- "Maad" Rants (75)
- "Stuff" No One Ever Told Me About… (24)
- "Stuff" that drives me insane (54)
- American Recovery & Reinvestment Act (26)
- Bookkeeping Tips (211)
- Certified Payroll/Prevailing Wage (1)
- Construction News (76)
- Cool "Stuff" (17)
- FREE QuickBooks eBooks (13)
- Freebie Friday's (27)
- Guest Bloggers (17)
- IRS Information (18)
- Microsoft Office (4)
- New Technology (35)
- QuickBooks Add-Ons (8)
- QuickBooks Corner (265)
- Accounts Payable (14)
- Accounts Receivable (22)
- Free Training (10)
- How To Videos (4)
- Job Costing Tips (33)
- Payroll Tips (72)
- QuickBooks 2011 – What's New? (27)
- QuickBooks 2012 – What's New (6)
- QuickBooks Tips & Tricks (61)
- What's New In QuickBooks 2010 (10)
- Social Media (13)
- The "Sunburst" Website (75)
- Top 10 News from the Web (3)
- Top 10 Tuesday (20)
- Webinars & Training (11)
QuickBooks Tip – Modifying & Working with your QuickBooks Chart of Accounts
Setting up or modifying an existing Chart of Accounts is not an overwhelming task in QuickBooks.
If you are new to QuickBooks, when you create your company file (File menu -> New Company), the EasyStep Interview provides you with a “wizard”, industry specific templates, and example accounts are even suggested. If you need a starting point, grab your tax return or financial statement compiled by your outside accountant, and enter the accounts you find there, turning summary accounts from the financial statements into subaccounts in QuickBooks.
If you have already started using QuickBooks you can easily add, edit, or merge accounts in your Chart of Accounts for your business with a matter of a few clicks of your mouse by selecting the Lists menu -> Chart of Accounts OR Company menu -> Chart of Accounts.
By creating a more organized and efficient chart of accounts, you will not only save on accounting fees but you will improve your in-house reporting as well.
Always BACKUP your company’s QuickBooks file before making ANY changes (File menu -> Save Copy or Backup) – just in case, you wish to reverse the process.
Adding accounts:
To add an account, click the Account button at the bottom of the Chart of Accounts list and choose New. QuickBooks prompts you to choose what type of account you want to create – Income, Expense, Fixed Asset, Bank, Loan, Credit Card, Equity, Accounts Receivable, Other Current Asset, Other Asset, Accounts Payable, Other Current Liability, Long Term Liability, Cost of Goods Sold, Other Income, or Other Expense. As you select an account type to create, QuickBooks even includes a suggestion box on the right-hand side of the window, listing common accounts under each account type.
Editing accounts:
To change an account name or type, right click on the account that you wish to work with and choose Edit Account, and simply type in the new name or select a different account type.
Merging accounts:
If you have duplicate accounts, Edit the duplicate, and in Account Name, enter the name of the account you wish to keep; all of the information in the previously separate accounts become merged into the one remaining account. As a precaution, before merging accounts, it would be prudent to make a copy of your QuickBooks file in the event that you discovered later that a merge was inappropriate.
Creating subaccounts:
Subaccounts are a critical feature of structuring your Chart of Accounts and ultimately your reports in QuickBooks. For example, on a tax return, rather than report separate totals for electricity, natural gas, and water, it is more efficient to combine their amounts under a heading, “utilities”. It is also true for the various kinds of insurance, professional services, taxes, etc. By grouping such related accounts in QuickBooks, its reports appear more organized and readable, especially since QuickBooks provides subtotals for each grouping.
Creating a subaccount is easy in QuickBooks. Go to the Lists menu -> Chart of Accounts OR Company menu -> Chart of Accounts, highlight the account that you want to turn into a subaccount, click the Account button -> choose Edit Account, click “Subaccount of” and select its parent account.
Note – Accounts may be added to or deleted from the chart of accounts at any time, but an account cannot be deleted once a transaction has been posted to it. Consequently, ensure the chart of accounts is complete and unnecessary accounts have been deleted or merged with another account before recording any transactions.
Account Numbers:
You are allowed up to 7 digits for an account number in QuickBooks; a minimum of 5 is recommended if you require numerous accounts and subaccounts. Unfortunately, QuickBooks preconfigured their numbering system using 4 digit – which is rather limiting. I often use, and recommend, a 5-digit account numbering system for construction companies:
10000 – 19999: Assets
10000 – 14999: Current Assets
- 10000 – 10999: Cash
- 11000 – 11999: Receivables
- 12000 – 12999: Inventory
- 13000 – 14999: Other Current Assets
15000 – 19999: Noncurrent Assets
- 15000 – 15999 – Fixed Assets
- 16000 – 19999 – Other Assets
20000 – 29999: Liabilities
20000 – 25999: Current Liabilities
- 20000 – 20499 – Accounts Payable
- 20500 – 20999 – Credit Cards
- 21000 – 25999 – Other Current Liabilities
- 21000 – 21999 – Accrued Expenses
- 22000 – 22999 – Payroll Liabilities
- 23000 – 23999 – Debt, Current Portion
- 24000 – 24999 – Capitalized Leases, Current Portion
- 25000 – 25999 – Other
26000 – 29999: Noncurrent Liabilities
- 26000 – 26999 – Debt, Noncurrent Portion
- 27000 – 27999 – Capitalized Leases, Noncurrent Portion
- 28000 – 29999 – Other
30000 – 39999: Equity
- 30000 – 30999 – Capital Stock
- 39000 – 39999 – Retained Earnings
Revenue: 40000 – 49999
50000 – 59999: Cost of Goods Sold
- 50000 – 50999 – Materials
- 51000 – 51999 – Labor
- 52000 – 52999 – Subcontractors
- 53000 – 53999 – Equipment
- 54000 – 59999 – Other Direct Costs
60000 – 89999: Expenses
- 60000 – 69999 – Selling Expenses
- 70000 – 89999 – General and Administrative Expenses
90000 – 99999: Other Income (Expenses)
Of course, there could be an endless variety of accounts under all of the above categories particularly under Expenses: Selling as well as General and Administrative. If there were an insufficient number of accounts required under Selling, you may omit the distinction and lump all under Expenses. If you apply overhead to your jobs reported in Cost of Goods Sold later than posting, you may even wish to add an Overhead grouping under Expenses for those amounts to be allocated to jobs. I find this especially convenient and timesaving, alleviating a frantic search through a mass of expense accounts containing thousands of transactions.
Related Posts
- QuickBooks Tip – Understanding Your Chart of Accounts
- QuickBooks Tip-Creating a Functional Payroll Liabilities Section
- Starting a New QuickBooks File? Benefits of the EasyStep Interview
- QuickBooks Tip – The Chart of Accounts, What It Is & It’s Many Uses In Your Business
- QuickBooks Tip – An Audit Trail for Accounts Receivable
- QuickBooks Tip – Handling Retainage
- QuickBooks Tip – Construction Accounts Payable
- QuickBooks Tip 10 Plus Methods of Accounting for Construction Contracts
- QuickBooks Creating a More Meaningful Payroll Expenses Section
- QuickBooks Payroll Tip-Setting Up General Liability Insurance Tracking
6 Responses to QuickBooks Tip – Modifying & Working with your QuickBooks Chart of Accounts
Leave a Reply Cancel reply
- Using Account Numbers in Your QuickBooks Chart of Accounts
- Straight from the IRS - Social Security Tax Reduced to 4.2%
- Calculating & Displaying Fringe Benefits on a Certified Payroll Report
- Frequently Asked Questions - California Prevailing Wage
- QuickBooks 2011 - Computer Requirements & Office Compatibility
- QuickBooks 2011 - 10 Tips for a Successful Installation/Upgrade
- U. S. Department of Labor Revises Certified Payroll Reporting Requirements for Form WH-347
- QuickBooks 2012 Announced
- New FHWA-1391 & 1392 Annual EEO Forms For Highway Contractors
- QuickBooks 2012 - Frequently Asked Questions About Upgrading

- Top 10 Thursday – News from around the Web 2/2/12
- Certified Payroll Reports & Bi-Weekly Paychecks
- Choosing QuickBooks & Add-Ons for Your Construction Business
- Paycheck/Payroll Frequencies by State
- Inbound Marketing
- Top 10 Thursday – News from around the Web 1/26/2012
- Bookkeeping/Accounting Tasks and Employee New Hire Packet
- Working With Taxable & Non-taxable Items and Customers
- eBook – Have You Built Your Google+ Business Page Yet?
- Top 10 Thursday – News from around the Web 1/19/2012
- Bookkeepers Test & Hiring a Bookkeeper or CPA
- QuickBooks Weekly Timesheet – Service vs. Payroll Item
- Free eBook: An Introduction to Lead Generation
- Top 10 Thursday – News From Around the Web 1/12/12
- Our Blog in 2011 – The Year in Review
- February 2012 (2)
- January 2012 (19)
- December 2011 (4)
- November 2011 (4)
- October 2011 (8)
- September 2011 (14)
- August 2011 (11)
- July 2011 (12)
- June 2011 (21)
- May 2011 (16)
- April 2011 (11)
- March 2011 (21)
- February 2011 (20)
- January 2011 (13)
- December 2010 (11)
- November 2010 (17)
- October 2010 (10)
- September 2010 (17)
- August 2010 (10)
- July 2010 (17)
- June 2010 (17)
- May 2010 (14)
- April 2010 (21)
- January 2010 (3)
- October 2009 (5)
- September 2009 (9)
- August 2009 (3)
- July 2009 (2)
- June 2009 (2)
- May 2009 (2)
- April 2009 (4)
- March 2009 (8)
- February 2009 (9)
- January 2009 (8)
- December 2008 (13)









Good point Ken, thanks for mentioning that
I find that smaller clients who do not use numbering in their COA need to be taught to use numbering. Once they learn the value of using a numbered COA, they find it is much easier to work with and understand.
Jay I agree, I like a numbered structure, I find that it makes for easier data entry. You are correct, most business just use a Chart of Accounts system without numbers in QuickBooks. Usually it is bigger (more established) companies who hire experienced bookkeepers (that work closely with an accountant or ProAdvisor) who realizes the benefits of a numbered system.
I like numbered COA. How many businesses, in your experience, use numbered COA in QB. My limited observation is that they just start using the COA w/o any numbering scheme since QB allows that. Any opinion?
Thank you.
Nice summary.