In Catalog -> Categories, you should see "Add a New Category" form which you could use to add a new category. In Category Name enter an unique category name. Categories could be formed in a tree style. Pick up a parent category in the Parent Category drop down list. If you wish to add a category without parent, use "Top Level". Upload an image for the category and category description if applicable. Both of these are not being used currently. They will be used in the future release. Enter a number to Sort Order which allows you to set the order of how categories are displayed. The smaller number that you assign it in Sort Order, the higher order the category is displayed. Expand Depth is the number of levels that are display in the category side box. You could leave it as the default value 2. Click Display Useful Links checkbox if you want to display the category links breaking down into price ranges and manufacturers. In Price Ranges you could define the boundary price values that break down into price range. Enter a list of prices separated by commas. For example, you enter 10.00,20.00,30.00 to show range $0.00 - $10.00, $10.00 - $20.00, $20.00 - up. Don't enter dollar sign. Click "Add" button when you are done.