We all know QuickBooks Desktop is a solution which is primarily designed to cater to the accounting and bookkeeping needs of small and medium-scale businesses. It also allows you to efficiently organize, track and store data.
In general, the Chart of Accounts is the list of the company’s accounts and balances. In QuickBooks, it represents the company’s assets, liabilities, income, and expenses. With Chart of Accounts, you can analyze the amount of money the company has, how much it owes, funds coming in and going out.
Negligence and mismanagement can make Chart of Accounts disorganized. It’s essential to optimize your Chart of Accounts for an organized and profitable business.
The default chart of accounts is helpful in providing a fixed set of reports based on industry selected. This is an easy and useful starting point and encourages to customize the COA as per your unique business. Create line items or accounts for your bank, credit card, loan account, assets, liabilities, revenue sources, and expense ends. You can also modify existing accounts names and delete the unwanted ones.
Organize the chart accurately to reflect your priorities. Put the major expense accounts like “Salaries” at the top of the Income statement while placing the less significant ones such as “Dues and Subscriptions” lower down the order. The default set up lists these accounts in an alphabetical order overlooking which is more significant than the other. In QuickBooks Desktop you can easily drag and move the accounts in your desired order. For QuickBooks Online use “account numbers” to re-arrange the order.
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Use parent and subaccounts to seek the best business results. Establish parent accounts for similar expenses to prioritize the significant expense accounts over the lesser ones. If we do not roll up the related expenses in a parent account, then all the accounts will get the same priority in your income statement. You will end up with a lengthy report with dozens of line items in it. On the other hand, maintaining parent and subaccounts enables you’re desired the organized and prioritized way of working. You can also run a “Collapsed” or “Expanded” report to have brief performance summary of your business.
This function produces a clean, summary-level income statement and additional reports making different aspects of your business easier to analyze. Use “Classes,” “Customer: Jobs” in QB desktop and “Locations” in QB Online for additional categorization and clear look to your chart of accounts. Talk to your bookkeeper and determine the right use of these lists to maximize exceptional reporting results.
It is essential to have correctly coded transactions. Ensure to educate and train the bookkeeper or an outsourced service provider on how to use your chart of accounts, your class list (if applicable) and categorize project expenses.
Your financial statements are as good as the information going into them. The right information will provide correct statements and vice-versa. For the desired outcome, Set-up a placeholder account such as “Ask my Accountant” to send transactions with the problem “where they should be coded.” Request for their specified end up destination too. At the month closing review this account and re-categorize these expenses as required.
We hope that you’ve achieved a good insight on how to optimize your Chart of Accounts for a better and improved way of producing financial statements. In case of any difficulty, contact at QuickBooks Technical Support Phone Number +1-877-221-952O.