What are transaction categories? How do I use them?

What are transaction categories?

Financial statements for your management company are available for download directly from your AngelList dashboard. These include a profit and loss statement, balance sheet and cashflow statement.

These statements are generated based on the transactions listed in your dashboard as well as any transactions from other accounts (e.g. credit cards, out-of-pocket expenses, etc.) you share with AngelList.

They are also generated based on the categories assigned to each transaction. For example, transactions labeled:

  • "Management Fee Payments" will be included in the calculation of Total Income reported on your profit and loss statement
  • "Owner Drawing" will be included in the calculation of Total Equity reported on your balance sheet

Financial statements are necessary for tax reporting. Therefore, accurately categorizing transactions is critical for accurate tax reporting. In the examples above, they (1) identify income to be reported, and (2) determine how that income is allocated to each owner.

Financial statements are also important for understanding the financial health of your management company.

How do I categorize transactions?

Where possible AngelList will automatically categorize transactions for you. In some cases, you will need to verify these categories or inform AngelList on what the category should be.

The following tables list the categories available to select for a given transaction and in what cases you may want to select a category.

Income

The following are categories related to income earned by your management company. Management companies structured as Limited Liability Companies (LLCs) do not themselves pay taxes on income (unless electing for a different tax treatment). Rather, the owner(s) of the management company pay taxes on the income earned.

Category Description
Management Fee Payments

Money received from management fees

Carry Revenue

Money received from carry

Other Revenue

Money received from other sources

Unknown Revenue

Money that cannot be automatically attributed to a specific source

 

Expenses

The following are categories related to expenses incurred by your management company. Expenses are usually deductible from your taxable income provided that they are business expenses related to the operation of your management company. If an expense is un-related to your management company (e.g. personal, living or family expenses) please indicate accordingly. 

Category Description
Meals and Entertainment Expense (100% Deductible)

Business meals with employees or contractors (more than 50% of staff present)

Food for company holiday parties

Food and beverages given free to the public

Meals and Entertainment Expense (50% Deductible)

Business meals with clients

Meals while traveling for business

Business meals with employees or contractors (less than 50% of staff present)

Entertainment meals

Office snacks

Meals and Entertainment Expense (0% Deductible)

Entertainment expenses

Personal meals, groceries or snacks

Software Expense

Payments for software or recurring SaaS subscriptions

Office Expense

Office supplies

Phone-related fees and costs

Content & Professional Development Expense

Payments for books, magazines and journal subscriptions

Conference fees for developing new skills and knowledge

Advertising & Marketing

Advertisement, brand development

Website-related costs, web hosting and domain costs

Networking and conference fees

Travel Expense

Business-related travel expenses including:

Transportation fees (e.g. plane tickets, ride share fees, etc.)

Hospitality expenses (e.g. hotel fees)

Payroll Expense

Payroll payments to employees

Payroll Tax Expense

Payroll-related tax payments

Payroll Processing Fees

Payroll provider fees

Bank & Credit Card Fees Expense

Bank account maintenance, overdraft, wire fees, etc.

Business credit card fees

Rent Expense

Payments for renting space used only for your management company

Insurance Expense

Payments for company-related insurance services

Legal & Professional Expense

Payments for company-related legal services

Payments for company-related audit services

Payments for company-related accounting services

Tax Expense

Payments for taxes owed by the company 

Business Gift Expense

Gifts for associates, clients and employees to promote business relations

Charitable Contribution Expense

Donations or grants to tax-exempt entities, endowments, etc.

Other Expense

Expense for something that doesn't fall in the above buckets

Unknown Expense

Expense that cannot be automatically attributed to a specific source

Unrelated Expense

Expense that is not related to your management company (e.g. personal, living, family, other business, fund) 

 

Equity

The following are categories related to equity held in the management company. For management companies with more than one owner, equity determines for each owner their capital account and allocation of income and expenses.

Category Description
Owner Capital

Capital contributed by the owner to the management company

Owner Drawing

Capital withdrawn by the owner from the management company

 

Liabilities

The following are categories related to liabilities held by the management company. In each of these cases, please share with your account manager details on the transactions incurred.

Category Description
Credit Card Payment

Payment to pay off transactions incurred on behalf of the management company by a credit card

Owner Reimbursement

Payment to pay off out-of-pocket transactions incurred on behalf of the management company by an owner

Employee Reimbursement

Payment to pay off out-of-pocket transactions incurred on behalf of the management company by an employee

Other Reimbursement

Payment to pay off out-of-pocket transactions incurred on behalf of the management company by someone else

 

Assets

Please reach out to your account manager if your management company is in possession of any of the following assets:

  • Bank accounts opened independently of AngelList
  • Tangible assets (e.g. laptops, office furniture, etc.)
  • Intangible assets (e.g. licensed software)
  • Investments (e.g. your management company is invested in a fund on AngelList or holds crypto assets)

 

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