Not tax advice. This guide is about organising your records. Whether a cost is deductible, and how much, depends on your situation and current rules. Confirm your categories with a tax professional or the official IRS instructions.
The goal is one tidy list of the year's business transactions, each with a category, and a summary of totals per category that you or your tax preparer can work from.
Download the full year's CSV exports for every account and card you use for business. Put them in one Transactions sheet with columns Date (A), Description (B), Amount (C), Account (D), Category (E) and Notes (F). Use one signed Amount column, with money in positive and money out negative. Remove duplicates from overlapping downloads.
If you're a US sole proprietor or single-member LLC filing Schedule C, it helps to use names that resemble the expense lines on that form. Examples of the kinds of lines it has include advertising, car and truck expenses, contract labor, insurance, legal and professional services, office expense, rent or lease, repairs and maintenance, supplies, taxes and licenses, travel, meals, utilities, wages, and other expenses. Check the current Schedule C and its instructions on irs.gov for the exact lines and what belongs on each.
Add a few bookkeeping-only categories that aren't expenses:
Put the list on a Categories sheet in column A, starting at A2.
Categories!A2:A.=Categories!$A$2:$A$30.Dropdowns stop typos like "Suplies" from creating a new category.
Work through each row. Use the Notes column for anything unclear, such as a mixed business and personal purchase or a large equipment buy, and flag it as Needs review for your tax preparer. Keep receipts for anything significant.
On a Summary sheet, list the categories in A2 down and put this in B2, then fill down:
=SUMIFS(Transactions!$C:$C,Transactions!$E:$E,$A2)
Expenses are negative, so put a minus in front, =-SUMIFS(…), if you'd like them shown as positive numbers. To total only one tax year when the sheet holds more:
=SUMIFS(Transactions!$C:$C,Transactions!$E:$E,$A2,Transactions!$A:$A,">="&DATE(2026,1,1),Transactions!$A:$A,"<"&DATE(2027,1,1))
Both formulas work the same in Excel and Google Sheets. Check that the categories add up to the total of column C. Any gap means some rows are blank or have a category not on your list:
=SUM(B2:B30)-SUM(Transactions!$C:$C)
A result of 0 means every row is counted. If you used the minus sign, compare against the totals before flipping the sign.
Give your tax preparer the Summary, the full Transactions sheet and your notes. Transfers, Personal and Owner rows stay out of the expense totals.
Some expense types have limits or special rules, and categories differ for other entity types and countries. This guide doesn't cover those. Ask a qualified professional.
A short list that maps to the lines of the tax form you file, or the categories your tax preparer uses, kept the same all year.
Add a dropdown (data validation) of your category list to the category column so every row uses an exact name.
Totals by category plus the categorized transaction list, after reviewing anything uncategorized or unusual. This is not tax advice.
Skip the formulas: the free Bank CSV Categorizer does this in your browser. Nothing is uploaded.
Just starting out? Grab the free Starter Expense Tracker (pay what you want, $0 is fine).