diff --git a/app/Http/Controllers/ExpenseController.php b/app/Http/Controllers/ExpenseController.php
index 1dc4f18d9b25..fa3eae6acd2a 100644
--- a/app/Http/Controllers/ExpenseController.php
+++ b/app/Http/Controllers/ExpenseController.php
@@ -86,6 +86,7 @@ class ExpenseController extends BaseController
             'vendor' => $vendor,
             'clients' => Client::scope()->with('contacts')->orderBy('name')->get(),
             'clientPublicId' => $request->client_id,
+            'categoryPublicId' => $request->category_id,
         ];
 
         $data = array_merge($data, self::getViewModel());
@@ -125,6 +126,7 @@ class ExpenseController extends BaseController
             'vendorPublicId' => $expense->vendor ? $expense->vendor->public_id : null,
             'clients' => Client::scope()->with('contacts')->orderBy('name')->get(),
             'clientPublicId' => $expense->client ? $expense->client->public_id : null,
+            'categoryPublicId' => $expense->expense_category ? $expense->expense_category->public_id : null,
         ];
 
         $data = array_merge($data, self::getViewModel());
@@ -234,7 +236,7 @@ class ExpenseController extends BaseController
             'countries' => Cache::get('countries'),
             'customLabel1' => Auth::user()->account->custom_vendor_label1,
             'customLabel2' => Auth::user()->account->custom_vendor_label2,
-            'categories' => ExpenseCategory::scope()->get()
+            'categories' => ExpenseCategory::scope()->orderBy('name')->get(),
         ];
     }
 
diff --git a/app/Http/Controllers/InvoiceController.php b/app/Http/Controllers/InvoiceController.php
index 3faf5fe91ed4..0106f6cf8937 100644
--- a/app/Http/Controllers/InvoiceController.php
+++ b/app/Http/Controllers/InvoiceController.php
@@ -245,7 +245,7 @@ class InvoiceController extends BaseController
         $invoice->public_id = 0;
 
         if (Session::get('expenses')) {
-            $invoice->expenses = Expense::scope(Session::get('expenses'))->with('documents')->get();
+            $invoice->expenses = Expense::scope(Session::get('expenses'))->with('documents', 'expense_category')->get();
         }
 
 
diff --git a/app/Services/ExpenseService.php b/app/Services/ExpenseService.php
index abf8a63e6343..040f7a405705 100644
--- a/app/Services/ExpenseService.php
+++ b/app/Services/ExpenseService.php
@@ -58,19 +58,6 @@ class ExpenseService extends BaseService
             $data['vendor_id'] = Vendor::getPrivateId($data['vendor_id']);
         }
 
-        if ( ! empty($data['category'])) {
-            $name = trim($data['category']);
-            $category = ExpenseCategory::scope()->withTrashed()->whereName($name)->first();
-            if ( ! $category) {
-                $category = ExpenseCategory::createNew();
-                $category->name = $name;
-                $category->save();
-            }
-            $data['expense_category_id'] = $category->id;
-        } elseif (isset($data['category'])) {
-            $data['expense_category_id'] = null;
-        }
-
         return $this->expenseRepo->save($data, $expense);
     }
 
diff --git a/resources/views/expenses/edit.blade.php b/resources/views/expenses/edit.blade.php
index 2e285a2ca0e4..c5889d8d7292 100644
--- a/resources/views/expenses/edit.blade.php
+++ b/resources/views/expenses/edit.blade.php
@@ -26,7 +26,6 @@
 	@if ($expense)
 		{!! Former::populate($expense) !!}
         {!! Former::populateField('should_be_invoiced', intval($expense->should_be_invoiced)) !!}
-        {!! Former::populateField('category', $expense->expense_category ? $expense->expense_category->name : '') !!}
         {!! Former::hidden('public_id') !!}
 	@endif
 
@@ -40,9 +39,10 @@
                             ->label(trans('texts.vendor'))
                             ->addGroupClass('vendor-select') !!}
 
-                    {!! Former::text('category')
-                            ->data_bind("typeahead: category, items: categories, key: 'name', valueUpdate: 'afterkeydown'")
-                            ->label(trans('texts.category')) !!}
+                    {!! Former::select('expense_category_id')->addOption('', '')
+                            ->data_bind('combobox: expense_category_id')
+                            ->label(trans('texts.category'))
+                            ->addGroupClass('category-select') !!}
 
