Bank transaction categorisation only applies to self-employed individuals, but is not always mandatory. It is also a useful tool for better financial management. We explain everything in detail below 🤓
For sole proprietorships only
Bank transaction categorisation on your part only applies to self-employed individuals operating as sole proprietorships. For companies, it is your accountant who handles your transactions. Company accounting follows a different model: it uses double-entry bookkeeping rather than simplified accounting, which is more complex.
Mandatory categorisation if you have receipts
Do you sell your services to private individuals? Are you in the medical or paramedical field, or do you work as a coach, therapist, masseur, beautician...? If so, you are not required to issue an invoice for every transaction. Any amount received from a client for which you do not issue an invoice is a receipt. In this case, categorisation is mandatory to justify your income. You must keep a receipts journal ✅
The categorisation system has been designed to allow for nearly 100% automated management of these bank receipts.
👉🏻 Find out more about creating a receipt in BILLY.
Optional categorisation
Do you always issue an invoice for your services? Are you, for example, a consultant, lawyer, graphic designer, journalist or architect subject to VAT? If you always issue a sales invoice for your services, you have no obligation to categorise your transactions. Categorisation is optional and serves as a reminder so you don't forget anything in your bookkeeping 🔎
1️⃣ Expenses without an invoice
Some expenses do not come with an invoice. This is the case, for example, with bank charges, rent payments or fee retrocessions paid. You can generate an expense entry in your bookkeeping using one of these categorisations. This is an option available to you, but it is not mandatory.
2️⃣ Invoice reconciliation
As soon as the system detects a match, reconciliation is done automatically for you. If that is not the case, you can link the transaction to an invoice manually. The reverse is also possible: you can link a transaction when adding an invoice.
💡 Thanks to this link between payment and invoice, you have a reminder so you never forget a purchase invoice. For your sales invoices, you will be able to track payment status.
3️⃣ Classification of non-profit-and-loss transactions
Finally, categorisation allows you to select certain categories that fall outside income and expenses. These are accounting entries with no impact on your business result.
Feel free to contact us via live chat to find out more about transaction categorisation.
See you soon 👋🏻