Did you know that the chart of accounts is one of the foundations of QuickBooks Online? Everything builds on the chart of accounts – so it’s important that you set it up correctly the first time. In this blog post I’ll share with you a QuickBooks Online chart of accounts tutorial so that you can follow step-by-step.
What is the chart of accounts?
When doing customized QuickBooks Online Training for our clients, we get very creative in explaining what is a chart of accounts. I like to explain it this way. Bookkeeping is not so much about numbers and math – it’s about categorizing transactions. Picture a large, well organized closet. Everything has a place – items are categorized by color, season, etc. Shoes and purses have a home. Pants are hanging neatly. Categorizing accounting transactions is like putting things in this ideal closet. Everything has a place in our bookkeeping “closet”. The accounting chart of accounts helps to organize your small business transactions. Each accounting transactions must be assigned to an account. All accounts together make up the “chart of accounts”. The chart of accounts is the foundation of a small business accounting system.
How do you set up a chart of accounts in QuickBooks Online?
Thankfully, with QuickBooks Online and other small business accounting software programs, you don’t need to know how to set up a chart of accounts. QuickBooks Online makes it easy to set up a chart of accounts in just a few simple steps. When you first set up QuickBooks Online, your answers in the Startup Interview will help QuickBooks Online set up the chart of accounts for you, based on your industry and company.
Here is my video – Part 1 of How to Set Up the Chart of Accounts in QuickBooks Online
Step-by-step QuickBooks Online chart of accounts tutorial
To get to the chart of accounts, select the gear icon.
Click Chart of Accounts.
The types of accounts you will be working with are:
- Credit card
- Cost of goods sold
To show you where these will be shown in the financial statements, click on Reports
Select Balance Sheet. On the balance sheet you will see the Bank accounts, the account setup within the category, like Checking and Savings accounts.
On the Profit and Loss report, you will see Income category and the accounts set up underneath it.
What if I want to change the account name? For example, Office Expenses to Office Supplies.
Go back to the chart of accounts and click on the account name that you want to change.
Click “Edit” on the right.
Change the Name into the one you want. For our example its “Office Supplies”.
Then click Save.
How do you add a sub-account?
In our example, we have Travel and Travel Meals.
Lets make the “Travel Meals” the subaccount of “Travel”.
Click on Travel Meals. (Click once)
Click Edit on the right.
Check “is sub-account“.
A dropdown box will appear. Find the parent account by typing in Travel.
Then click Save.
What if I want to delete an account?
Click the account name that you want to delete.
Then on the right select Delete.
Note: If you want to see the account you deleted, just check the “Include Inactive box” at the top.
For continuation of this tutorial please check out this post “Setting Up Charts of Accounts Part 2”.
I hope that you have found this QuickBooks Online Chart of Accounts tutorial helpful. Be sure to check out all of our step-by-step tutorials. Be patient and keep learning – soon you too will be doing 5 Minute Bookkeeping. Till next time!