A chart of accounts is just the list of buckets your money gets sorted into. A good one is short, matches your tax form, and reflects how your business actually spends.
The structure
- Assets: checking, savings, receivables, equipment.
- Liabilities: credit cards, loans, sales tax owed.
- Equity: owner contributions and draws, retained earnings.
- Revenue: one or a few income lines.
- Cost of goods sold: materials, inventory, direct labor (if you sell products).
- Expenses: the Schedule C lines, plus any you need for management.
Keep it short
Generic templates ship with 80 to 150 accounts. A freelancer needs about 20. Every extra account is a decision you have to make on every transaction. ProfitBooks builds a chart sized for your industry from a single question and adds accounts only when your transactions need them.
Industry starting points
- Freelancer or consultant: revenue, software, contractors, home office, travel, meals, insurance, education, fees, phone and internet.
- Trades: job revenue, materials, subcontractors, fuel and vehicle, tools, permits, insurance, equipment depreciation.
- Ecommerce: gross sales, refunds, platform fees, payment fees, cost of goods, shipping, advertising, software.
- Rental property: rent income, mortgage interest, property tax, insurance, repairs, management fees, utilities, depreciation.