Click on Categories under "E-Store" on the left hand side in your storeadmin.

You may or may not have sample categories already added.
Click on the Add button to add a new one.

Category Name

Give the category a name. This example is a Bracelets category.

If this is a regular category, leave Parent Category set to the blank box.
This option is only for when you're making a sub-category.

Optional Images

The next three options are usually left blank.
However, if you want to know what they're for, CLICK HERE for an explination.

Most sites use a regular text menu.
In which case you would leave the Nav Image box blank.

Nav Image (menu image)

 

Header Image is for a page title image.

Header Image (page title)

 

List Image is used if your menu only shows the catalog link and not all
your categories and you wanted to us an image to represent the categories.

List Image (catalog categories)

 

Category Description

Give your category a description. This is optional of course but it helps
to add a description so that search engines can index you better against
the keywords you add in the keywords section further down.

Search Engine Optimization

Add pertinent keywords for your category.
 Be sure to choose words that you used in your description.
This way search engines can crawl your site and compare
keywords listed below to the category description above.

Meta Title is another key feature for search engines.
When you do a search, those bold clickable links are "meta titles".

Product Layout

There is a default setting under Catalog Setup in your storeadmin area
for the layout of your products. However, you can override that setting
and tell each individual category what layout to use. Choose
that from the Layout dropdown menu.

Choose Yes to make your new category active to where
it will be seen when someone clicks on the link on your site.

Rows tells how many product rows per page your category will display.
You can have up to 30 rows. How many actual products depends on the layout you choose.

When you're all finished with the steps above, click on Add Category.

Now you should see your new category listed.
Move it up or down with the little up and down arrows.