Bookkeeping · 7 min read
Chart of Accounts for Small Businesses
Your chart of accounts is the backbone of your books. Get it right and every report tells a clear story; get it wrong and you'll be re-categorizing transactions for years.
The five account types
- Assets — what the business owns (cash, AR, equipment)
- Liabilities — what the business owes (AP, loans, credit cards)
- Equity — owner contributions, distributions, retained earnings
- Income — revenue from operations
- Expenses — costs of operating the business
A standard numbering convention
- 1000s — Assets
- 2000s — Liabilities
- 3000s — Equity
- 4000s — Income
- 5000s — Cost of Goods Sold
- 6000s — Operating Expenses
- 7000s — Other Income / Expense
