How to categorize business expenses from bank statements for tax time

If you didn't keep books during the year, your bank and card statements are the next best source. The goal is a summary of income and deductible expenses by category.

Choose categories that map to your tax form

Sole proprietors in the US can mirror Schedule C lines: advertising, car and truck expenses, contract labor, insurance, legal and professional services, office expense, rent, repairs, supplies, taxes and licenses, travel, meals and utilities. Keep a Personal category for anything that isn't business.

Convert, auto-categorize, then review

Convert all twelve months of statements, let AI assign first-pass categories, then sort by description to fix merchants in bulk. Pay attention to transfers between your own accounts—they are neither income nor expenses.

Summarize with a pivot table

Insert a pivot table with Category in rows and Amount in values. That table, plus the original statements as backup, is what most accountants want to see. Keep receipts for meals, travel and large purchases—the statement proves payment, not business purpose.