What Is a Chart of Accounts?

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A chart of accounts is the list of categories used to classify your business transactions. It's where you place the income, expenses, and assets.

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Product Recommendation: QuickBooks Online
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Chart of accounts for small business

The abbreviation for a chart of accounts is COA. Small business owners maintain the COA in a bookkeeping spreadsheet or inside accounting software. The chart of accounts list can be short or long, depending on the needs of your business. 

TIP: It's best to consult with your accountant and bookkeeper before creating your list. Professionals often use a numerical system with each account.


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 Free chart of accounts printable spreadsheet excel

Chart of accounts example

When you're working with the business books, you must place each transaction in the applicable category.
  • Example #1: You purchase a ream of paper for your printer, you would classify the transaction under Office Supplies.
  • Example #2: You buy a desk for your office; you classify it to Furniture & Fixtures.
  • Example #3: You receive a payment from your customer; you classify it under Income.
For specific categories, you'll have a parent account and a sub-account (nested under the parent). The subs contain the most common situations occurring in your business and provide a more in-depth characterization of the transaction. So, if you're a landlord, you may have sub-accounts under Income that look like this:
Income
  Damages
  Late fee
  Rent

Import chart of accounts into QuickBooks Online

When you're setting up a chart of accounts in QuickBooks, you may use the standard COA, or you can import a custom list. Which one should you choose? Although the express setup sounds like the best option, you might spend more time fixing a generic account list. So, it's better to take the time to customize it now rather than later.



DISCLAIMER: Please consult with your accountant, attorney and financial advisor before implementing any information displayed on this website. DIY research does not replace the advice of a licensed professional who has thoroughly reviewed your file.