Add new category

How to add a new income or spending category to your list in FreeAgent.

What are categories?

When you add invoice items, expenses, bills or bank entries, you put these into categories to explain the type of income or cost they are. For example, pens and pencils for use in the office would be put into the Stationery category.

At the moment you can only set up new income or spending categories, that is, profit and loss account categories. You can't create new balance sheet categories except for new bank accounts.

Adding a new category

Click Settings, then click Income and Spending Categories.

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Click the Add New button and choose which type of new category you want to add.

This might be Income if you want to split your sales into different income streams, Cost of Sales for costs that relate directly to the sales you make (for example, if you're a jeweller, this would be purchases of metal and precious stones), or Admin Expenses for all your other day-to-day business costs.

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Income category

Give the category a name, and choose a new nominal code number for it.

A nominal code is the code number you use for each different category. It's important if you export your data to other accounts production software.

FreeAgent will only let you pick certain codes; Income can only go from 001 to 049, and some of the codes will already be taken by FreeAgent's existing categories.

Then click Create Income Category to save this category and finish creating new categories, Create and Add Another if you want to save this category and create another new one, or Cancel to exit without saving this category.

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Cost of Sales category

Give the category a name, and choose a new nominal code number for it.

A nominal code is the code number you use for each different category. It's important if you export your data to other accounts production software.

FreeAgent will only let you pick certain codes; Cost of Sales can only go from 100 to 199, and some of the codes will already be taken byFreeAgent's existing categories.

Choose the tax reporting name for this category, and whether it's allowable for tax.

Choose what you want the default VAT rate to be for this category. This is which VAT rate is usually used for costs in this category. (You can use a different VAT rate to the default when you enter individual bills and costs.)

Then click Create Cost of Sales Category to save this category and finish creating new categories, Create and Add Another if you want to save this category and create another new one, or Cancel to exit without saving this category.

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Admin Expenses category

Give the category a name, and choose a new nominal code number for it.

A nominal code is the code number you use for each different category. It's important if you export your data to other accounts production software.

FreeAgent will only let you pick certain codes; Admin Expenses can only go from 200 to 399, and some of the codes will already be taken by FreeAgent's existing categories.

Choose the tax reporting name for this category, and whether it's allowable for tax.

Choose what you want the default VAT rate to be for this category. This is which VAT rate is usually used for costs in this category. (You can use a different VAT rate to the default when you enter individual bills and costs.)

Then click Create Admin Expense Category to save this category and finish creating new categories, Create and Add Another if you want to save this category and create another new one, or Cancel to exit without saving this category.

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What if I want to change or delete an existing category?

You can only do this up to and until you've put transactions into that category. A category containing transactions can't be changed except to alter the default VAT rate, and some of FreeAgent's pre-existing categories, such as the main Sales category, can't be changed except to alter the default VAT rate.

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