In this QuickBooks Pro Tutorial we will discuss setting up a chart of accounts.
A chart of accounts is simply a list of your accounts used to track financial transactions in your small business.
You can find your chart of accounts in your QuickBooks file by clicking on Lists and then going down to Chart of Accounts.
You have installed your QuickBooks and set up your company file. Now it is time to customize your chart of accounts to fit your particular small business.
Print out the default list and decide what you want to keep and what you want to delete. To delete an account:
You can also edit the names of the remaining accounts if you need to. Simply click on the accounting button again and go up to edit and click.
Decide if want to use numbers with your account names (most accountants suggest you use a numbers...but if you have a very small business...it may not be necessary).
If you decide to use a numerical system, you can enable this feature in your QuickBooks by selecting Edit → Preferences → Accounting → Company Preferences. Select Use account numbers”.
A maximum of 7 digits can be used, although most small businesses use 4 to 5 digits.
The first digit indicates the classification.
Accounts beginning with:
Decide what new accounts you need to add.
There are several methods for deciding what accounts you need. You can look at sample chart of accounts for businesses in your industry or if this is not your first year...get out last year’s tax return for a general idea of the income and expense accounts you need.
If you prepare you taxes on a Schedule C, a great resource is Schedule C: from A to Z (The Sole Proprietor's Guide to Tax Savings) It will help you categorize your expenses.
Set up new accounts With your list of new accounts in hand...let’s get them set up:
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