How to set up Quickbooks Chart of Accounts
The Chart of Accounts is the foundation or backbone of every business’s financial system. These accounts work behind the scenes to show how much money is flowing in and out of the different categories that shape a business.
QuickBooks will set up a default chart of accounts depending on the type of business. The default list will include accounts receivable, accounts payable, inventory asset, sales tax payable and retained earnings. You also have the option to create accounts that aren’t automatically included. The categories that new accounts can be set up in include assets, liabilities, owner’s equity, income or expenses.
The actual process of creating new accounts in QuickBooks is very simple. First click on the gear icon to get to the Chart of Accounts. The Chart of Accounts is listed below the ‘Your Company’ column. After clicking on ‘Chart of Accounts’, click the ‘New’ button. This will take you to the new account screen where you will complete fields such as account type, detail type, service/fee income/other miscellaneous income, name and description. Then click the ‘Save’ button and just like that you have your new account.
Not only can you create new accounts but you can modify or delete an account. From the Chart of Accounts screen, scroll down to the account you want to edit, click the drop-down arrow and select ‘Edit’. This will open a window where you can modify the name and description of the account. You can only change the Category Type if you haven’t entered any transactions to this account. Then just save and close. To delete an account, from the Chart of Accounts screen, scroll down to the account, click the drop-down arrow and select ‘Delete’. Then click ‘Yes’ to confirm the action to delete.
Now you have a Chart of Accounts that caters to your own specific business.