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Tracking categories (Xero)

Tracking categories are Xero's free way to label transactions by job, region, or cost code. Capped at 2 active categories with 100 options each. Lightweight job costing.

By Chalkline. Last updated 14 May 2026. Verified 14 May 2026.

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Tracking categories are a Xero feature for labelling transactions by an additional dimension beyond the account code, then producing reports filtered or grouped by category. For builders, the most common use is tagging every transaction with the job it belongs to, producing per-job profit and loss without the cost or complexity of Xero Projects.

Hard limits (Xero global rules):

  • Maximum 2 active tracking categories at any time.
  • Maximum 100 options per category.
  • Archived options don’t count against the 100 active limit, so historic jobs don’t crowd out new ones.

For a residential builder, the two active categories typically are:

  • Category 1: Job (each option = a specific build).
  • Category 2: Cost code or Region or Trade type, depending on what reporting matters.

Where tracking categories beat Xero Projects:

  • Free (included in standard Xero subscription, no add-on cost).
  • Already in Xero without setup of a separate module.
  • Reports easily through standard Xero P&L by category.
  • Sufficient for simple per-job profitability tracking.

Where Xero Projects beats tracking categories:

  • Time tracking (Projects has it natively; tracking categories don’t).
  • Estimates and budgets at category level (Projects has structured estimate-to-actual reporting; tracking categories show actuals only).
  • Project lifecycle management (start, in-progress, completed states; Projects has it natively).
  • Time and materials invoicing (Projects generates client invoices from tracked time).

A typical builder setup with tracking categories:

  1. Set “Job” as Category 1 with options for each active job (e.g. “001 Smith Reno”, “002 Jones Extension”, etc.).
  2. Set “Trade” as Category 2 (Chippy, Sparky, Plumber, Plasterer, Brickie, Tiler, Painter, Civil, Plant, Other).
  3. Code every transaction to one option from each category at entry time.
  4. Run “Profit and Loss by Tracking Category” monthly to see per-job and per-trade performance.

Common defects:

  • Two categories not set up: only one in use. Missed reporting dimension.
  • Options not archived when jobs complete: 100-option cap reached, can’t add new jobs. Audit and archive completed jobs quarterly.
  • Inconsistent coding across users: some transactions miss the tracking category. Reports incomplete.
  • Tracking conflicts with project software: running Buildxact’s Xero integration alongside manual tracking categories on the same job. Duplicate data; conflict on what’s correct.

Migration path. A builder starting on tracking categories who later outgrows them can move to Xero Projects or to Buildxact-with-Xero. The tracking category history stays in Xero; the new system tracks forward from the migration date.

For builders.

  1. Set up tracking categories on day one of using Xero. Retrofitting after months of un-tracked transactions is painful.
  2. Train every user (or your bookkeeper) on which option to code each transaction. Inconsistent coding is the main failure mode.
  3. Archive completed jobs monthly to keep the active option list lean.

Also known as: Xero tracking, tracking codes, Xero job codes.

Category: Business / accounting / Xero.

See also

Last updated: 2026-05-14. Verified: 2026-05-14.

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