Free Chart of Accounts Template Excel Download + Setup

The exact number of levels depends on the complexity and needs of the business, and sometimes an opportunity for consolidation may simplify the structure. At the end of the year, a review of these accounts may indicate if fewer levels would be advantageous. A version of this article was first published on Fundera, a subsidiary of NerdWallet, highlighting the evolving strategies in accounting practices. A well-structured Chart of Accounts (CoA) is crucial for construction companies, given the industry’s project-centric nature and the complexity of tracking costs and revenues for multiple simultaneous projects. This CoA facilitates accurate financial reporting, budgeting, and project cost management, ensuring compliance with accounting standards and regulations. While the chart of accounts can be similar across businesses in similar industries, you should create a chart of accounts that is unique to your individual business.

• This code makes it easier to find specific transactions in your chart of accounts.
• With this sample format, you can create an account plan to manage all the accounts.
• You can easily download this template anytime and anywhere based on the requirements you have.
• The specific accounts and their numbering may vary by company, industry, or specific accounting standards adopted.
• To help those just starting out, this site publishes workable, basic COAs, that can be expanded as needed, free of charge.

Income Statement

• If you’re making the leap from an overly simplistic or disorganized Chart of Accounts, knowing what to include and what not to include can be tricky.
• This prevents duplicate accounts and keeps everything easier to navigate.
• Designate a starting number for each category (e.g., revenue, COGS and OPEX).
• Expense Accounts – In most organizations, the Expense accounts make up the longest list of individual accounts in the Chart of Accounts.
• The first digit of the number signifies if it is an asset, liability, etc.

An expense account named Professional fees can be added to monitor costs for hiring professionals. Marketing expenses is another expense account to track promotional costs. The COA also includes accounts for online payment systems to monitor digital transactions. Although most decent accounting software packages will generate and https://www.cenfinity.com/bookkeeping/bookkeeping-review-vs-audit-why-cpa-firms-must-4/ maintain these identifying numbers for you, it’s still a good idea to have a solid understanding of the underlying system.

Income statement accounts

These accounts are crucial for understanding the core profitability of your business. Think of it as the top line what comes in before any expenses are taken out. A well-organized chart of accounts will break down revenue into different streams, giving you a clear picture of where your money is coming from. For example, a retail store might have separate revenue accounts for clothing sales, shoe sales, and accessory sales. A service-based business could track revenue by service type, like unearned revenue consulting, training, or maintenance. This level of detail helps you analyze which parts of your business are performing best.

US GAAP Chart of Accounts

While IFRS and US GAAP, are clear the condition (transfer of control) for recognizing revenue, they make no mention of the accounts to be used. Other times it does not seem the concepts are consistent with common practice. Currently, practitioners seem to prefer a COA organized in a rational and consistent manner over one reflecting a particular XBRL structure. When XBRL was still new, our clients indicated that being able to map accounts to an XBRL taxonomy was a priority. But if a company wants to grow, it will need something more robust, especially if it intends to eventually list on an stock exchange or sell itself to a listed corporation.

• If you’re setting up your Chart of Accounts manually, be sure to leave a lot of room between accounts to add new accounts.
• Dummies helps everyone be more knowledgeable and confident in applying what they know.
• If you are a Bookkeeper or an accountant who has been assigned the task to prepare an initial Chart of Accounts you will need to determine the following information.
• Clear revenue categorization helps you see which income streams perform best and where you may need to adjust pricing or strategy.
• If the corporation were to liquidate, the secured lenders would be paid first, followed by unsecured lenders, preferred stockholders (if any), and lastly the common stockholders.
• You can easily add new accounts or sub-accounts without disrupting the overall system, making it easier to support growing clients.
• That’s what your company faces without a well-organized chart of accounts.

Now that we have the high-level information behind us, let’s roll up our sleeves a bit and zero in on building the ideal chart of accounts for your company. As we said before, an effective COA begins with two essential building blocks – balance sheet accounts and income statement accounts. Granted, by the time they hit your financial reports, you’re probably grouping them in a line item anyway.

How to Set Up Your Chart of Accounts

Here at Graphite, we put together a free downloadable Chart of Accounts example that considers all of these best practices. And we split it out by industry for an even quicker chart of accounts numbering time-to-value for you. Pairing this with a cash flow statement template can give your team even more clarity into your financial position and decision-making needs. COA templates for service businesses typically include labor tracking and project-based tracking. But if you are starting from scratch, then the following is great place to start.