How to Set Up a Chart of Accounts (Tailored by Business Type)
Welcome to The Profit Ledger — your go-to spot for smart bookkeeping tips, tutorials, and tools for small business success.
Whether you’re a solopreneur or scaling your team, we help you take control of your finances with confidence.
What is a Chart of Accounts (COA) — and Why Should You Care?
Think of your Chart of Accounts as your business’s financial roadmap. It’s a structured list of categories that tells your bookkeeping system where every dollar should go.
Each account acts like a folder — organizing your income, expenses, assets, and liabilities so you can:
✅ Make sense of your numbers
✅ File accurate taxes
✅ Spot trends and opportunities
✅ Keep auditors (and yourself!) happy
The 5 Core Account Categories
Every chart of accounts is built around five core buckets:
- Assets – What you own (cash, accounts receivable, equipment)
- Liabilities – What you owe (loans, credit cards, unpaid bills)
- Equity – Your ownership value in the business
- Income – Money coming in (sales, services, interest)
- Expenses – Money going out (rent, software, wages)
Tailoring Your Chart of Accounts by Business Type
Your COA should reflect how your business earns and spends money. Here’s a breakdown by common business models:
👩🎨 Service-Based Businesses (Coaches, Consultants, Freelancers)
You may not have inventory, but you do need to track time, tools, and subscriptions.
Suggested Income Accounts:
- Consulting Revenue
- Hourly Service Income
- Retainer Revenue
Suggested Expense Accounts:
- Software Subscriptions
- Contractor Payments
- Professional Development
- Marketing & Ads
🛍️ Retail or E-commerce Businesses
You’ll need to track inventory, product returns, and shipping costs.
Suggested Income Accounts:
- Product Sales
- Shipping Income
- Returns & Allowances (as a negative income)
Suggested Expense Accounts:
- Cost of Goods Sold (COGS)
- Merchant Processing Fees
- Inventory Purchases
- Packaging Supplies
🧰 Trades & Contractors (Plumbers, Builders, Landscapers)
You’re dealing with job costs, labor, and materials.
Suggested Income Accounts:
- Project Revenue
- Change Orders
- Service Calls
Suggested Expense Accounts:
- Subcontractor Labor
- Job Supplies
- Equipment Rentals
- Vehicle Expenses
💻 Online Creators or Course Sellers
Your setup might be digital, but your books should still be sharp.
Suggested Income Accounts:
- Course Sales
- Affiliate Income
- Sponsorships
Suggested Expense Accounts:
- Hosting & Platforms (Teachable, Kajabi, etc.)
- Creative Software (Canva, Adobe)
- Email Marketing Tools
Tips to Keep Your Chart Clean and Effective
- Don’t go overboard. Use sub-accounts to stay organized without cluttering your reports.
- Stay consistent. Use the same categories each month so trends are easy to track.
- Review annually. Archive accounts you no longer use to keep things streamlined.
Grab Your Free Chart of Accounts Template 📥
Want a plug-and-play COA for your business type with accounts descriptions?
We’ve created a free excel workbook you can copy and customize, broken out by various business types: e-commerce, trades, retail, and services.
👉 [Download Your COA Template Here]
Final Word: Build With the Future in Mind
Your chart of accounts isn’t just for taxes — it’s the framework for understanding how your business grows.
Build it thoughtfully now, and you’ll save time, stress, and confusion later.
Need help setting up your chart? Drop your business type in the comments, and we’ll recommend a custom structure!
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