Welcome to the Fit Small Business QuickBooks Online training course! In this lesson, we’re going to cover how to add, delete, and modify the chart of accounts list.

You can follow along on your own QuickBooks Online account. If you don't have one already, click here to sign up for a free 30-day trial and follow along below.

To complete this lesson, you can either watch the video below, read through the step-by-step instructions, or do both. Let’s begin!

Why is it Important to Setup the Chart of Accounts?

The Chart of Accounts is the backbone of your bookkeeping/accounting system. All of the transactions that you enter into QuickBooks are categorized behind the scenes using the Chart of Accounts so that financial statements, such as your Profit & Loss Statement or Income Statement, can be generated.

What Accounts Will QuickBooks Create for You?

QuickBooks Online will create a chart of accounts list based on the industry that you selected when you set up your account.   

Below is a list of accounts that QuickBooks will automatically create for you:

• Accounts Receivable
• Accounts Payable
• Inventory Asset
• Sales Tax Payable
• Retained Earnings

Review Your Chart of Accounts List

If you want to keep track of something that is not on the default chart of accounts list, you will need to create a new account. Here are some things to consider when deciding if you need a new account:

1. What items would you like to track that are not currently on your chart of accounts list? For example, if you want to keep a close eye on the fees that your bank charges you, then you could setup an expense account for Bank Service Charges.
2. What accounts are on the list that you know you will never use?  For example, if you don’t sell products, then you would have no use for an account that tracks shipping & delivery fees.  

Once you have decided what accounts you would like to add or delete, you are ready to make the necessary changes in QuickBooks. We will use our fictitious business, Paul’s Plumbing to walk through how to add, delete or modify the chart of accounts list.

Chart of Accounts Quick Reference Chart

Below, you will find a quick reference chart to assist you with setting up new accounts and to give you the big picture of what’s happening “behind the scenes”in QuickBooks.  The first column is a list of the categories you can choose from when setting up an account. The second column are examples of accounts that you would setup in QuickBooks Online.  The last column is the financial statement that the account will appear on in QuickBooks.

How to Add a New Account to the Chart of Accounts List

Example: Paul would like to track the income that he makes from his residential customers separate from the income that he makes from commercial customers.

Let’s setup these two accounts for Paul’s Plumbing:

Step 1 – Display the Chart of Accounts List

To navigate to your chart of accounts, click on the Gear icon to the left of your company name and Chart of accounts is listed below the Your Company column as indicated below.

Step 2 – Click the blue New button in the upper right hand corner as indicated below:

Step 3 – Complete each of the fields as indicated below:

1. Category Type: Typically you will select Sales of Product Income if you sell products or Service/Fee income if you sell services.
2. Detail Type: Based on which category type you selected, QuickBooks will provide you with a brief explanation of when to use this account type.  This can be very helpful if you are unsure about how to categorize a new account.
3. Detail Type Explanation: This field provides an  explanation  of the detail type selected in step 2.
4. Name: This is the name of the account that will appear on your chart of accounts list
5. Description: This is where you can put any additional description about this account.  If you don’t have anything additional to add, just put the same info here that you entered in the Name field.

Step 4 – Save the New Account

Click the Save & New button and repeat steps 1 through 3 to set up another account.

Once both accounts have been set up, the new accounts will appear on the chart of accounts list, as indicated below.

How to Delete an Account from the Chart of Accounts List

You should delete accounts that you do not plan to use. This can be helpful because:

• The account won’t accidentally be used in transactions
• It makes your Chart of Accounts list much more manageable

A WORD OF CAUTION: You should never delete an account that you have already used in a transaction.

Step 1 – Display the Chart of Accounts List

To navigate to your chart of accounts, click on the Gear icon to the left of your company name and Chart of accounts is listed below the Your Company column as indicated below.

Step 2 – Delete Account

Once you have the Chart of accounts list on your screen, scroll down to the account that you would like to delete. Click on the drop down arrow in the far right column next to that account and select Delete, as indicated below.

Step 3 – Confirm Delete Action

In the next screen, you will have the option to proceed with deleting the account or to cancel, as indicated below.

A WORD OF CAUTION: Once you select delete, there is no automatic undo button.  If you accidentally delete an account, you will have to add it back again.

How to Modify an Account from the Chart of Accounts List

Step 1 – Select the Account

In QuickBooks, you can modify accounts at anytime.  From the Chart of Accounts, scroll down to the account that you want to make changes to & click the drop arrow next to Run Report, select Edit as indicated below:

Step 2 – Make Modifications to the Account

The following window should open where you can make changes to the Account Name and Account Description fields as indicated below.

A WORD OF CAUTION: Do not change the Category Type if you have already entered transactions using this account.  If you do so, it could impact your financial statements.

Step 3 – Save & Close

Don’t forget to save your changes before exiting your account.

Wrap Up

That wraps up the section on Setting Up the  Chart of Accounts. The next lesson in our QuickBooks Online Training Course will be How to Set Up Products & Services in QuickBooks Online. In this lesson, we’ll explain how to track inventory in QuickBooks Online.

To access this lesson or any of the others in the series, click here. 

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