How to Setup the Chart of Accounts

How to Setup the Chart of Accounts

Overview

A well-structured chart of accounts (COA) is essential for any business to maintain accurate financial records. The COA serves as the backbone of an accounting system, categorizing financial transactions into meaningful groups.

CustomBooks™ comes with a standard Chart of Accounts. You may add, change, or remove these to suit your needs. You can also import your own chart of accounts or even copy it from another client if you have more than one CustomBooks™ account.

Structure of a Chart of Accounts

A standard COA typically consists of the following categories:
  1. Assets – Cash, accounts receivable, inventory, fixed assets.
  2. Liabilities – Loans, accounts payable, accrued expenses.
  3. Equity – Retained earnings, owner’s equity.
  4. Revenue – Sales income, service revenue.
  5. Expenses – Rent, utilities, salaries, office supplies.
Each account is assigned a unique account number for easy identification.

Numbering System

CustomBooks™ allows customization of account numbers. A common structure includes:
  1. 1000–1999: Asset accounts
  2. 2000–2999: Liability accounts
  3. 3000–3999: Equity accounts
  4. 4000–4999: Revenue accounts
  5. 5000–5999: Cost of Goods Sold accounts
  6. 6000–6999: Expense accounts
Check this article for a sample Chart of Accounts that provides a basic structure you can use as a reference or starting point.

Info
These ranges can be modified or ignored in your Accounting Settings.

Creating an Account

To create a new account in the Chart of Accounts:
  1. Navigate to Accounting → Chart of Accounts.
  2. Click Create. (see screenshot below)
  3. Enter a Name for the new account.
  4. Choose an Account Type.
  5. Enter an Account Code or leave this field blank to have the system assign a code for you (The system will use standard account type numbering when assigning a number).
  6. Select or choose an Account Group (optional). See this article to learn more about Account Group.
  7. Select a Parent Account (optional). A parent account in a Chart of Accounts is a high-level account that groups related subaccounts under it. It acts as a category or summary account, providing an organized structure for financial reporting.
  8. If this account will be tracking transactions related to 1099 filings, choose the appropriate 1099 Category from the list.
  9. Select a Tax Line (optional). A tax line is a designation used to associate specific accounts with tax reporting categories. It ensures that transactions recorded in those accounts are correctly mapped to tax forms when generating financial reports for tax purposes.
  10. Click Save and Close to finish.


Creating a new Account

To import a Chart of Accounts, go to this ARTICLE to learn more.
You may also add your own custom fields to an account in the chart of accounts. To learn more, read the article about Custom Fields.

Defining a Sub-Account

A sub-account in a Chart of Accounts is a more detailed category under a parent account that helps in tracking specific financial activities. For instance, Hotel Expense and Meals might be sub-accounts of Travel Expenses. Sub-account totals roll up into the parent account.

In the screenshot above, Disassembly Expense, Production Waste, Cleaning Supplies and Office Supplies are a sub-accounts of Expense.

Creating a Sub-Account

  1. In the Chart of Accounts list view, double click the account that will become the sub-account.
  2. In the Parent field, enter the account number of the account that will become the parent.
  3. Click Save and Close.


To remove a sub-account from a parent account, double click the sub-account and remove the account from the parent field then save.

Exporting the Charts of Accounts

The Chart of Accounts can be exported by clicking the Export list button on the Chart of Accounts list view command bar. The exported chart of accounts includes the account number, the parent (if any), the account name, the account type, the balance and any other columns that is currently added on the list. You may uncheck those columns that you do not need on the exported file.


Inactive G/L Accounts

You can make a G/L Account inactive. The account should have zero balance before making it inactive or else the system will not allow it. Inactivate accounts will not show up in any selection list or reports but will remain in the system for historical purposes. Inactive accounts can be hidden as well in the Chart of Accounts List.
InfoIf you try to mark an active account with a balance as inactive, a wizard will open to allow you to easily move the outstanding balance to a different G/L account. 

Making a G/L Account Inactive

  1. In the Chart of Accounts list view, double click the account that you would like to inactivate.
  2. Slide the Make Inactive toggle bar.
  3. Click Save and Close.


To inactivate multiple accounts in batch:
  1. In the Chart of Accounts list view, highlight one or more accounts (use ctrl on windows or cmd on mac to highlight multiple accounts)
  2. Right click and choose Edit → Make Inactive.


Warning
  1. You  may not inactivate accounts that have a balance. A wizard will open if you try to inactivate an account with a balance, allowing you to easily move the balance to a different G/L account.
  2. Certain accounts are needed by the system and cannot be inactivated. You will receive an error when attempting to deactivate these accounts.

Tips and Tricks

  • If an account that was just entered doesn't appear in the list, click the Refresh button (#1) to refresh the screen.
  • You may run and view a General Ledger Report showing transactions by clicking the Show button → General Ledger (#2).
  • Search for an account using the Search box in the upper right can corner (#3).
The Chart of Accounts screen

You can also check these articles to know more about Chart of Accounts :
  1. Chart of Accounts Overview
  2. Sample Chart of Accounts
  3. Importing and Exporting Chart of Accounts


    • Related Articles

    • Importing and Exporting Chart of Accounts in CustomBooks™

      Importing Chart of Accounts You can import accounts to the Chart of Accounts (CoA) in CustomBooks™ in two ways: From the Company/Client List. From a file using the Data Import Wizard. Importing from the Company/Client List If you have another company ...

    • The Chart of Accounts

      You can check these articles to know more about the CustomBooks™ Chart of Accounts : Charts of Accounts Overview Working with the Chart of Accounts Sample Chart of Accounts Importing and Exporting Charts of Accounts

    • Chart of Accounts Overview

      Chart of Accounts The Chart of Accounts is a listing of all the accounts in the general ledger, each account accompanied by a reference number. To set up a chart of accounts, one first needs to define the various accounts to be used by the business. ...

    • New Chart of Accounts Groups & Upgraded Financial Reports!

      New Chart of Accounts Groups & Upgraded Financial Reports! Check out the video below! Create a better organized/easier analyzed Chart of Accounts with our new non-posting Account Groups! Unlimited hierarchy for account structure with Group, Parent ...

    • How to Print the Chart of Accounts

      To print the chart of accounts, go to Accounting → Chart of Accounts and click export to excel. Then print the resulting report. Alternatively, this may be printed from the Universal Report by choosing Reports and clicking the Universal Report under ...