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Chart of Accounts

The chart of accounts is the backbone of your accounting system.

Account Types

  • Assets (1000-1999): What your business owns
  • Liabilities (2000-2999): What your business owes
  • Equity (3000-3999): Owner's stake in the business
  • Revenue (4000-4999): Income from sales and services
  • Expenses (5000-5999): Costs of running the business

Account Structure Examples

Assets (1000-1999)

1000 - Cash & Bank Accounts

1010 - Checking Account

1020 - Savings Account

1030 - Petty Cash

1200 - Accounts Receivable

1210 - Trade Receivables

1220 - Employee Advances

1500 - Fixed Assets

1510 - Equipment

1520 - Vehicles

1530 - Furniture & Fixtures

1590 - Accumulated Depreciation

Liabilities (2000-2999)

2000 - Accounts Payable

2010 - Trade Payables

2020 - Accrued Expenses

2100 - Credit Cards

2110 - Business Credit Card

2120 - Corporate Amex

2500 - Long-term Liabilities

2510 - Bank Loan

2520 - Equipment Financing

Revenue (4000-4999)

4000 - Sales Revenue

4010 - Product Sales

4020 - Service Revenue

4030 - Subscription Revenue

4500 - Other Income

4510 - Interest Income

4520 - Consulting Fees

Expenses (5000-5999)

5000 - Operating Expenses

5010 - Salaries & Wages

5020 - Payroll Taxes

5030 - Employee Benefits

5100 - Office Expenses

5110 - Rent

5120 - Utilities

5130 - Office Supplies

5140 - Internet & Phone

5500 - Marketing & Sales

5510 - Advertising

5520 - Website & SEO

5530 - Trade Shows

Creating Hierarchy Accounts

Organize accounts in parent-child relationships for detailed tracking:

Step 1: Create Parent Account

  1. Go to Accounting → Chart of Accounts
  2. Click "Add Account"
  3. Select account type: Expense
  4. Account number: 5100
  5. Account name: Office Expenses
  6. Check "This is a parent account"
  7. Save account

Step 2: Create Sub-Accounts

  1. Click "Add Account" again
  2. Select account type: Expense
  3. Account number: 5110
  4. Account name: Rent
  5. Select parent account: 5100 - Office Expenses
  6. Save account
  7. Repeat for other sub-accounts (5120 - Utilities, 5130 - Office Supplies)

Hierarchy Benefits

  • Organized Reporting: View totals by parent category
  • Detailed Tracking: Track specific expenses within categories
  • Flexible Analysis: Drill down from summary to detail
  • Clean Structure: Keep chart of accounts organized

Numbering Best Practices

  • Leave gaps between numbers (5100, 5200, 5300) for future accounts
  • Use increments of 10 for sub-accounts (5110, 5120, 5130)
  • Parent accounts end in 00 (5100, 5200)
  • Sub-accounts use parent prefix (5100 → 5110, 5120, 5130)
  • Maximum 3-4 hierarchy levels to avoid complexity

Real-World Example

Scenario: Track marketing expenses by channel

5500 - Marketing & Sales (Parent)

5510 - Digital Marketing (Sub-parent)

5511 - Google Ads

5512 - Facebook Ads

5513 - LinkedIn Ads

5520 - Content Marketing (Sub-parent)

5521 - Blog Writing

5522 - Video Production

5530 - Events & Trade Shows

Result: View total marketing spend (5500) or drill down to specific channels

Pro Tip: Start with fewer accounts and add sub-accounts as your business grows and reporting needs become more specific.

Warning: Cannot delete accounts with transaction history. Mark as inactive instead.