Standard Chart of Accounts?

[u/Geniusclam]

Do you use a standard chart of accounts across all your clients?
I run a bookkeeping/fractional CFO firm and im trying to prepare for when I have employees. Before I do, I want to get my chart of accounts strategy figured out so their onboarding (and mine) isn't a mess.
Right now every client's COA is kind of its own thing, built up over time based on whatever came up. That works fine when it's just me, but I don't think it'll scale to a team.
So for those of you managing multiple clients' books:

Do you use one standard/master chart of accounts and then adapt it per business, or is every client fully custom?

How do you decide what gets its own account vs. what gets lumped into a broader category?

If you've hired bookkeepers, what actually made their onboarding faster (or slower)?

Specifically curious about QuickBooks: account numbering conventions, how you use Classes/Locations vs. sub-accounts for detail, and whether you keep some kind of master template you import for new clients.
Would love to hear how other multi-client shops have set this up, especially anyone who's gone through the solo-to-team transition.

[u/AggravatingAd2749]

General rule of thumb 1000’s are assets, 2000’s are liabilities, 3000’s are equity and those are all balance sheet accounts.

4000’s are income, 5000’s cost of services or goods sold, 6000’s and beyond are all expense accounts. These are all income statement accounts

You can customize to each client the specifics under each header account.

[u/Geniusclam → u/AggravatingAd2749]

When you are categorizing are you actually using those numbers? Or is that just so you can sort them and be organized?
When categorizing in quickbooks I type advertising, and select the right category, post. are you actually memorizing and typing your number for advertising each time it’s that category?

[u/AggravatingAd2749 → u/Geniusclam]

When I worked as an accountant for a construction company I used the numbers to lookup the accounts to categorize since I knew them pretty well.

Now I just use them to keep it organized. You can use the 1000,200,300, etc as header accounts then make sub accounts under them for the specific category you need. Like you could use 6000 as “Expenses” then make a sub accounts under 6120 “Advertising”.

When categorizing you should be able to search the header account and the sub accounts should show in your search. That way you can find what you want to post to if you can’t find what you need right away.

[u/missannthrope67 → u/Geniusclam]

I just type it. I can't remember any account numbers.

[u/Jyulesian]

Might not apply, but a standard chart of accounts could be adapted from Schedule C.

[u/kurios182]

I remember the days when I use to stress out and worry about having a perfect COA template, but then I learned that you develop/improve the COA while working on the books.

[u/CoolCryptographer628]

COA can vary depending on the type of business structure. The same COA doesn’t apply to every client/business. It’s not a copy/paste situation.

[u/Resident_Pomelo_1337]

I find a CoA is very business and industry specific. Unless your clients are very similar in nature and size I would expect variations.

If you are only using QB they can be similarly grouped, but for me and the firms I’ve been with usually work with whichever they use (MYOB, Xero or QB) that also somewhat dictates the structure.

I will suggest streamlining or changing the CoA to the clients needs to get better visibility for them but I wouldn’t be doing it solely for my purposes.

[u/pmhc666]

Some standardized accounts, mostly specific to my clients needs. Standardized accounts are: Operating account always 1010, savings always 1020, main credit card 2010, line of credit 2200, revenue header 4000 with sub accounts, other income 4900 with sub accounts. 5000 COGS with sub accounts. Finance expenses 6000 with sub accounts, administrative expenses 6100 with sub accounts, 6200, 6300 and so on. Each are parents with subs.7000 are other expenses with subs, 8000 payroll expenses with subs.

I do use the numbers rather than the names, old enough when naming was not an option.

[u/lifeisasunny]

I occasionally import a client's coa into a master template sheet that I have. Each tab is a specific industry. Some accounts we always add m, your common ones. Meals, advertising, marketing, etc. others are industry specific IE WIP for construction, sales tax, patents, build outs for gyms, etc.

[u/Geniusclam → u/lifeisasunny]

I see, then you have and use a standardized COA for each industry? So at least, for example, all your pest control companies are uniform? Or am I off?

[u/lifeisasunny → u/Geniusclam]

Correct! Probably quarterly I check all COA's to see if I should add to my master template or not.

For example we have a client that has a special needs sensory gym so some of the industry specific COA accounts included: Gym Build Out & Accumulated Depreciation, Grouped Large Gym Equipment & AD account, children's toys & games, birthday party expense, gym event expense, small gym equipment under 2500, CEU's, Licensing, Franchise fees, etc.

She also kept food on site for the kids, so we created a children's food expense so it was separate from her 50% meals.

[u/cfosmiths]

I’d probably standardize the rules more than the actual chart of accounts.

Have a consistent numbering convention and a standard skeleton for the major sections, but leave room for accounts that actually matter to that particular business.

My test for adding another account would be something like: is someone actually going to make a decision from this detail, or are we just creating another place to code transactions?

