In GoDaddy Bookkeeping, categories are the buckets you place your income and expenses transactions in. They help you to stay organized come tax time, and make filling out your Schedule-C worksheet a breeze at the end of the year.
To categorize a transaction simply click on the transaction, and a box will appear allowing you to edit your transaction's category. Please see the picture below for how that looks in GoDaddy Bookkeeping:
Here is a scenario to illustrate what types of transactions you might need to categorize in GoDaddy Bookkeeping. For the purpose of the scenario, you will assume the identity of a GoDaddy Bookkeeping customer:
Your Name: Johnny Richards
Marital Status: Single
Background: You are a college student who mows lawns on the side. You have business expenses, and have received a 1099-MISC. You are 19 years old, single, and a U.S. citizen. You live in the United States at a house you rent with some of your fellow classmates.
Story: After classes and on weekends, you provide lawn care services for neighbors and for a local business. You are not an employee, and would be classified as an "Independent Contractor". You borrow the lawnmower from a friend, and buy your own gasoline and oil for the lawnmower.
It's the last day of the year, and you've earned $2,500.00 for mowing lawns from the neighbors, and earned $1,000.00 for mowing a local Restaurant's lawn. You received a Form 1099-MISC from the owners of the Restaurants showing the amount they paid you.
On top of the of the $3,500 in income you received, you also have a few expenses you incurred in the process of doing business. Please see the diagram below explaining all the expenses that need to be categorized in your GoDaddy Bookkeeping account:
In the previous scenario and for all small businesses, items that are income or expense transactions need to be categorized, either by you or automatically. Once they are categorized, they will then be associated with the appropriate tax line on your Schedule-C worksheet.
We try to make categorizing your business transactions easy by covering common categories a small business would normally encounter, and associating those categories with the appropriate tax lines on your Schedule-C worksheet. Here is more information on how to create, edit, merge, and delete categories in GoDaddy Bookkeeping, and how to associate categories with a particular tax line: