A chart of accounts is the organized list of categories your bookkeeping system uses to classify financial activity. Think of it as the filing cabinet behind your financial statements.
The basic categories
Assets include resources such as cash and receivables. Liabilities include amounts owed. Equity reflects the owner’s interest. Revenue tracks income earned, while expenses capture costs of operating the business.
A thoughtful chart of accounts helps create consistent reports and makes trends easier to compare over time.
Keep it useful, not complicated
Choose account names that match your operations. Avoid creating a separate account for every minor purchase. Review classifications regularly, and work with your accountant when changing the structure.
Further reading: SBA: Manage your finances.
Need help putting these ideas into practice?
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