How Mise works

How transactions get categorized

Every transaction Mise sees is categorized in two passes.

The first pass is deterministic. When Mise has seen a merchant before — through a rule you’ve set, a correction you’ve made, or a pattern Mise has learned from your previous corrections — it categorizes the transaction instantly, with full confidence, against the same account it used last time.

The second pass is an AI agent, called only when the first pass has no match. The agent receives the transaction, your chart of accounts, your recent confirmed categorizations, and any business-specific patterns Mise has learned. It returns a suggested category, a confidence level, and a reasoning note you can read on the review queue.

Confidence is shown next to every transaction as a small dot. Green means Mise is confident and the transaction is safe to confirm in bulk. Gray means look at it before confirming. Red means Mise wants your judgment.

The rules the agent follows

Whether the categorization comes from the rule layer or the agent, the same accounting principles apply. These are the rules Mise enforces, in the order it weighs them:

1. POS deposits are transfers, not revenue, on accrual basis. Deposits from Shopify, Stripe, Square, Toast, DoorDash, Uber Eats, or Grubhub land in an in-transit clearing account on accrual basis — not in revenue. Revenue was recognized at the point of sale in the POS, not when the deposit cleared the bank. On cash basis, those same deposits are revenue. The basis you select for your business determines which interpretation Mise applies.
2. Credit card payments are transfers to a liability account, not expenses. When you pay down your American Express balance from operating cash, Mise treats that as a movement between your bank and your credit card liability — not as a fresh expense. The original credit card spend already booked the expense at the time of purchase.
3. Refunds reduce revenue.A refund is a contra-revenue line — it reduces sales, it doesn’t increase expenses. Mise books refunds against a refunds-and-discounts account so the income statement shows gross sales, refunds, and net separately.
4. Owner withdrawals are equity reductions, not expenses. When the owner takes cash out of the business — explicitly as a draw, or implicitly by charging a personal item to the business card — Mise treats it as a reduction in owner equity, not as a cost of generating revenue.
5. Loans are liability movements, not revenue or expense. A large deposit from a lender like Shopify Capital, OnDeck, or Square Loans is debt — it lands in a long-term liability account, not in revenue. The recurring repayments that follow are reductions of that same liability, with the interest or factor cost split off into its own expense line.

How Mise learns

When you correct a categorization, Mise records the correction against your business. When the same merchant has been corrected to the same category enough times to be unambiguous, Mise promotes that correction to a permanent rule for your business. The next transaction from that merchant is categorized instantly through the rule layer, with no AI call.

This learning is per-business. Mise does not aggregate corrections across customers — your categorization preferences shape your books, not anyone else’s.

How journal entries get pushed to QuickBooks

When you confirm a categorization on the review queue, Mise constructs a balanced journal entry and queues it for the next sync to QuickBooks. The journal entry shape depends on what kind of transaction is being booked.

The standard two-line journal entry

For most transactions — a meal at a supplier, a software subscription, a customer payment that isn’t a POS deposit — Mise pushes a simple two-line journal entry.

The three-line loan payment journal entry

When a transaction matches a loan you’ve set up, Mise expands the entry to three lines so principal and interest land in the right accounts.

Idempotency

Mise tracks every journal entry it has pushed to QuickBooks by ID. When you re-run a sync — by accident, on purpose, or after fixing an unrelated error — entries that have already been pushed are skipped, not duplicated. Clicking “Sync confirmed to QuickBooks” three times in a row produces the same single set of entries in QuickBooks.

When QuickBooks rejects an entry — because an account was deleted, a date is closed, or a permission has changed — Mise surfaces the exact error text QuickBooks returned. You see what QuickBooks said, not a generic “something went wrong.”

How loans get handled

Mise supports three categories of small business loan, each with its own math model.

Term loans

Standard amortizing loans — SBA, equipment financing, vehicle loans, mortgages, working capital lines of credit. You enter the interest rate, the amortization term in months, and the monthly payment. Mise computes the remaining balance after each payment, splits future payments into principal and interest using the standard amortization formula, and pushes the three-line journal entry every time a matching payment hits the bank.

