According to CPA and Advanced Certified QuickBooks Pro Advisor Rhonda Rosand (@RhondaRosandCPA) of New Business Directions, the Chart of Accounts is the “foundation and infrastructure of everything that is built for you in QuickBooks,” from financial reports to revenue plans.
Rhonda believes it’s imperative to keep your Chart of Accounts short and simple. In the end, making your accounting data easy to comprehend means you can quickly and accurately assess (and act on) your business’ financial position. This ultimately enables you to make smart, informed decisions.
The Chart of Accounts is complicated territory - only confident QuickBooks users should venture under the hood to make adjustments. However, every user should have a basic understanding of what the Chart of Accounts is and how it organizes your finances.
In the video below, Rhonda offers a compelling argument and an excellent overview of the main categories in the Chart of Accounts. Without further ado, let’s hear from the expert herself:
Remember Rhonda’s key points:
Don’t bloat your Chart of Accounts with too many accounts (0:51)
Fewer accounts means shorter reports - aim for a 1 page Balance Sheet and a 2 page Profit and Loss Report – (0:55).
Remember the three account main categories when you’re creating new accounts: assets, liabilities & equity, and revenue & expenses (1:15)