> ## Documentation Index > Fetch the complete documentation index at: https://docs.smartbills.io/llms.txt > Use this file to discover all available pages before exploring further. # Categories & Departments > Organize expenses with categories and departments for proper accounting classification ## What are Categories and Departments? Categories and departments are the two primary classification systems in Smartbills for organizing expenses. **Categories** describe what type of expense was incurred (such as Travel, Meals, or Office Supplies), while **departments** indicate which business unit or cost center the expense belongs to. Together, they provide the structure needed for accurate financial reporting and accounting integration. ## Categories ### How Categories Work Categories classify expenses by their nature or purpose. Every expense in Smartbills is assigned to a category, which determines how the expense is recorded in your accounting system. Categories are managed from **Settings > Categories** (`/:slug/settings/categories`). When an expense is created, Smartbills may automatically suggest a category based on the vendor or the content of the receipt. The user can accept the suggestion or choose a different category manually. ### Default Categories Smartbills comes with a set of commonly used categories out of the box: | Category | Description | | ---------------------------- | ------------------------------------------------------------------ | | **Travel** | Flights, trains, car rentals, fuel, and other transportation costs | | **Meals & Entertainment** | Business meals, client dinners, team lunches | | **Accommodation** | Hotels, Airbnb, and other lodging expenses | | **Office Supplies** | Stationery, printer supplies, desk equipment | | **Software & Subscriptions** | SaaS tools, software licenses, online services | | **Telecommunications** | Phone bills, internet service, mobile plans | | **Professional Services** | Legal fees, consulting, accounting services | | **Marketing** | Advertising, sponsorships, promotional materials | | **Training & Education** | Courses, conferences, certifications, books | | **Miscellaneous** | Expenses that do not fit other categories | ### Custom Categories Administrators can create custom categories to match their organization's chart of accounts. Custom categories support: * **Custom name and description** to clearly define the category for employees * **Accounting code mapping** to link the category to a specific GL account number * **Tax treatment rules** to flag categories that have special tax implications * **Active/inactive toggle** to hide categories that are no longer in use without deleting historical data ## Departments ### How Departments Work Departments represent your organizational structure, the teams, divisions, or cost centers that expenses are charged to. Departments are managed from **Settings > Departments** (`/:slug/settings/departments`). When an expense is assigned to a department, it appears in that department's spending reports and is allocated to the correct cost center in your accounting system. ### Department Configuration Each department can include: | Field | Description | | --------------------- | ------------------------------------------------------------------------ | | **Name** | The display name of the department (e.g., "Engineering", "Sales") | | **Code** | An optional accounting code for integration with your chart of accounts | | **Manager** | The user responsible for reviewing the department's expenses | | **Budget** | An optional monthly or annual spending limit for the department | | **Parent Department** | For nested department hierarchies (e.g., "Frontend" under "Engineering") | ### Accounting Integration Both categories and departments map directly to your accounting chart of accounts. When you export expenses or sync with accounting software like QuickBooks or Xero: * **Categories** map to expense account codes (e.g., Travel maps to GL 6200) * **Departments** map to cost centers, classes, or tracking categories * This mapping ensures expenses land in the correct accounts without manual reclassification ## Key Terminology | Term | Definition | | --------------------- | ----------------------------------------------------------------------------- | | **Category** | A classification that describes the type of expense (e.g., Travel, Meals) | | **Department** | A business unit or cost center that an expense is allocated to | | **Chart of Accounts** | The list of financial accounts used by your organization's accounting system | | **GL Account** | A General Ledger account code that a category maps to | | **Cost Center** | An organizational unit used for tracking spending, equivalent to a department | | **Budget** | An optional spending limit assigned to a department or category | ## Roles Involved | Role | Responsibility | | -------------- | --------------------------------------------------------------------------------------- | | **Admin** | Creates, edits, and manages categories and departments. Requires that access permission | | **Accountant** | Maps categories and departments to the chart of accounts | | **Employee** | Selects a category and department when creating or editing an expense | | **Manager** | Reviews expenses for correct categorization within their department | ## Related Guides How to create and manage categories in the web app How to set up departments and assign managers Step-by-step guide to categorizing an expense Learn about the expense lifecycle