Merchant cash advances

Shopify Capital, OnDeck, Square Loans, and other factor-based products. There is no interest in the traditional sense — the cost is the factor markup baked into the total repayable amount. You enter the original advance, the total repayable, and Mise computes the factor. Every repayment is split between principal recovery and factor cost, the same way a term loan splits between principal and interest.

Zero-interest installment loans

Short-term installment products with no interest charge. Mise treats the full payment as principal. The journal entry collapses to two lines: a debit to the loan liability, a credit to the bank.

Mid-life loans

When a loan pre-dates your time in Mise — meaning the original funding deposit isn’t in your bank feed — Mise can’t infer the opening balance from your transaction history. You supply the current balance and the date that balance was accurate as of, and Mise backfills the amortization schedule from that point forward.

Opening balance handling

Before Mise pushes an opening balance journal entry to QuickBooks, it queries the live balance of the matching liability account in QuickBooks. If the account already reflects the loan balance — because you or your bookkeeper had already entered it — Mise recommends skipping the push so the balance isn’t double-counted. If the QuickBooks balance differs from what Mise computed, Mise offers to push a correcting entry. You can always override the recommendation manually.

How POS settlements get reconciled

When you upload a settlement report from Shopify, Stripe, Toast, DoorDash, or Uber Eats, Mise matches each settlement to its corresponding bank deposit and constructs a journal entry that respects your basis. The shape of that journal entry depends on two things: whether you’re on accrual or cash basis, and whether you’ve designated an in-transit clearing account for the payment processor.

Accrual basis, in-transit clearing account configured

This is the structurally correct setup for accrual revenue recognition. The settlement entry debits the in-transit clearing account for the gross amount, credits gross sales, expenses fees, and books refunds against a contra-revenue account.

Separately, when the bank deposit arrives and is categorized, that entry debits the bank and credits the in-transit account — clearing the asset to zero on a per-settlement basis. The math ties across the pair.

Cash basis

On cash basis, revenue is recognized when the money lands. Mise still breaks out fees and gross sales so the income statement shows the true picture — but the bank takes the debit directly, not an in-transit account.

Accrual basis, no in-transit clearing account configured

When your business is on accrual basis but no in-transit clearing account has been designated for a payment processor, Mise still pushes a settlement journal entry — but it’s structurally incomplete. The entry debits the bank directly, the same way the cash-basis shape would, and Mise tags the QBO memo with a warning.

The “Bank double-counts” warning is honest about what’s happening. The bank deposit’s own categorization will also debit the bank (because there’s no clearing account to debit instead), so the bank line is recorded twice. Mise emits this entry anyway — so revenue and fee detail aren’t lost — but the books will not balance until you configure an in-transit clearing account on the Reconcile page.

Mise surfaces this state directly in the UI: any time the basis is accrual and the clearing account is unconfigured, the provider settings show a terracotta warning until the gap is fixed.

Refund handling

Refunds appear in settlement reports as negative or separately-flagged lines. Mise reads them, adds a contra-revenue credit to the settlement journal entry, and lets the math tie: gross sales minus fees minus refunds equals the net deposit. Refunds are never treated as expenses, regardless of basis.

Specific account behaviors

The rules above produce the journal entry shapes above. Restated here from an accounting-principle angle — so a CPA or bookkeeper can confirm Mise is treating each account class correctly.

POS deposits

On accrual basis: debit the in-transit clearing account, not revenue. Revenue was recognized at the moment of sale inside the POS system; the in-transit account reflects money owed to the business but not yet in the bank. When the deposit arrives, debit bank, credit in-transit — the asset clears.

On cash basis: debit bank, credit revenue. Revenue equals when money lands.

Credit card payments

Debit the credit card liability, credit the bank. The original purchase already booked the expense; the payment is a balance-sheet movement, not a fresh cost.

