How To Set Up a Chart of Accounts in QuickBooks Online
This article is part of a larger series on Accounting Software.
In this tutorial, you’ll learn how to add, delete, and modify accounts in the QuickBooks Online Chart of accounts list. We’ll also teach you how to import a chart of accounts from an Excel spreadsheet or a comma-separated values (CSV) file.
This lesson is part of our free QuickBooks Online tutorial series. If you have a QuickBooks subscription, it’s best to follow along in your account. Otherwise, you can visit QuickBooks and sign up for a 30-day free trial or purchase QuickBooks right away and get 50% off for three months.
How To Add an Account to the Chart of Accounts List
First, click on the gear icon on the upper right-hand side of your QuickBooks dashboard, and then select Chart of accounts from the pop-up window, as shown below.
Navigate to Chart of accounts in QuickBooks Online
Next, click the green New button in the upper right corner of the screen to access the account setup window for your new account.
Click new to access chart of accounts in QuickBooks Online
Since our last update: The latest QuickBooks version has a new and improved account setup form. When you click the New button, a pop-up account creation screen will appear on the right-hand side, which looks totally different from the older version. The new account setup form is better as it makes it easier to select categories, and you can see where exactly your new account will show up in your reports.
From the new account setup form, you can choose from the account type on top, such as income, expenses, banks, and assets.
New account creation form in QuickBooks Online
Once you select the appropriate category, you must fill in the following fields:
- Save account under: Select the appropriate account from the drop-down menu. The available accounts will vary based on the account type you selected.
- Tax form section: Select the category that best describes your new account. This can be used by your accountant to complete your sales tax forms.
- Account name: Provide a name for your account that will make it easy for you to distinguish when choosing accounts to post transactions. For instance, instead of “Checking Account,” it might be better to include the bank name and the last four digits of the account number, like “US Bank Checking x1234.”
- Account number: Providing a number for your account is optional. If you wish to use account numbers and this field is not available, you must enable account numbers, as shown in our guide on how to set up advanced settings in QuickBooks Online.
- Description: You may provide an optional description of the new account.
Another useful feature we found in the new account setup form is the New Account Preview section. When you scroll down the setup form, you will see where the account shows up in your report. In the GIF below, you’ll see that our Digital Advertising Costs account shows up in our profit and loss (P&L) reports and, if you scroll further, you’ll see that the account is now a subaccount of 6100 Advertising Expense.
New Account Previous section in QuickBooks Online
When you are satisfied with your answers, click either the green Save and Close button or the drop-down arrow next to it and select Save and New to add another account.
How To Edit an Account in the Chart of Accounts List
To edit an existing account, find the account on the Chart of accounts screen and click the drop-down arrow next to Run report. Next, select Edit to open the account setup screen.
Edit an account in QuickBooks Online
The fields available in the account setup screen are the same as discussed in the previous section. Make the needed changes to the account and then click the green Save and Close button.
How To Delete an Account in the Chart of Accounts List
Instead of deleting accounts in QuickBooks Online, you must mark them as inactive. If the account has never been used in a transaction, the account will no longer count toward your maximum number of accounts. If the account has been used in a transaction, the history of the account will be retained, and the account will continue to count toward your maximum.
From the Chart of accounts screen, click the drop-down arrow next to Run report for the account you wish to make inactive. Then, select Make inactive from the drop-down list.
Make an account inactive in QuickBooks Online
How To View & Print Your Chart of Accounts
From the chart of accounts screen, click the Run Report button on the top right side of the screen to view a copy of your chart of accounts.
Creating a chart of accounts report in QuickBooks
After clicking Run Report, a copy of your chart of accounts appears. You can then export your chart of accounts to an Excel file, print it out, or email it if needed.
Sample copy of chart of accounts in QuickBooks Online
How To Import Accounts to the Chart of Accounts List
If you’re transferring your books from another bookkeeping software, you might be able to export your chart of accounts from the prior software into an Excel spreadsheet or CSV file, which can then be imported into QuickBooks Online. Imported accounts will add to—not replace—your current chart of accounts.
Avoid duplicate accounts: QuickBooks Online won’t import an account if there’s another account with the same name either already in your chart of accounts or import file. After importing your accounts, QuickBooks Online will provide a list of accounts that didn’t import due to duplicates.
Your spreadsheet must contain columns for the account name, account type, and detail type. You can also include a column for account number if you wish. The spreadsheet can contain other columns, but they won’t be imported into QuickBooks Online. The first line of the spreadsheet should contain a label for each column, which doesn’t necessarily have to match the field name in QuickBooks Online.
