needed.