                     {!! Former::text('expense_date')
                             ->data_date_format(Session::get(SESSION_DATE_PICKER_FORMAT, DEFAULT_DATE_PICKER_FORMAT))
@@ -132,12 +132,12 @@
     </div>
 
 	<center class="buttons">
-        {!! Button::normal(trans('texts.cancel'))->large()->asLinkTo(URL::to('/expenses'))->appendIcon(Icon::create('remove-circle')) !!}
-        {!! Button::success(trans('texts.save'))->submit()->large()->appendIcon(Icon::create('floppy-disk')) !!}
+        {!! Button::normal(trans('texts.cancel'))->asLinkTo(URL::to('/expenses'))->appendIcon(Icon::create('remove-circle')) !!}
+        {!! Button::success(trans('texts.save'))->submit()->appendIcon(Icon::create('floppy-disk')) !!}
+        {!! Button::normal(trans('texts.categories'))->asLinkTo(URL::to('/expense_categories'))->appendIcon(Icon::create('list')) !!}
         @if ($expense)
             {!! DropdownButton::normal(trans('texts.more_actions'))
                   ->withContents($actions)
-                  ->large()
                   ->dropup() !!}
         @endif
 	</center>
@@ -149,6 +149,7 @@
 
         var vendors = {!! $vendors !!};
         var clients = {!! $clients !!};
+        var categories = {!! $categories !!};
 
         var clientMap = {};
         for (var i=0; i<clients.length; i++) {
@@ -193,6 +194,13 @@
             }
             $vendorSelect.combobox();
 
+            var $categorySelect = $('select#expense_category_id');
+            for (var i = 0; i < categories.length; i++) {
+                var category = categories[i];
+                $categorySelect.append(new Option(category.name, category.public_id));
+            }
+            $categorySelect.combobox();
+
             $('#expense_date').datepicker('update', '{{ $expense ? $expense->expense_date : 'new Date()' }}');
 
             $('.expense_date .input-group-addon').click(function() {
@@ -285,8 +293,6 @@
         var ViewModel = function(data) {
             var self = this;
 
-            self.categories = {!! $categories !!};
-            self.category = ko.observable();
             self.expense_currency_id = ko.observable();
             self.invoice_currency_id = ko.observable();
             self.documents = ko.observableArray();
@@ -310,6 +316,7 @@
             self.account_currency_id = ko.observable({{ $account->getCurrencyId() }});
             self.client_id = ko.observable({{ $clientPublicId }});
             self.vendor_id = ko.observable({{ $vendorPublicId }});
+            self.expense_category_id = ko.observable({{ $categoryPublicId }});
 
             self.convertedAmount = ko.computed({
                 read: function () {
diff --git a/resources/views/invoices/edit.blade.php b/resources/views/invoices/edit.blade.php
index 676d87f7fd2a..e5f78562e7ad 100644
--- a/resources/views/invoices/edit.blade.php
+++ b/resources/views/invoices/edit.blade.php
@@ -862,6 +862,7 @@
                 for (var i=0; i<expenses.length; i++) {
                     var expense = expenses[i];
                     var item = model.invoice().addItem();
+                    item.product_key(expense.expense_category ? expense.expense_category.name() : '');
                     item.notes(expense.public_notes());
                     item.qty(1);
                     item.expense_public_id(expense.public_id());
diff --git a/resources/views/invoices/knockout.blade.php b/resources/views/invoices/knockout.blade.php
index 7f3d70176814..c30c03955fb9 100644
--- a/resources/views/invoices/knockout.blade.php
+++ b/resources/views/invoices/knockout.blade.php
@@ -799,6 +799,19 @@ function DocumentModel(data) {
     }
 }
 
+function CategoryModel(data) {
+    var self = this;
+    self.name = ko.observable('')
+
+    self.update = function(data){
+        ko.mapping.fromJS(data, {}, this);
+    }
+
+    if (data) {
+        self.update(data);
+    }
+}
+
 var ExpenseModel = function(data) {
     var self = this;
 
@@ -807,6 +820,11 @@ var ExpenseModel = function(data) {
             create: function(options) {
                 return new DocumentModel(options.data);
             }
+        },
+        'expense_category': {
+            create: function(options) {
+                return new CategoryModel(options.data);
+            }
         }
     }