Here is an example spreadsheet ready for import:
Sample spreadsheet to import accounts into QuickBooks Online
From the Chart of accounts screen, click the drop-down arrow next to the green New button and select Import.
Import accounts into QuickBooks Online
Next, click the Browse button and select the spreadsheet you prepared for the import.
Upload your import file
After selecting your spreadsheet, click the green Next button in the bottom right corner of the screen (not shown).
The next screen requires you to map the data in your spreadsheet to the four fields imported by QuickBooks Online. For each QuickBooks Online Field, select the column in your spreadsheet that contains the data.
Mapping account data for importing into QuickBooks Online
When you are satisfied with your mapping, click the green Next button. The final screen before importing provides your last opportunity to change any account information or deselect any accounts you don’t wish to import.
Verify account details before importing to QuickBooks Online
After verifying the information is correct, click the green Import button to complete the importing process. The new accounts should now be included in your chart of accounts.
How QuickBooks Creates & Classifies Accounts
QuickBooks Online creates a default chart of accounts list based on the industry you selected when you set up your QuickBooks company. We recommend reviewing this default chart of accounts to determine what accounts need to be added, edited, or deleted. While the default chart is a good place to start, most companies will want to adjust it to fit their needs.
The platform also requires detailed information for each account, including both an Account Type and Detail Type. It’s very important that you properly classify accounts so that QuickBooks Online can operate effectively.
For instance, you must list your Accounts Receivable account with the Account Type “Accounts Receivable.” Otherwise, QuickBooks Online won’t know to increase this account whenever you issue a new customer invoice. Similarly, your inventory account must have the Detail Type “Inventory” so that QuickBooks Online knows which account to increase when you purchase products.
Setting up your chart of accounts is one of the many ways you can customize QuickBooks to your business needs. You can also customize sales forms, including invoices, estimates, and sales receipts. This is one reason QuickBooks is awarded our best small business accounting software.
Suggestions for Your Chart of Accounts
Because the chart of accounts is the backbone of your bookkeeping system, it pays to take time now to make sure your list of accounts is complete and appropriate for your business. We recommend having at least the following accounts included in your chart of accounts.
Account Type | Detail Type | Recommendation |
|---|---|---|
Bank | Cash on hand | Create an account to track cash not intended for deposit into a bank account like petty cash |
Bank | Checking | Create a separate account for each checking, savings, or money market account |
Accounts Receivable (A/R) | A/R | At least one A/R account is required to issue invoices to customers |
Other Current Assets | Inventory | You must have at least one inventory account if you buy and sell inventory |
Other Current Assets | Undeposited funds | Every company should have one undeposited funds account to track cash and checks waiting for deposit |
Fixed Assets | Varies | If the company owns fixed assets, it needs at least one account to track the cost of fixed assets |
Fixed Assets | Accumulated depreciation | Companies with fixed assets need at least one account to track the amount of depreciation deducted |
Accounts Payable (A/P) | A/P | You must have at least one A/P account to input and track unpaid bills from vendors |
Credit Card | Credit card | Each credit card account the company possesses should have a separate account in the Chart of Accounts |
Other Current Liabilities | Line of credit (LOC) | Create a LOC account if the company has a LOC with a bank |
Other Current Liabilities | Payroll tax payable | Companies that pay employees must have at least one payroll tax payable account |
Other Current Liabilities | Sales tax payable | Companies that collect sales tax from customers must have at least one sales tax payable account |
Long Term Liabilities | Notes payable | Create a separate notes payable account for each loan the company must repay, including a mortgage |
Equity | Retained earnings | Each company should have a retained earnings account |
Income | Varies | You should have at least one income account for your primary sources of income |
Other income | Interest earned | Create an interest earned account if the company receives interest like from a checking, savings, or money market account |
Expenses | Varies | Create an expense account for each of your major categories of expenses |
Other Expenses | Depreciation | If the company owns depreciable assets, you must have a depreciation expense account |
Frequently Asked Questions (FAQs)
Customizing your chart of accounts helps you categorize transactions in a way that makes sense for your business. It allows you to generate precise data about your income, expenses, assets, liabilities, and more.
You can customize your chart of accounts by adding the specific accounts that your business needs and removing those you don’t need. You can add, edit, delete, or import a chart of accounts from the Chart of Accounts page under Your Company—which you can access from the cog wheel icon on your QuickBooks dashboard.
Wrap Up
Congratulations on completing another tutorial on QuickBooks Online, where you learned to add, edit, delete, and import accounts for your chart of accounts list. The next tutorial in our QuickBooks Online Training Course is on how to set up the products and services list. The list of product and service items in QuickBooks Online is extremely important and is central to how QuickBooks simplifies the bookkeeping process.
