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SETTING UP THE CHARTS OF ACCOUNTS: HOW TO SET UP CHART OF ACCOUNTS PART 2

 

 

 

In my last post, I covered How to Set Up Chart of Accounts Part 1 . Just as a reminder, the chart of accounts is the foundation of everything you do in QBO. It’s important to set up the chart of accounts correctly so that you don’t have problems later. In this post, Setting Up the Charts of Accounts: How to Set Up Chart of Accounts Part 2, you will learn the following:

 

  1. How to add accounts to the chart of accounts

  2. Best practices when setting up the chart of accounts

 

 

HOW TO ADD AN ACCOUNT TO THE CHART OF ACCOUNTS IN QBO

 

Click on the gear located on the upper right side

 

 

 

 

 

 

 

 

 

 

 

Select “Chart of Accounts

 

From the top right click “New

 

You will see this window

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Choose the “Category Type” – in most cases, you will be adding Income or Expense type accounts.

Choose the Detail Type that best matches the account name that you want. Make your best guess – it won’t hurt anything if you get it wrong.

 

Change the account Name on the right side. Enter a Description if you need to.

 

HOW TO SET UP A SUB-ACCOUNT IN THE CHART OF ACCOUNTS

 

Follow the same steps for adding a new account to the chart of accounts (as shows above).

 

Check “is sub-account“, then choose the parent account for the list. For example, if you want to add Hotel expense as a sub account of Travel expense:

 

  • Add an account for Hotel Expense

  • Check “is sub-account“

  • Select Travel expense from the list

BEST PRACTICES WHEN SETTING UP THE CHART OF ACCOUNTS

 

How do you know when you’re adding too many sub-accounts?

If you want to track travel expenses using sub accounts like Airfare, Auto, Hotel and Travel Meals,  will that be reasonable? YES.

 

If you want to track office expenses using sub accounts like Paperclips, Pens, Paper, Toner, Binders, Notebooks, etc., those are too many sub accounts and you don’t really need them.

 

Hint: Avoid getting overly detailed – don’t add so many accounts – the chart of accounts will become long and cluttered.

 

This concludes our series – Setting Up the Charts of Accounts: How to Set Up Chart of Accounts Part 2. I highly recommend that you spend time setting up and customizing your chart of accounts. As I said, everything in QBO builds on the chart of accounts. When you set up the chart of accounts correctly in QuickBooks Online 

 

Do you like this tutorial or have any questions?? Don’t forget to comment below! If you want to download the video tutorials just sign up in the box below or on the right side.

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