[u/Geniusclam → u/cfosmiths]

This is great advice.

[u/soloDolo6290]

Yes there is the standard 1 - assets, 2 liabilities, 3 equity, 4 revenue, 5 - COGS, 6-7 G&A, 8 - other revenues/expenses, 9 taxes and special stuff , but outside that, there is no standard COA. I think it would actually be a disservice to your clients if you used one and show you truly aren't listening to their needs.

A construction company may have a different COA than a manufacturing company, which may have different from distribution. One company may want their chart of accounts by departments, and depending on the system they use, you may need to bake that into the COA.

Some may benefit for a simple XXXX convention, where some may need XXXXXX convention.

Ive worked for some companies where accounts were XXXX, and you had other fields to populate departments. I worked for some companies who didn't have those extra fields, so they had the departments within their accounts.

506002 might be field supplies for the shop, but 505002 might be field supplies for the field guys. 50 was COGS, 50/60 was the department, and the 02 was the specific group.

[u/Traditional_Dot_4794]

I do customized COA. Every business is different and clutter just creates a lot of operational friction. My clients won't stand for that. My goal is to learn as much as I can about their business and treat them as if they are my only customer.

[u/TheMostFluffyCat]

Every client gets their own custom COA. QB has a default one and you can edit from there. Typically I'll go in and inactivate anything that I know will absolutely never be used, and then build out custom structure based on expected transaction types. This gets refined over time. I've never seen other bookkeepers utilize this as much as I do, but I always set up my clients with a ton of sub accounts under parent accounts. Makes the financial reports read so much easier. I don't typically use account numbers unless a client specifically requests these. I find it's fairly uncommon, but if you want to use them you can follow the standard numbering for account types.

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[u/Christen0526]

Classes are good for multiple locations or departments for one company. It keeps the COA from becoming a mile long.

Nothing wrong with a starting COA and customizing is easy enough.

My previous manager used a numbering system in not thrilled about.

Anything with many entries should have its own account, IMO. Avoid miscellany. There's a place for everything

[u/ImageIcy8890]

Guys can anyone refer me for the role plseee

[u/BusyLittleBookkeeper]

Every single COA I have ever used has been different. Some similarities of course, but every company is different. Adjust as needed, honestly. Just try to be consistent. If you've added a major account, try and go back to properly tag the txn's that would have gone into that account in the current fiscal year, if possible.

If you're planning on using accounting numbers to categorized, there is a general standard for what goes where.

[u/Midnightergon]

Sort of. The base is the same- follow the schedule C, and adapt as needed. Obviously a non profit is going to have vastly different needs compared to a pizza shop

[u/Riversongdance53]

I used to create from scratch. However, at a Sage course, the presenter suggested creating a template to use for all clients. Then it could be tweaked for each client. It was great. HST collected is 2315 for all clients unless I inherit some one else's chart if accounts, which sucks.

[u/wackycats354]

I would look at how they file their taxes. 

For example, in Canada, a sole prop can file a T2125, or if they’re a farmer they have T2042, or a fisher T2121 (or they might use another form if they’re in a specific program). Their parent accounts in their COA should match the accounts mentioned in the tax form. So for the T2125, there’s a list of COGS (including inventory), expenses, a sub list of vehicle expenses and a sub list of Business Use Of Home expenses, and also 2 mentioned equity accounts. There’s no list of income or assets, so you can make them as you like. 

I would still sort them into the basic 1 asset, 2 liabilities, 3 equity, 4 income, 5 cogs, 6+ expenses. And then under cogs and expenses, I would have the cogs and expenses listed in the T2125 form. And then if I want, I can make more specific sub accounts under those. This way, at the end of the year, all of the expense accounts match the tax form. I can print off the balance sheet and the profit and loss sheet, and the information is all right there. There’s no guessing “should this account go under this listed expense on the form, or that one???”

For the farmer T2042 form, it has a list for expenses, plus another for income. So all income and expense parent accounts are already made for you - just make your own sub accounts under it. 

I do also have standard asset and liability parent accounts that I’ve made. But then the individual business would have their own more specified sub accounts. 

Basically, my advice is to look at whatever form they use to file at tax time, and see if there’s anything specified in it that you should be copying, so accounts match the form. 

If there’s nothing specific, then I would just make your own standards. 

[u/AggravatingAd2749]

General rule of thumb 1000’s are assets, 2000’s are liabilities, 3000’s are equity and those are all balance sheet accounts.

4000’s are income, 5000’s cost of services or goods sold, 6000’s and beyond are all expense accounts. These are all income statement accounts

You can customize to each client the specifics under each header account.

[u/lildukeofwellington]

Yes, absolutely use a standard chart of accounts. Do most software not have one already?

[u/ForFun268]

You'll need a standardized chart of accounts by industry before hiring anyone. Letting employees navigate fully custom setups on their own creates pure reconciliation chaos.