Quick Books chart of accounts

After you've finished the setup and have successfully set yourself up in QuickBooks, the program presents a chart of accounts. Think of the chart of accounts as an organization system, such as file folders. It keeps all related data in the proper area. When you write a check to pay a bill, it deducts the amount from your checking account, reduces your accounts payable, and perhaps increases your asset or expense accounts.

You have a choice of giving each account a number. These numbers, a kind of bookkeeping shorthand, are standardized throughout bookkeeping; believe it or not, everybody in the industry seems to know what number goes with what item. To keep things less confusing, I like to use titles as well as numbers.

To customize your chart of accounts, follow these steps:

1. Choose Edit^Preferences.

2. Click the Accounting icon (on the left).

3. Click the Company preferences tab and indicate that you'd like to use account numbers.

An editable chart of accounts appears. Because QuickBooks doesn't assign account numbers as a default, you'll need to edit the chart to create them.

4. Go through your QuickBooks chart of accounts and add any missing categories.

You may not need all these categories, and you can always add more later. In Table 16-2, I show you a chart of accounts that a CPA wrote for an eBay business.

Table 1G-2 eBay Business Chart of Accounts

Account Number

Account Name

What It Represents

1001

Checking

All revenue deposited here and all checks drawn upon this account

1002

Money market account

Company savings account

1100

Accounts receivable

For customers to whom you extend credit

1201

Merchandise

COGS: Charge to cost of sales as used, or take periodic inventories and adjust at that time

1202

Shipping supplies

Boxes, tape, labels, and so forth; charge these to cost as used or take an inventory at the end of the period and adjust to cost of sales

1401

Office furniture & equipment

Desk, computer, telephone

1402

Shipping equipment

Scales, tape dispensers

1403

Vehicles

Your vehicle if it's owned by the company

1501

Accumulated depreciation

For your accountant's use

1601

Deposits

Security deposits on leases

2001

Accounts payable

Amounts owed for the stuff you sell, or charged expenses

2100

Payroll liabilities

Taxes deducted from employees' checks and taxes paid by the company on employee earnings

2200

Sales tax payable

Sales tax collected at time of sale and owed to the state

2501

Equipment loans

Money borrowed to buy a computer or other equipment

2502

Auto loans

When you get that hot new van for visiting your consignment clients

3000

Owner's capital

Your opening balance

3902

Owner's draw

Your withdrawals for the current year

Table 16-2 (continued)

Account Number

Account Name

What It Represents

4001

Merchandise sales

Revenue from sales of your products

4002

Shipping and handling

Paid by the customer

4009

Returns

Total dollar amount of returned merchandise

4101

Interest income

From your investments

4201

Other income

Income not otherwise classified

5001

Merchandise purchases

All the merchandise you buy for eBay; you'll probably use subaccounts for individual items

5002

Freight in

Freight and shipping charges you pay for your inventory, not for shipments to customers

5003

Shipping

COGS: Shipping to your customers: USPS, FedEx, UPS, and so on

5004

Shipping supplies

COGS: Boxes, labels, tape, bubble pack

6110

Automobile expense

When you use your car for work

6111

Gas and oil

Filling up the tank!

6112

Repairs

When your business owns the car

6120

Bank service charges

Monthly service charges, NSF charges, and so forth

6140

Contributions

Charity

6142

Data services

Do you have an outside firm processing your payroll?

6143

Internet service provider

What you pay to your Internet provider

6144

Web site hosting fees

Fees paid to your hosting company

6150

Depreciation expense

For your accountant's use

6151

eBay fees

COGS: What you pay eBay every time you list an item and make a sale

Account Number

Account Name

What It Represents

6152

Discounts

Fees you're charged for using eBay and accepting credit card payments; deducted from your revenue and reported to you on your eBay statement

6153

Other auction site fees

COGS: You may want to set up subcategories for each site where you do business, such as Yahoo! or Amazon.com

6156

PayPal fees

COGS: Processing fees paid to PayPal

6158

Credit card merchant account fees

COGS: If you have a separate merchant account, post those fees here

6160

Dues

If you join an organization that charges membership fees (relating to your business)

6161

Magazines and periodicals

Books and magazines that help you run and expand your business

6170

Equipment rental

Postage meter, occasional van

6180

Insurance

Policies that cover your merchandise or your office

6185

Liability insurance

Insurance that covers you if someone slips and falls at your place of business (can also be put under Insurance)

6190

Disability insurance

Insurance that will pay you if you become temporarily or permanently disabled and can't perform your work

6191

Health insurance

If provided for yourself, you may be required to provide it to employees

6200

Interest expense

Credit interest and interest on loans

6220

Loan interest

When you borrow from the bank

6230

Licenses and permits

State and city licenses

6240

Miscellaneous

Whatever doesn't go anyplace else

6250

Postage and delivery

Stamps used in your regular business

6251

Endicia.com fees

COGS: Fees for your eBay business postage service

Table 16-2 (continued)

Account Number

Account Name

What It Represents

6260

Printing

Your business cards, correspondence stationery, and so on

6265

Filing fees

Fees paid to file legal documents

6270

Professional fees

Fees paid to consultants

6280

Legal fees

If you have to pay a lawyer

6650

Accounting and bookkeeping

Bookkeeper, CAP, or EA

6290

Rent

Office, warehouse, and so on

6300

Repairs

Can be the major category for the following subcategories

6310

Building repairs

Repairs to the building where you operate your business

6320

Computer repairs

What you pay the person who sets up your wireless network

6330

Equipment repairs

When the copier or phone needs fixing

6340

Telephone

Regular telephone, FAX lines

6350

Travel and entertainment

Business-related travel, business meals

6360

Entertainment

When you take eBay's CEO out to dinner to benefit your eBay business

6370

Meals

Meals while traveling for your business

6390

Utilities

Major heading for the following subcategories

6391

Electricity and gas

Electricity and gas

6392

Water

Water

6560

Payroll expenses

Wages paid to others

6770

Supplies

Office supplies

6772

Computer

Computer and supplies

Account Number

Account Name

What It Represents

6780

Marketing

Advertising or promotional items you purchase to give away

6790

Office

Miscellaneous office expenses, such as bottled water delivery

6820

Taxes

Major category for the following subcategories

6830

Federal

Federal taxes

6840

Local

Local taxes

6850

Property

Property taxes

6860

State

State taxes

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