How to Setup Chart of Accounts? Fastest Bookkeeper Supporting Services

How to Setup Chart of Accounts?

QuickBooks Online Tutorials fastest bookkeeper supporting services

Did you know that the main area of data in QuickBooks online is the chart of accounts? In this article of QuickBooks online Tutorials fastest bookkeeper supporting services. You will learn how to prepare your chart of accounts in QuickBooks online.

 If you have any questions about this topic you can leave them in the comments section below and I’ll   do my best to help you and of fastest bookkeeper supporting services if you feel the article helped you I hope you will follow this Blog and get updates on new articles that come out all the time.  

An account is simply a record of transactions in the days before the computer. It was simply   a separate piece of paper in the computer it's a separate file as part of the QuickBooks software.   you need a separate account or let's say a separate record for each expense category you have,   general income source, that you have and each financial type of account that you have.   Minimum Bookkeeping you have to have an account for the cash on hand that you use here are the example accounts we will use in the minimum bookkeeping.

Income Source

We will have one record just for Video income and a separate record for editing income it might be helpful to know the difference between how much   money came in for doing a Video service compared to how much money came in doing an editing service.

Expense Category

These are the four example expenses delivery, repair, utilities and transportation  that we will use them basically represent any example expense delivery, repair, utilities and transportation   and each category of expense should have its own record or its own account in the chart of accounts   and of minimum bookkeeping.

Financial Type Of Account

we have to have one example bank account ,  one example company credit card account and a separate account or let's say a separate record   for the cash on hand that we might receive from customers or pay out to vendors.

Accounts List:

Account Name	Account Type	Accounts Details
Video Income	Income	Service Fee Income
Editing Income	Income	Service Fee Income
Delivery Expenses	Expenses	Other Business Expenses
Repair expenses	Expenses	Other Business Expenses
Utilities Expenses	Expenses	Other Business Expenses
Transportation Expenses	Expenses	Other Business Expenses
Cash In Bank	Bank	Checking
Credit Card	Credit Card	Credit Card
Cash On Hand	Bank	Checking

You have account name, account type and account detail type   and before you can add an account to the chart of accounts in QuickBooks online.

Account Name

you have to tell QuickBooks online all three pieces of information -  the account name can be anything you   want as long as you know what it means when you look at the reports that the account appears on   exactly what you type in as the name is exactly how it will be shown in the reports.

Account Type

Account type determines what type of transaction can be recorded into that account. it also   determines which financial statements and reports it will show up on and it determines the position  of the account in the reports. for example if the account is an expense type of account it will show   up on the profit and loss and it will show up in the expense section of the profit and loss   and you can only record expenses into that account as you use QuickBooks online.

Account Detail Type

 The detail   type is usually not relevant it sometimes adds functionality to an account but that's very rare   and we will not need this in our crash minimum bookkeeping so let's just use what's on the list here and one by one we'll record them in the list of accounts in the chart of accounts in QuickBooks online.

QuickBooks Online Dashboard

we remember from the QuickBooks Online Accountant Dashboard that the Gear Icon in the top right has the long-term permanent   information. So if you're looking for the chart of accounts you click the Gear Icon go all the way to the left where it says your company and go down to where it says chart of accounts and click now.

 

if it's the very first time that you're opening up this window you will see this little picture ----

----- with this little green button so you click the little green button and from this moment  forward this is the window ----

you may notice QuickBooks online has already given you a huge number or maybe not huge but   a large number of accounts already in the chart of accounts QuickBooks online is trying to help you by putting in what it believes is the most commonly needed accounts. 

So these would be the names of the most commonly used expenses 

this might be a general income category and these other things are for later as you get more advanced into doing the books   or doing accounting for other people notice it already has an account for uncategorized assets. ---------

But we need to put just like any other company we need to put our own chart of accounts or add the specific accounts that we need remember its name type and detail type.

so how do we add   well it's very simple we go to the top right and click new.

 now the type of the first one is income  and the detail type I believe is  service fee income. so we just click here---

---- and we choose service fee income and I like to put the name in capital because that will help you distinguish between the ones that you added and the ones that QuickBooks online gave you.

So we have one account services income and then we click save and new and believe me behind this window it added that account leave these two choices and then add the next one now click save and close.

So that you can see it added the editing income and the video income and it put it in the income section of the chart of accounts   so now let's do the four expenses delivery, repair, utilities and transportation exactly the same way and the detail type is other business expense. 

So step by step add an expense Account, this is other business expense and first it will be delivery expense when we click save and new it'll keep the window open and remember the two choices on the left   so the next name is repair expense save and new the next one would be utilities expense and then the last one will be transportation expense now after the expenses click save and close. 

Just to confirm that the ones in capital letters are the ones that we added ourselves and we have the correct type and the correct detail type.  

now there's only three left chase bank American express and cash on hand we do bank checking   for chase bank so click new, it's a bank the type is checking cash in chase bank and click save and new. then the next one is a credit American express credit card which is a credit card type of account   so that's easy when you choose credit card there is no detail type just type American express and then click save and new. Minimum Bookkeeping even though the cash on hand is not really a bank account and it's not really checking it behaves the way a checking account would because you put money into it and you pay money from it and now if you choose to click save and close. 

You can see that the ones in capital letters   are the ones that we made and you can see they're the correct type and detail type. Now I congratulate you for finishing the setup of your chart of accounts.

 However you may well   ask are there other areas of data that we have to manage in order to be able to do the minimum   amount of bookkeeping required by the IRS and the answer is no if your goal is to do the minimum amount of bookkeeping just to satisfy the tax agencies or anyone who just wants to know what your condition or profit is then all you have to do is set up.

The chart of accounts and for those people who studied accounting this is what the chart of accounts looks like in a textbook it's called the general ledger so if you're only interested in satisfying   the IRS and just getting your minimum books done then this is all you need to set up and prepare.  

However your company or the company that you're doing the bookkeeping for might also need what's called peripheral area of data for example in addition to the chart of accounts you might need customers and accounts receivables as a separate area of customer information in order to keep track of the different amounts of money that different customers may owe you at any.  

Accounts Receivable

Given moment and compare that to how much they paid or how much you might owe them in a refund   and that is a separate set of records that is separate from the chart of accounts you might.  

Accounts Payable

Also owe money to the vendors whom you pay for services that you incur the expenses with like   repair or maintenance or delivery and if you owe different vendors different amounts of money you   might need a separate area of data with a separate set of records and reports to keep track of that.  

Inventory

you also might even have a company that sells merchandise inventory and needs to count the items   and keep track of the changes in the quantities and the names and the prices and purchase costs   of each item if the company you're doing the bookkeeping for requires that then QuickBooks online would have a separate area of data with a separate set of reports just to manage the inventory.

But any of these additional peripheral areas of data would match and be in sync with the main area of data the general ledger and in order to know these things you would have to take a separate little minimum bookkeeping on each but the good news is after this very fast crash minimum bookkeeping  the additional separate minimum bookkeeping’s for each additional area of data that you may or   may not need will be a very easy minimum bookkeeping because you will already have a foundation in QuickBooks online.