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“The Perfect Chart of Accounts” by Your Quickbooks Consultant Orange County



“The Perfect Chart of Accounts” by Your Quickbooks Consultant Orange County

Your “Chart of Accounts” or “COA” is the list of accounts in your accounting software.  The accounts are listed in your reports and the totals allow you to determine how much you have spent, made, own, or owe depending on the type of account.  

It is essential to create a list of accounts that you need in order to make better business decisions.  Your chart of accounts needs to be designed intentionally. If it hasn’t been, it’s never too late! And your Quickbooks consultant Orange County is here to help.

Two Types of Accounts

There are two major types of accounts:

  1. Balance sheet accounts that tell what you own and owe.  Balance sheet accounts are determined by your checking accounts, inventory, and credit cards.  
  2. Income statement accounts tell you about current period operating results.  These, in turn, have two major categories, income and expenses. For companies with inventory, expenses are further broken out into cost of goods sold and other expenses.   

Three Purposes

A chart of accounts should meet three needs:

  • Make it really fast for you to do your taxes
  • Give you all sorts of “Aha’s”
  • Allow you to spend far more time on revenue analysis than expense analysis because that’s where success lies for small businesses


Your accounts should be the same as (or be able to be grouped into) the lines on your tax return.  You can find a copy of the tax form you fill out. For example, a sole proprietor will use a Schedule C of 1040, and a corporation will complete 1120.  

There are a few special needs, such as meals and entertainment, which are only partially deductible, that you need to pay special attention to. Team One Accounting can help you with that.  


As small business owners, we work with a gut feeling, but when you see what you’ve made or spent in black and white, it takes on a whole new level of meaning.  Your income statement and other reports should do that for you. If they don’t you may not have your accounts set up right.


Think about how you want to see your revenue:

  • By product line
  • By major supplier
  • By category of the solution to the customer
  • By customer type
  • By service type
  • By location (you can also use Class for this)
  • By job
  • By distribution method

Your Quickbooks consultant Orange County can help you brainstorm based on your industry and type of business.  

Actionable Intelligence

If you’ve been putting all your revenue into one revenue account, it will be exciting the first time you see your new Profit and Loss statement.  

If you’ve been breaking out your revenue but it hasn’t led to any actionable change in your business, then there may be a better way to break it out.  

If you’re happy with the way your revenue is broken out, then think about how you can take it to the next level.   

Once you see your new Chart of Accounts, you will likely have even more questions.  The COA can be an evolving entity, designed to serve your business needs.

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