Financial Reports that make sense are the result of a well-built Chart of Accounts. Your QuickBooks Online books is made up of lists, and the most important list you will build within your QuickBooks Online account is your Chart of Accounts. Your company’s income, expenses, assets, liabilities and owner equity will be presented in your Financial Reports with the accounts that you create within your companies Chart of Accounts.
For your companies’ financial reports to make sense and become meaningful to you as a business owner, you should carefully consider the naming convention of your accounts as they relate to your business operations. When you tell QuickBooks Online what industry you’re in, it creates a “default” Chart of Accounts list based on that initial setup selection. Your next steps are to further customize this account list for your unique business.
You Should Create Parent & Child Accounts for Business Expenses
When customizing your Chart of Accounts list, it is important to create “Parent” and “Child” accounts for your expenses, including your COGS (cost of goods and services sold) expenses. Do keep in mind that with the Essentials and Plus subscriptions of QuickBooks Online you are limited to 250 accounts. However, there is no limit to the number of accounts you can create with the Advanced subscription of QuickBooks Online.
You Should Create Parent & Child Accounts for Business Income
Most small businesses have more Expense Accounts than Income Accounts. Choose your income accounts wisely. Remember that the setup of your Products and Services will have more detail than your Income Accounts. You may have hundreds of Products and Services setup, and only a half-dozen Income Accounts. Each of the Products and Services that you Purchase and Sell get mapped to a specified Income Account and a COGS (cost of goods sold) Expense Account. Also note that some Services require Sales Tax to be charged, while others do not. Stay informed on your State requirements.
You Should Create Parent & Child Accounts for Business Liabilities
When customizing your Chart of Accounts list it is important to create “Parent” and “Child” accounts for your business Liabilities. If you have employees, you will have a number of “Payroll Liabilities” such as “Payroll Taxes” and “Employer Health Insurance Payable”. When your QuickBooks Online payroll service is setup, some default accounts are automatically created in your Chart of Accounts. However, if you use another payroll provider such as Gusto, Paychex, Benefits Mall or ADP, you will need to create a customized Payroll Chart of Accounts and develop a process for recording your Liabilities.
Your Personal Guide to Seamless Accounting: Advanced QuickBooks ProAdvisor at Your Service
Hey there! I’m Gina, and I’m the proud co-founder of Lend A Hand Accounting. Why did I start this? Well, I believe that everyone should have access to affordable, efficient, and flexible accounting and bookkeeping services. It’s all about making sure these essential services fit snugly into your budget without any fuss.
We’ve ditched the traditional hourly rate system and adopted a flat fee pricing. You might be wondering, “Why does this matter?” Well, this way, you know exactly what you’re paying for upfront and there are no unexpected surprises. You get to pick and choose the accounting services you need, like a customized menu. And the best part? You’re in complete control of when you start or stop using our services. We’re essentially just a call or a text away, no need for endless phone calls or draining trips to the accountant’s office.
I’m not just any accountant though. I’m an Advanced QuickBooks Online ProAdvisor. That means I’m equipped with advanced expertise and resources to help you leverage QuickBooks Online to its full potential. My goal is to make your accounting process smooth and efficient so you can focus on what you do best – running your business.
Ready to get started? Reach out to me directly at 360-637-4799. We can even kick things off immediately if you’re ready. Simply create a free account, and I can instantly take a look at your books and let you know where you stand.
At the end of the day, we’re here to serve you. We really appreciate the trust you place in us and we’re eager to meet all of your accounting and bookkeeping needs. Looking forward to being part of your team!
Take care,
Gina
The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
