How to Set-Up Your Chart of Accounts in Quickbooks 2019
When you first set-up your company file in Quickbooks 2019, it’s fairly easy to set-up your chart of accounts. As you go through the Quickstart guide, all you really have to do is choose your industry and it gives you a packaged listing of the most frequently used accounts.
This is great for ease and speed of set-up, but there are a few guidelines you want to follow with your chart of accounts:
First, make sure your revenue accounts match what you truly do – you want to ensure all of your revenue accounts in your Quickbooks chart of accounts match the reality of what you do. The listing Quickbooks 2019 gives you will include some general accounts, but make sure you add in the ones that make sense for your business.
Second, don’t create an account for all your expenses – I see this in businesses all the time…they end up setting up an account for literally every expense they have. This is silly and creates a mess over time. What you want to do is have main accounts for the broad categories of expenses, then have sub-accounts for the detail under that main account. For example, “Insurance Expense” would be your main account, and “Health Insurance” and “Liability Insurance” would be your sub-accounts. Keep your chart of accounts nice and tight with the main accounts.
Finally, use Class Tracking if appropriate – in Quickbooks, you can break down your business by what is called “Classes.” Classes are essentially divisions of your business that you want to track. For example, “Commercial” and “Residential.” Once you set-up your Classes, you would then categorize each transaction to a class so you can easily track your business for the different divisions.
It’s really quite simple to set-up your chart of accounts, but you want it to simply reflect the realities of your individual situation. Do what makes sense for you and it will allow you to understand your business so much better.