Categorizing Common Expenses
A quick reference for the right category of the transactions international founders see most often.
The right category keeps your Profit & Loss accurate and makes tax season easier. Use this table as a quick reference for the transactions international founders see most often.
| Transaction | Category |
|---|---|
| Payment from a client (invoice, Stripe charge) | Sales Revenue or Service Income |
| Freelancer or contractor based in the US | US Based Contractors |
| Freelancer or contractor outside the US (Wise, Deel, Payoneer) | International Contractors |
| Stripe, PayPal or payment platform fees | Payment processing fees |
| SaaS tools (Google Workspace, Notion, AWS, Slack) | Software & Subscriptions |
| Ads (Google, Meta, LinkedIn) | Advertising & Marketing |
| Agencies, designers, content for marketing | Marketing Expenses |
| Accountant, lawyer, registered agent, company filings | Legal & Accounting Fees |
| Flights, hotels, transport on business trips | Travel Expenses |
| Meals during business travel | Travel Meals |
| Event tickets and trade shows | Conferences and Events |
| Coworking or office rent | Co-working Rental Space |
| Phone and internet | Internet & Phone |
| Money you put into the company from personal funds | Member's Contributions |
| Money you take out of the company for yourself | Member's Draws / Distributions |
| Payout from Stripe to your bank, or between your own accounts | Transfer (see Transfers Awaiting Their Pair) |
| Credit card bill paid from checking | Transfer (see Company Credit Card) |
Tips
- Owner contributions and draws are not revenue or expenses. Categorizing them correctly avoids paying tax on money that is not profit.
- Keep US Based and International Contractors separate. US contractors may require a 1099 form at year end.
- If none of the categories fits, add one in Chart of Accounts (see Chart of Accounts, Users and Settings) instead of using Miscellaneous Expense.
- Be consistent: use the same category for the same kind of transaction every month, so your reports are comparable.