Call us: (724) 359-5022

Establishing a Chart of Accounts for Your Business

  • By Lauri Paxton
  • 16 Jul, 2012
Every business needs a process to organize its financial transaction.  The Chart of Accounts lists all the accounts for a business organized in a specific order.  Think of a chart of accounts as a file cabinet, with a file for each type of accounting information you want to track.   For example, if you need to know how much money you spend on advertising, you’ll set up a file (an account in the chart of accounts) for Advertising Expense. Each account will have a description that includes the type of account and the types of transactions that should be entered into that account.
As every business is unique, they will have their own specific Chart of Accounts based on how the business is operated, so you’re unlikely to find two businesses with the exact same Chart of Accounts.
However, some basic organizational and structural characteristics are common to all Charts of Accounts and are designed around two key financial reports: the balance sheet, which shows what your business owns and what it owes, and the income statement, which shows how much money your business took in from sales and how much money it spent to generate those sales.
The balance sheet accounts in your Chart of Accounts should include:  Current Assets, Long-term Assets, Current Liabilities, Long-term Liabilities and Equity.
Income statement accounts complete the remainder of your Chart of Accounts and should include:  Revenue, Cost of Goods Sold, and Expenses.
An account list should be developed that makes the most sense for how you’re operating your business and the financial information you want to track. The Chart of Accounts is a money management tool that helps you track your business transactions, so set it up in a way that provides you with the financial information you need to make smart business decisions.
Sound Business decisions are made with accurate financial information.  If your Chart of Accounts isn’t adding up, Paxton Bookkeeping and Tax Services can help.  Contact us at 724-359-3022 or .
By Lauri Paxton 16 May, 2017
As summer approaches, you are either the type of business that thrives or pulls back for the slowdown of summer. Summer is a very hit or miss time for businesses depending on what industry you are in, and where you are located.
By Lauri Paxton 15 May, 2017
The American taxes are a pay as you go system. This means that taxes are to be paid throughout the year. Many employees do not realize this, because as an employee, your employer is withholding taxes from your pay check to continuously pay your taxes for you throughout the year.
By Lauri Paxton 11 Apr, 2017
Like many Americans, you most likely have been squirreling money away for years to prepare for the day that you will be able to retire.  We always tell people that you are never too young to start to save for retirement.
By Lauri Paxton 10 Apr, 2017
Are you one of those who are quickly approaching the deadline to file your taxes on April 18 th ?  Don’t panic because you are not the only one.  If you are avoiding filing your taxes based on not being able to pay the full amount you owe, you may want to rethink your strategy.
By Lauri Paxton 16 Mar, 2017
The phone rings. You see a number that you don’t recognize, but pick up the call anyway. An agent claiming to be from the IRS says that you owe back taxes and threatens to arrest you or file a law suit against you if you don’t make an immediate payment over the phone. Thousands of Americans faced this exact situation in 2016. This is a prime example of an IRS scam.
By Lauri Paxton 15 Mar, 2017
If you are one of the thousands of people who started to drive for ride share companies such as Uber or Lyft, then this may be the first year that you are filing your taxes as self-employed. You have enjoyed the ability to make your own schedule, work when you want, and make decisions to help improve your income. But what does all of this mean for your taxes?
By Lauri Paxton 13 Feb, 2017
When you go to your doctor there is a baseline where your medical team will start to determine if you are healthy or if you are in need of medical attention.  Vitals such as blood pressure, temperature, weight, cholesterol etc. are monitored regularly.
By Lauri Paxton 10 Feb, 2017
As the New Year has gotten underway and you finish your tax preparation, it is time to look ahead to the remainder of 2017 and beyond. While all of your company’s financial information is fresh in your head, it is a good time to look back at how far you have come and plan for the next few years.
By Lauri Paxton 20 Jan, 2017
As an entrepreneur you have probably found that traveling is an inevitable part of growing and running your business.  How you spend your time traveling can have an impact on your productivity.  Whether you are running down the street to a meeting or traveling across the country to work with a client, smart and efficient traveling can help to better use your time and keep your company growing.
By Lauri Paxton 19 Jan, 2017
Are you one of the 55 million people in the United States that freelance for a living or freelance as a side job? According to the Monthly Labor Review, the freelance surge is the Industrial Revolution of our time. Some common freelance jobs include technical jobs, professional services, graphic design and professional writing. If you are one of those people who work for themselves, do you consider yourself a business owner or do you consider your side job a hobby?
More Posts
Share by: