Bookkeeping Bootcamp: Chart of Accounts
Welcome, fellow financial fitness enthusiasts! It’s the inaugural day of Boomtown’s Bookkeeping Bootcamp - over the next three days, we're embarking on a transformative journey to whip your books into shape.
Today, our focus is on the foundational element of bookkeeping, the Chart of Accounts (COA). So, grab your virtual dumbbells and let's get started on sculpting those financial records!
The Chart of Accounts 📚
Step 1: Review
The first exercise on today's agenda is a comprehensive review of your existing Chart of Accounts. To find this in QuickBooks Online, click the Gear Icon in the upper right corner, and then choose Chart of accounts from the Your Company menu. Take a close look and ask yourself:
Are there any accounts that seem to have overstayed their welcome without contributing much to your financial narrative? Can you consolidate similar accounts to simplify your COA without sacrificing accuracy?
Is your COA organized logically? Are your account names clear and descriptive?
First, identify and bid farewell to any unused or duplicate accounts that may be cluttering up your financial space.
In QBO, click on the down arrow to the right of the account you want to remove and then choose Make inactive (reduces usage). If you’d like to remove multiple accounts, tick each account’s checkbox (to the left of the account name) and use the Batch actions button to make them inactive.
For similar accounts, choose the most descriptive account name and merge them all into one place.
In QBO, click on the down arrow to the right of the account you want to remove and then choose Edit. Change the Account name field so that it exactly matches the account you want to keep and click the green Save button. A box will appear asking if you would like to merge the two accounts - click Yes, merge accounts. (Please note that you can only merge accounts that have the same Tax form section selected.)
Finally, make any structural changes that make logical sense to you. For example, you may have an Office Expenses account with sub-accounts for Supplies, Software and Security. Remember that you want your COA to be easy to navigate and understand! Consider if someone unfamiliar with your business would understand each account’s purpose.
Streamlining your COA is like decluttering your financial closet - creating room for what truly matters.
Step 2: Add New Accounts
Now, let's shift gears and consider expansion. Do you find yourself wishing you had more granularity in your financial insights? If that sounds like you, then you may want to consider the addition of new sub-accounts.
Whether it's breaking down expenses into more detailed categories or creating sub-accounts for specific projects, this step allows you to tailor your COA to the unique contours of your financial landscape.
One good example is Advertising & Marketing - if you’re using sub-accounts, you might have Social Media and Printed Promotional Materials under your parent account.
To add a new account in QBO, click on the big green New button in the upper right corner and fill in the details for the account you want to add. (Note that the Save account under section will determine if your account is set up on its own or as a sub-account of another account.)
The Journey Ahead 🚀
By the end of this program, your books will be transformed into a well-organized, efficient financial system ready to tackle the challenges of your unique industry. Stay tuned for the next two days of the Bookkeeping Bootcamp, where we'll unravel more layers of financial wisdom.
Embarking on this three-step program holds the promise of bookkeeping with less financial stress. But here's the beauty of it: you don't have to navigate this journey solo. Each day is an opportunity to enhance your bookkeeping prowess, but if you’re feeling overwhelmed, reach out! Schedule a free call with me and let’s talk about how I can take bookkeeping off of your to-do list.
See you tomorrow!