Your Chart of Accounts is the backbone of your QuickBooks data. Treat it with respect, but do learn how to work with it.
Whether or not you recognize it as such, you have a Chart of Accounts in your personal financial life. You have money that comes in and goes out for various reasons. You probably own a home and at least one vehicle, and other types of physical property. You may have a car payment and a mortgage and other types of loans, and you likely have an assortment of savings vehicles, maybe a 401(k), an IRA, or at least a savings account.
Your business bookkeeper, QuickBooks, sets up individual accounts in your Chart of Accounts to document these and maintain a record of the balance for each of them. It divides them into several types, including:
- Costs of Goods Sold, and
The Chart of Accounts is a critical element of your accounting system, and it needs to be maintained carefully. If you plan to alter it significantly, you should take a QuickBooks class to learn more about it.
When you create transactions, you assign them to one of these accounts. Those designations are used for a variety of reasons in your bookkeeping, like reports.
How do I find my Chart of Accounts? Open the Lists menu and select Chart of Accounts.
What if my Chart of Accounts doesn’t contain numbers? Open the Edit menu in QuickBooks and select Preferences, then click on General | Company Preferences. Click in the box in front of Use account numbers to put a checkmark there, then click OK.
Why would I want to modify my Chart of Accounts? There are numerous reasons, but make sure you understand why you think it’s necessary. You may want to consult an accountant or take a QuickBooks tutorial that is focused on this critical element of your bookkeeping. Business change their Charts of Accounts when for, example, their company is growing and/or they want more precise reports.
How do I add an account? Go to Lists | Chart of Accounts. In the lower left corner, there’s a bar that says Account on it. Click the arrow next to it to open this menu:
You can work with your Chart of Accounts by accessing this menu.
To add an account to your QuickBooks Chart of Accounts, click New. You’ll have to answer a few questions here to define your new account, including:
- What type of account is it?
- What name and number will you give it? (It’s important that you assign a number that will fall within other accounts of the same type.)
- Will it be a subaccount of another account?
- Do you want to assign it to a tax form line?
- What is the opening balance?
You’ll need to learn how to use QuickBooks’ tools for adding new accounts if you plan to modify your Chart of Accounts.
When you’re done, save the new QuickBooks account to make it available for use in your bookkeeping.