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  • Rebecca Hurt

How Do I Set Up My Chart Of Accounts?

Updated: Sep 8

A common question I get often is, "What is a Chart of Accounts and how do I set it up?" The short answer to this question is, your Chart of Accounts is the road map for your bookkeeping.



The Chart of Accounts is a chart or list of all your bookkeeping accounts for your expenses, income, equity, liabilities, etc. While some businesses have one avenue of income, another business may have 2, 3, or even more than that. Expenses for a business will always be more than one (think utilities, gas, auto, office supplies, etc.) and equity is usually 2 or more, depending on the structure of the business (sole proprietor, LLC, S Corp, partnership, etc.)


Let's look at two different companies to make this easier for you to understand. For the example below, both companies are Sole Proprietor businesses. That means there is one person that owns the business. No partners and not a corporation.


A landscaping business named A Plus Landscaping, only has one stream of income. The business does not sell any products, they strictly do landscaping. They also have 2 bank accounts and several expenses they use for business. The owner, Jo, is a sole proprietor and does not have any employees.


Another landscaping business named BB Landscaping offers landscaping services and sells some pesticide and compost. They have 2 bank accounts and one corporate card, several expenses and 3 employees including the owner, Larry. This means this company also has payroll and workers comp to deal with. BB Landscaping does not ship their products yet, they sell to their customer and deliver.


For company A Plus Landscaping, the Chart of Accounts would look like this:

Chart Of Accounts for A Plus Landscaping

Income - Sales of Service

Bank - Checking Account 101

Bank - Savings Account 102

Bank - Cash on Hand

Assets - Current Assets

Assets - Long Term

Cost of Sales

COGS - Supplies

COGS - Equipment Rental

COGS - New Equipment

COGS - Wood Chipping/Recycling

Owner's Equity

Owner's Investment

Owner's Draw

Retained Earnings

Expenses - Advertising

Expenses - Auto Gas

Expenses - Auto Repair

Expenses - Insurance

Expenses - Licenses

Expenses - Office Supplies

Expenses - Taxes

Expenses - Utilities


For company BB Landscaping, the Chart of Accounts would look like this:

Chart Of Accounts for BB Landscaping

Income - Sales of Service

Income - Sales of Products

Bank - Checking Account 225

Bank - Savings Account 226

Bank - Cash on Hand

Credit Card - Corporate CC 829

Assets - Current Assets

Assets - Long Term

Assets - Inventory Asset

Cost of Sales

COGS - Supplies

COGS - Equipment Rental

COGS - New Equipment

COGS - Wood Chipping/Recycling

COGS - Inventory Purchases

Owner's Equity

Owner's Investment

Owner's Draw

Retained Earnings

Expenses - Advertising

Expenses - Auto Gas

Expenses - Auto Repair

Expenses - Insurance

Expenses - Licenses

Expenses - Office Supplies

Expenses - Taxes

Expenses - Utilities

Payroll Expenses

PR Expenses - Salaries & Wages

PR Expenses - PR Fees

PR Expenses - Workers Compensation

PR Expenses - PR Taxes Paid


At this point, you probably noticed that the two examples of the Chart of Accounts have several items that are the same and a few that are different. That is because, while both companies are landscaping businesses and have a lot of the same structure in their business, they are not completely the same. The Chart of Accounts needs to reflect each business correctly. This way all income, expenses, equity, liability, payroll, and other items can be coded accurately.


I hope this post has helped you understand a little more about the Chart of Accounts and why I call it the "road map" for your bookkeeping.


If you have any further questions about this or other bookkeeping subjects, please contact me at Rebecca@RHBizSolutions.com. I look forward to talking to you about your bookkeeping needs.


Disclaimer: The Chart of Accounts listed above are examples and are in no way complete. Please consult an accounting professional for help setting up your Chart of Accounts. This is vital to starting your books off correctly and best practice for accounting and tax purposes.


Here's To Your Success!

Rebecca Hurt

RH Business Solutions


 Address. PO Box 2464

Oxnard, CA 93034

Tel. 805-253-3151

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