QuickBooks Tips: Setting Up Your Chart of Accounts
QuickBooks is the ideal solution for organizing, managing, and analyzing your business’s finances. Setting up your Chart of Accounts can be a bit tricky if you aren’t familiar with this software, but The CFO Source is a valuable business accounting resource in our community, and we are here to help.
What is the Chart of Accounts?
Each piece of financial data within QuickBooks must be designated to a specific account in order for you to record, budget, or report that data. Accounting systems use a general ledger for matching asset accounts to liability accounts, but since a business’s current assets do not often perfectly match their current liabilities, accounting professionals use other account types to ensure an accurate ledger. Your QuickBooks Chart of Accounts is a list of these accounts that you use to categorize your expenses, income, assets, and liabilities.
Setting Up Your Chart of Accounts: Step-by-Step Guide
STEP 1: Under Lists, you’ll find the Chart of Accounts command. In the Account menu, select New.
STEP 2: Choose your desired Account Type from the list provided:
- Fixed Asset
- Credit Card
If your account is not one of the above, choose Other Account Types, where you can select one of the following additional accounts:
- Accounts Receivable
- Accounts Payable
- Cost of Goods Sold
- Other Asset
- Other Current Asset
- Other Current Liability
- Long-Term Liability
- Other Income
- Other Expense
STEP 3: Once you have chosen the appropriate account, click Continue. Give your account a unique Name.
STEP 4: Though not required, you have the option to provide a Description for this account as well. Without the description, your financial statements will simply list this account by the Account Name you have chosen, but if you’d like a more descriptive label for the account in your accounting reports, you may add a brief description.
STEP 5: If this account’s data will be reported on your business’s tax return, you can assign the account to a specific tax line using the Tax-Line Mapping drop-down list.
STEP 6: Once you have completed setup for your first account, click the Save & New button to add any other accounts necessary.
Get Professional QuickBooks Help for Your Business
Setting up the Chart of Accounts for your business in QuickBooks is only just the beginning of using this accounting software to its fullest extend and better managing your business finances. For the expert guidance your business needs, look to The CFO Source. We can help you make the profitability process simpler and give you the peace of mind that your business’s finances are managed with expert care. Call or contact us today to get started.