Standard Chart of Accounts
Recurring question that I constantly skirt around (I will finally answer it today)…
I work with service providers like you do and I am thinking that having a standard chart of accounts would be beneficial. You mention in your book that you have found having a standard chart of accounts to be helpful. I've been trying to find examples of a good chart of accounts but google has not proved to be very helpful. I was wondering if you would be open to sharing the chart of accounts you use with your clients?
First off…I love my standard chart of accounts (COA).
But every time someone asks for me to share my, I avoid the topic. The reason being, my standard COA feels really specific to my niche and how my internal processes work. To share it would feel irrelevant to someone else’s process and it’d have to come with a load of explanation.
I can imagine the question: “Erica, why on Earth do you have accounts in your COA that you never actually use in QBO?”
Because I use them for forecasting in Fathom.
At the crux of it, I break the admin expenses into cost centers and list sub-accounts within those cost centers (similar to what you’d see at a large corporation). That way, the business owner and I can have a high-level view and discussion about how much Marketing, HR, etc are costing the company.
Here’s my high-level standard below. I’ve removed the sub-accounts here since they’re niche-specific, but an example would be 52001: Human Resources - Payroll Wages, 52002: Human Resources - Payroll Taxes, etc.
Swipe this starter file here (now available in Aligned Accountants)
The benefits of a standard chart of accounts for every client I have is the improved efficiency of:
Bookkeeping - Wait, is the account called “hotels” or “lodging” in this client file…always “lodging” in my COA
Month-end close review - Woah, marketing looks way out of whack this month. Let’s see what’s driving that.
Forecasting - Client: Have we forecasted for federal and state quarterly estimates in this cashflow forecast? Me: Absolutely. Let’s jump to where I forecast that.
Want to know how to easily upload your standard COA into QBO? Here’s a link to a really good QBO Help article.
Hope this helps!
Erica
PS - I’m looking forward to Friday! Louella (fellow 15-Hr-er) will show us Keeper and then I’ll do Q+A, so bring your questions and all your Friday vibes!
Behind-the-scenes in my business this week:
On this No Work Wednesday, I’m ::gasp:: working a little—not before a trip to the dentist though (I can almost feel my upper lip again).
I’m grateful for my flex-days that are Wednesdays. I normally don’t work Wednesdays, but the “free day” during the week allows to me to swap work days if a kid (or I) get sick on a Monday or Tuesday or it allows me to catch up on work if I have a particular busy period.
Today I need work on my newest client onboarding, working on none other than…updating their chart of accounts to my standard :o)
Money back guarantee, if you get in there and don’t see the value. No questions asked.
More details in the link above.