LessAccounting auto-categorizes incoming expenses (whether from an auto-import, ones you manually import, or ones you manually create) based on transaction title. We do this in 2 different ways:
1) We "guess" at categories based on how other businesses in our app categorize that same (or similar) expense. If it's a transaction that our system has not seen before or if it's an expense that is categorized differently across many different businesses, then we don't categorize it since there's too many options to choose from.
2) You can also manually categorize expenses, which will help our system "learn" how to categorize it in the future for both you and others in our app. If you manually categorize an expense, we'll start to auto-categorize that same expense any time else we see it. We do this based on matching expense title (ignoring any numbers or special characters.)
Take the following transactions for example:
- STARBUCKS - LOS ANGELES CA 90210
- STARBUCKS - LOS ANGELES CA 90068
- STARBUCKS - MANHATTAN NY 10036
Sticking with the Starbucks example, let's say we see "STARBUCKS LOS ANGELES" on your transactions list. Many businesses have this same expense and let's say most categorize it as "Meals." When we see it for your account, we'll automatically categorize it as "Meals" since we'd think you'd categorize it how most other businesses do.
But let's say you prefer to be more specific. Let's say you prefer to categorize "STARBUCKS LOS ANGELES" as "Coffee." Simply manually re-categorize it and whenever we see that expense in the future, we'll categorize it as "Coffee" just for your account.
Between us guessing and you telling us your preferences, you should have less and less to manually categorize over time! You can even review what we've auto-categorized by going to your Transactions Dashboard and clicking "Review Auto Categorized Expenses" below the Troubleshooting column. This is a good place to re-categorize expenses if needed.