QuickBooks Tip: Customize your Chart of Accounts

by Lynnea Bylund on November 30, 2010 · 28 comments

The Chart of accounts (COA) is a list of the accounts used by an organization’s accounting process. The list can be numerical, alphabetic, or alpha-numeric.

The structure and headings of accounts should assist in consistent posting of transactions. Each nominal ledger account is unique to allow its ledger to be located. The list is typically arranged in the order of the customary appearance of accounts in the financial statements, profit and loss accounts followed by balance sheet accounts.

quickbooks bookkeeping accountingWhile ostensibly the COA is a categorizing approach, if set up with careful forethought, your COA “…can be one of your most useful tools in analyzing your business,” says Donna MacMillian of Bookkeepingrus.com in Portland, Maine.

By designing your chart of accounts with the financial analysis of your company in mind, you will be able to see just where your profits are coming from and where your expenses need to be examined.  How so?

Donna MacMillan


quickbooks_tipsBy setting up income accounts for each department or segment of your business you will get a view of which areas are working for you. And by breaking out your expenses, both direct and indirect, within these income areas, you will also see which areas are most profitable. For example, if you are in the business of general contracting, you might build custom homes, do remolding, rehab older buildings and incur warranty costs. Wouldn’t it help you if you knew how much income was coming in from each of the services you provide? And how much profit each of the areas was bringing into the company?

If you are lumping warranty costs into general expenses then how do you know how much it is costing you? In this example, you would want to set up an income account for each of the profit areas you would like to track – Custom Homes, Remolding, and Rehab. You would also set up sub accounts for each of the Cost of Goods Sold accounts tying each sub account into a profit area. If you had an account called Materials (or Labor, or Subcontractors) you would set up a sub account under Materials for Custom Homes, Remolding, Rehab, and Warranty Costs. While you don’t need an income account for Warranty you will want to track the expenses you incur. In fact you might want to set up a Warranty sub account for each profit area under each Cost of Goods Sold account, thereby allowing you to see where your warranty costs are adding up. For each account in your Cost of Goods Sold section repeat this process of setting up sub accounts for each business segment.

If you wished to get a more concise view of each of the segments of your business, then you could assign a percentage of General and Administrative Expenses to each of profit centers.

With these facts available you can make good decisions as to what areas it makes sense to extend growth, or perhaps to cease operations. And while I have used the construction industry as an example, this works in every type of industry. And your chart of accounts can be expanded or compressed as your business needs arise.

{ 28 comments }

1 Gandhi for Children October 24, 2010 at 12:10 pm

This is good stuff. Our organization has benefited from your accounting tips, for sure!

2 Kaci Wischman December 16, 2010 at 2:54 am

t’s always a pleasure to see uncovering a new way of working with and customizing my QuickBooks. Thanx for this.

3 Odwella Projen December 23, 2010 at 12:51 pm

Concur with previous commenter, I have always been stumped on this aspect of QuickBooks.

4 Dr. Joey Eyball December 23, 2010 at 5:58 am

Valuable info. Lucky me I found your site by accident, I bookmarked it. Finally my QB COA will hum!

5 Catering Maniac December 23, 2010 at 2:45 pm

That is a brilliant idea! QuickBooks rocks!

6 ZapThis December 23, 2010 at 3:24 pm

Good an very informative post. I was needing to know how to customize my COA. TY!

7 Nadruki Reklamowe December 24, 2010 at 1:40 pm

Good one! Finally I can customize my QuickBooks Chat of Accounts. Thank you for this instructional post!

8 Doris Kuchnie December 31, 2010 at 2:05 pm

Thank you. My CoA is now fixed!

9 Przeprowadzki Warszawa January 3, 2011 at 2:53 pm

Thank you, my QB COA is good now. I wanna read more your articles!

10 Akum January 6, 2011 at 12:35 am

Super article – I tweaked my Chart of Accounts immediately after reading.

11 Peter Warszawa January 10, 2011 at 11:49 am

Finally, I can customize my QuickBooks Chart of Accounts. Good job, I appreciate your blogs for great info like this!

12 Gielda Transportowa January 13, 2011 at 9:11 am

I agree also – thank you, I finally have my CoA right!

13 CPA Czapki January 15, 2011 at 10:17 am

I would like to let you know that this Chart of Account info rocks.

14 Rico Grasmuck January 22, 2011 at 5:39 pm

It is my opinion it’s the best primer on QB COA I’ve read. Gratzi!

15 Klinika Stomato January 27, 2011 at 2:00 pm

The important thing is that your website is great and my COA is now perfectly customized. Thanks!

16 Sean Murphy January 27, 2011 at 2:58 pm

Things you brought to customize the quickbooks chart of accounts made a lot of sense. It worked and I like it! Greetings!

17 CPA Torty February 3, 2011 at 9:57 am

I was about to turn to the Intuit forums, but you nailed it for me! My COA QuickBooks understanding just improved!

18 Szyby Samo February 4, 2011 at 4:16 pm

Great post… my QuickBooks chart of accounts is now PERFECT! Merci!

19 Kat Strone February 5, 2011 at 7:29 pm

Simply amazing article!!! My COA is now correct! TY!

20 Catalyst QuickBooks Editor February 17, 2011 at 10:51 pm

Glad we could help!

21 Posicion Amiento February 18, 2011 at 11:43 am

This post helped be fix and finetune my QuickBooks Chart of Accounts

22 Pamela March 9, 2011 at 5:40 pm

The important thing is that your website is great. And the QuickBooks tips are always helpful!

23 Keena Duhamel March 15, 2011 at 10:45 am

It’s really a nice and helpful piece of info. I’m glad that you shared this helpful information with me because my chart of accounts was nerver right and I never really understood it. Now its right! Please continue to keep us informed like this. Thank you so much!

24 Tea Lady April 13, 2011 at 3:20 pm

Good an very informative post. I finally have my COA customized properly.

25 follow your dreams April 27, 2011 at 11:57 pm

When I originally commented I clicked the -Notify me when new feedback are added- checkbox and now each time a remark is added I get four emails with the identical comment. Is there any approach you possibly can remove me from that service? Thanks!

26 akciğer kanseri belirtileri April 29, 2011 at 9:36 am

really thanks i needed this for our quickbooks operation in turkey!

27 bmx May 4, 2011 at 8:19 pm

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28 make a windmill May 4, 2011 at 8:45 pm

Great work! keep the posts coming… i’ll keep reading them. Thanks

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