To claim business expenses and reduce your tax bill you first need to categorise your expense transactions. Categorise new expense transactions as soon as possible to keep your tax calculations up to date.
Tip: For personal expenses, use the 'Archive' category or simply leave them as uncategorised and Solo will exclude them from your tax calculations.
How to categorise a transaction
Click the Select a category drop down box for the transaction you want to categorise.
Select the appropriate category from the drop down menu.
Click the round tick ✅ button to save the transaction.
Tip: If you have an expense but you're not sure which category to choose, use 'General Merchandise' as your default category to claim 100% of the expense.
That's it! Your transaction has now been categorised and included in Solo's tax calculations. You can view your categorised transactions at any time by clicking on the Expenses tab at the top of the page.
To undo a categorised transaction, click on the ✖️ icon next to the category name to remove the category. Then save the transaction by clicking on the tick button. The transaction will then be moved back to the Uncategorised tab and excluded from Solo's calculations.
How does Solo calculate expenses?
It's a long story, but here are the basics. When you categorise an expense, the first thing Solo does is work out how much of the expense can be claimed. This is done based on the information you entered in your settings and any specific tax rules that relate to the category you've selected.
Example: If you've entered in your settings that you're GST registered and you use your vehicle 25% of the time, Solo will work out how much of the expense is GST then claim 25% of the GST amount and 25% of the GST exclusive amount. You can check the calculation by clicking on the down arrow ∨ at the right-hand end of a transaction.
For a list of Solo's expense categories and the relevant tax rules, check out our article on which expenses you can claim.
Tip: You can also check how Solo is calculating each expense by exporting your data. Go to 'Export Data' in the main menu of Solo to get started. You can also view totals for each category.
Which expenses can I claim?
Self-employed freelancers and contractors are often surprised by the amount of expenses they can actually claim. For a complete list of self-employed expenses, check out our article on which expenses you can claim.
Batch categorising similar expenses
To categorise lots of similar transactions quickly try this trick:
Click on the transaction description or search for the transaction to group similar transactions. You can also click on an amount to group transactions with the same amount.
Click the checkbox at the left-hand end of a transaction to select the transaction.
Use the Categorise all drop down menu to apply a category to all the selected transactions.
Save each transaction by clicking the tick ✅ button.
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