In this lesson, 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 comma-separated values (CSV) file.
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This lesson is one in our series of Free QuickBooks Tutorials. The video below and the step-by-step illustrated instructions that follow present the same information. The video is from a slightly older version of QuickBooks Online. While the process of setting up the chart of accounts in QuickBooks Online is essentially unchanged, the layout of the screens is slightly different. The step-by-step instructions are from the most current version of QuickBooks Online.
The Importance of Setting Up the Chart of Accounts
The chart of accounts is the backbone of your bookkeeping and 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 and loss statement or income statement, can be generated.
Review Your QuickBooks Online Chart of Accounts List
QuickBooks Online creates a default chart of accounts list based on the industry you selected when you set up your QuickBooks company. I recommend reviewing this default chart of accounts to determine what accounts need to be added, edited, or deleted. First, however, we need to discuss how QuickBooks Online organizes and classified accounts.
QuickBooks Online Account Types and Detail Types
QuickBooks Online 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 will not know to increase this account whenever you issue a new customer invoice. Similarly, your inventory account must have Detail Type “Inventory” so that QuickBooks Online knows which account to increase when you purchase products.
You need to review the default chart of accounts created by QuickBooks. While the default chart is a good place to start, most companies will want to make adjustments to fit their exact needs.
How to View and Print Your Chart of Accounts
From your QuickBooks Online Dashboard, click the settings icon at the top right of the screen and then select Chart of accounts in the first column:
Your chart of accounts is now displayed. If you would like a printed or PDF copy of your chart of accounts, click Run Report in the upper right-hand corner of the screen.
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. I recommend having at least the following accounts included in your chart of accounts:
Cash on hand
Create an account to track cash not intended for deposit into a bank account like petty cash
Create a separate account for each checking, savings, or money market account
Accounts Receivable (A/R)
At least one A/R account is required to issue invoices to customers
Other Current Assets
You must have at least one inventory account if you buy and sell inventory
Other Current Assets
Every company should have one undeposited funds account to track cash and checks waiting for deposit
If the company owns fixed assets, it needs at least one account to track the cost of fixed assets
Companies with fixed assets need at least one account to track the amount of depreciation deducted
Accounts Payable (A/P)
You must have at least one A/P account to input and track unpaid bills from vendors
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
Create a separate notes payable account for each loan the company must repay, including a mortgage
Each company should have a retained earnings account
You should have at least one income account for your primary sources of income
Create an interest earned account if the company receives interest like from a checking, savings, or money market account
Create an expense account for each of your major categories of expenses
If the company owns depreciable assets, you must have a depreciation expense account
Once you have decided what accounts you would like to add, edit, or delete, you are ready to make the necessary changes in QuickBooks.
How to Add an Account to the Chart of Accounts List
From the Chart of accounts screen, click the green New button in the upper right corner of the screen to access the following account setup screen for your new account:
The following fields can be completed for each account:
A. Account type: You must specify an account type from the drop-down menu.
B. Detail type: Select a detail type from the drop-down menu. The available detail types will vary based on the account type selected. The gray box below the detail type provides an explanation of the detail type selected.
C. 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.”
D. 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 How to Set Up Advanced Settings.
E. Description: You may provide an optional description of the new account.
F. Sub-account: You can organize your accounts with parent and sub accounts. For instance, you might create a “Utilities Expense” parent account and then create sub accounts for “Electric Expense” and “Gas Expense.” If this is a sub-account, place a check mark next to Is sub-account. Then, select the parent account from the down-down box below Is sub-account.
G. Start tracking: Enter the date you started tracking your finances with QuickBooks Online.
When you are satisfied with your answers, either click 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 View register. Then, select Edit to open the account setup screen.
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 towards 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 towards your maximum.
From the Chart of accounts screen, click the drop-down arrow next to View register for the account you wish to make inactive. Then, select Make inactive from the drop-down list:
In the example above, Paul’s Plumbing is making account number 1160, Payroll clearing account, inactive. Since the account has been used in at least one transaction, the account will still count toward the maximum number of accounts Paul’s Plumbing can use.
How to Import Accounts to the Chart of Accounts List
If you are 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. Accounts imported will be added to your current chart of accounts, not replace your chart of accounts.
1. Prepare Your Spreadsheet
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:
2. Import Your Spreadsheet
From the Chart of accounts screen, click the drop-down arrow next to the green New button and select Import:
Now, click the Browse button and select the spreadsheet you prepared for the import:
After selecting your spreadsheet, click the green Next button in the bottom right corner of the screen.
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:
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:
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.
Avoid duplicate accounts: QuickBooks Online will not import an account if there is another account with the same name either already in your chart of accounts or in your import file. After importing your accounts, QuickBooks Online will provide a list of accounts that did not import due to duplicates.
Congratulations on completing another lesson in our QuickBooks Online Training Course where you learned to add, edit, delete, and import accounts for your chart of accounts list. The next lesson in our QuickBooks Online Training Course is 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.