Owner draws

Debit owner draws (an equity account), credit bank or credit card. Distributions to owners reduce equity. They are never an expense, because they are not a cost of generating revenue. This applies equally to explicit draws and to personal items charged to a sole proprietor’s business card.

Refunds

Contra-revenue, never expense. Booked against a refunds-and-discounts account so the income statement shows gross, refunds, and net separately.

Loan funding

Debit bank, credit long-term liability. The deposit is debt taken on, not income.

Loan payments

Debit liability for principal, debit interest expense for interest, credit bank. For factor-based products, the interest line is the factor cost. For zero-interest products, the entry collapses to debit liability, credit bank.

Chart of accounts

When you create a business in Mise, the chart of accounts is seeded from a template tied to your vertical. Mise ships three templates — restaurant, DTC, and other — each appended with a common tail of financing, equity, and transfer accounts.

Why the vertical matters

A restaurant chart includes per-aggregator in-transit clearing accounts: Toast, DoorDash, Uber Eats, and Stripe. A DTC chart includes Shopify and Stripe in-transit. The “other” chart includes a generic in-transit account that can be retitled as needed.

Without per-provider clearing accounts, accrual revenue recognition for businesses with multiple payment processors becomes incoherent — fees and gross flow into the same bucket, and you lose the ability to trace any single settlement back to its deposit. Mise solves this at the chart level so the structural setup is correct on day one.

Modifying the chart

You can rename, deactivate, or add accounts at any time. Mise’s mappings — between its internal categories and your QuickBooks accounts — are revisited every time you sync, so chart edits don’t break previously-pushed entries.

How basis affects everything else

Most of the behaviors above shift depending on whether your business is on accrual or cash basis. The categorization agent, the journal entry construction, and the reconciliation flow all adapt.

Cash basis

Revenue is recognized when money lands. POS deposits are revenue. There’s no need for in-transit clearing accounts — every deposit hits the bank and credits sales in the same entry. Refunds, fees, and net are still broken out so the income statement remains honest.

Accrual basis

Revenue is recognized when earned. POS deposits are transfers to in-transit clearing, not revenue. Reconciliation journal entries debit the clearing account and credit revenue at the gross settlement amount; the subsequent bank deposit clears the asset.

Accrual setup requires per-provider in-transit clearing accounts to function correctly. Mise warns you in the UI when the basis-and-clearing setup is mismatched.

What Mise doesn’t do

These are the boundaries we’ve drawn around the product. They’re deliberate, not accidental — each is a feature we could build but have chosen not to, because doing them properly is more expensive than the value would justify or because they would dilute what Mise is good at.

Multi-currency

Every business in Mise is single-currency USD. We don’t book FX gains and losses, we don’t manage currency conversion, we don’t reconcile across currencies. This is a real constraint for businesses with non-USD operations and we won’t pretend otherwise.

Inventory accounting

Mise expenses cost of goods sold at the time of purchase. We don’t track inventory levels, we don’t compute weighted-average cost, we don’t book inventory adjustments. Businesses on accrual basis with proper inventory tracking in QuickBooks can flag this in their settings so Mise doesn’t push duplicate entries.

Accounts receivable and accounts payable

Mise doesn’t generate invoices, doesn’t track open invoices, doesn’t pay bills. The QuickBooks AR and AP modules continue to do what they do; Mise doesn’t try to replace them.

Payroll

Outside the scope of the product. Gusto, ADP, and the QuickBooks payroll module continue to do payroll; Mise reads the resulting bank transactions and categorizes them.

Invoice OCR and receipt scanning

Mise works from bank and processor data, not from documents. Tools that read receipts and invoices are doing a different job; Mise is doing the bank-to-GL job.

Cross-tenant learning

Mise does not aggregate categorization corrections across businesses. Your learning shapes your books; it does not influence anyone else’s. Privacy is the default — we may revisit this only with explicit, per-customer opt-in.

Real-time POS integration

Mise reconciles POS data via CSV settlement reports, not via real-time platform APIs. Real-time integration is on the roadmap; CSV-first is deliberate for the initial product.