Standard Chart of Accounts & Account Types - Experts in QuickBooks - Consulting & QuickBooks Training by Accountants (2023)

Assets are things your company owns. They are usually divided into two groups: current assets and fixed assets. Current Assets are assets that you can easily turn into cash, such as checking accounts, savings accounts, money market and CD accounts, accounts receivable, and inventory. Current assets are normallynumbered from 1000 to 1499. So, you might want to use account number 1100 for your company checking account because a checking account is a current asset.

Fixed assets are usually numbered from 1500 to 1999. These are items with a minimum cost (for example, $500) that you would have to sell to generate cash. Automobiles, equipment, and land are examples of fixed assets. For example, suppose last year your company bought a new computer system for $1,100. Since the cost of the system was more than $500, the purchase was entered to an asset account rather than to an expense account. Consult your accountant or tax preparer to determine the actual minimum cost you should use to determine fixed assets.

Liabilities

Liabilities are funds your company owes. For example, say your company borrowed $20,000 from the bank. When the $20,000 loan was deposited to the checking account, the deposit was entered in the liability account Bank Loans, not an income account.

Example, Payroll Liabilities:
The Payroll Liability account is a current liability account that QuickBooks automatically adds to your chart of account when you turn on payroll.The Payroll Liabilities account tracks taxes that you deduct from employee’s paychecks and hold temporarily until you turn them over to the government. These include federal and state income withholding taxes, local taxes, and the employee-paid portion of taxes such as Social Security and Medicare.

Capital/Equity

Your capital account structure depends on whether your company is organized as a sole proprietorship, partnership, or corporation.

If your company is a sole proprietorship, you need a Capital account and an Owner’s Drawing account. Use the Capital account to keep track of the total amount of money you have invested since starting the business, plus or minus the net profit or loss each year since you started the business. Use the Owner’s Drawing account for money you take out of the business for personal use, such as checks to the grocery store or dry cleaners, ATM transactions, your salary, and any money that gets deposited into your personal accounts.

It is important to keep in mind that the owner of a sole proprietorship doesn’t get a regular employee paycheck with money deducted for payroll taxes. Instead you pay quarterly estimated taxes, which you should always allocate to the Owner’s Drawing account.

If your company is a partnership or LLP (Limited Liability Partnership), you need to set up Capital and Drawing accounts for each partner.If your company is an S or C corporation or an LLC corporation, it should have a Common Stock account and sometimes a Preferred Stock account. Common stock and preferred stock represent the total sum of stock the company has issued. An LLC might have Member stock if there is more than one person who owns stock.

Income or Revenue

Cost of Goods Sold

Expenses or Overhead Costs

Overhead Costs, or Expenses, are fixed costs you have even if you run out of work. Examples include rent, telephone, insurance, and utilities.

For example. Payroll Expense:

The Payroll Expenses account tracks payroll items that are an expense to your company. These include salaries, wages, bonuses, commissions, company contributions such as a company-paid health plan, and the company-paid portion of taxes such as Social Security and Medicare.

Other Income

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Hector Garcia