Expense Categories That Actually Make Sense

Every freelancer has the same question when they start tracking expenses: what categories should I use? Here's the simple answer.

Start with these 10 categories: Advertising & Marketing, Office Supplies, Software & Subscriptions, Professional Services (accountant, lawyer), Travel & Transportation, Meals & Entertainment, Home Office, Insurance, Training & Education, and Other.

That's it. You don't need 30 categories. You don't need sub-categories. Your accountant doesn't care whether "Zoom subscription" is under "Software" or "Communication." They care that it's tracked consistently.

The CRA groups business expenses into broad categories on the T2125 form. Your categories should roughly map to those. But the form is flexible: as long as the expense is legitimately business-related and you can prove it, the exact category doesn't matter.

One common mistake: mixing personal and business expenses in the same category. Keep them separate. If you use your phone for business, track the business percentage as a separate expense. Don't put your entire phone bill under "Business Expenses."

norabooks comes with sensible default categories for freelancers. Use them as-is or customize. The important thing is consistency: pick your categories once and stick with them all year.