A software founder's guide to categorizing transactions

Helen Chong
Category: Puzzle Guides

The key to understanding the health of your business and keeping your investors and the IRS happy? Categorizing your transactions.

That’s why Puzzle makes the categorization process easy.

How do I start categorizing transactions? 

First, navigate to your “Transactions” page. 

You’ll see your transaction history — a list of transactions  we’ve pulled from bank account, company credit cards, and Stripe account. 

Next, click on a transaction’s category to begin classifying it. 

  1. Assign a category to the transaction. You can categorize your utility bills, meals with clients, contractor payouts, domain and hosting fees — anything your business pays for with cash. You can even search keywords to find the right category in seconds.
  2. Need to see more information about the transaction before you can confidently categorize it? Click anywhere on the transaction row to show the transaction detail panel on the right. 
  3. Once you’re done, it takes one click to finalize that transaction's category to track what you have already completed. 

From there, Puzzle converts these detailed transactions into accurate cash-basis financial statements for your company. 

How can I put categorization on autopilot?

Rules can help you automate categorization, saving you time every month.

Let’s say you have a recurring transaction, like a monthly invoice from a SaaS vendor. 

To avoid having to make the same categorization every month, you set up a rule that says every new transaction matching this description is labeled under the Subscription Revenue category. After making a rule once, you’ll never have to categorize that type of transaction again. 

Puzzle’s automation learns from the categories you set and creates smarter automated rules to generate category suggestions. 

Why is accurate categorization so important? 

Whether you’re filing taxes, raising your Series A, or just trying to understand your business better, accurate financial records are an absolute essential. Without detailed bookkeeping (including categorized transaction histories), your records become far less reliable. 

Inaccurate categorization can lead to: 

  • Incorrect insights into the health and trajectory of your business
  • Inaccurate investor reporting, which can hurt future fundraising opportunities
  • Inaccurate tax returns – or worse, being audited by the IRS

Ultimately, categorizing your transactions on Puzzle is both low-lift and high-return. 

Spending a few minutes each week to categorize transactions or set up rules can save you hours per month and increase the accuracy of your financial data -- enabling you to make better decisions for your business.

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Helen Chong
Growth @ Puzzle

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