On your account panel as seen below
Click on products this will bring up a list that has categories in it as seen above.
Once you click on categories a new page as seen below will be shown
The category page contains the following fields
Name: This is the name of the category
Parent Category: This contains a category that the current category might belong to. ( Only select this part if you are adding a subcategory).
Featured: This selection is to check if the category is a special group with it's own menu.
Assign To Menu: This is to check if you need the category to be assigned on a menu on the landing page.
Thumbnail: This is a category image.( it is optional only add an image if you need one).
Then hit save. Congrats you have added your first category. In the above example, I went on and added a subcategory known as Accessories and parts see the image below.
Now Let's Look into