Chart of Accounts for Small Business: Examples and Template

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If you’ve ever looked at a financial report and wondered where a transaction should have been recorded, your chart of accounts is usually the answer.

A well-structured sample chart of accounts for a small business can make it easier to track spending, understand profitability, and stay prepared for tax season.

In this guide, you’ll find a practical example of a chart of accounts. Whether you’re building your bookkeeping system from scratch or cleaning up an existing one, this article will help you create a structure that supports accurate financial reporting.

Why Every Small Business Needs a Chart of Accounts?

A chart of accounts is the master list of all the accounts your business uses to record financial transactions. It organizes income, expenses, assets, liabilities, and equity into categories that determine how information appears on your financial statements.

Every transaction is assigned to an account from your chart of accounts, which determines how it appears on your Profit & Loss Statement and Balance Sheet. A well-organized accounting chart of accounts makes financial reporting more accurate and tax preparation much easier.

Whether you’re using QuickBooks or Xero, a properly structured chart of accounts is the foundation of clean, efficient bookkeeping and reliable financial reporting.

The 5 Account Types in a Standard Chart of Accounts

A standard chart of accounts is organized into five core account types. Together, they provide the structure for recording transactions and generating financial statements.

Here’s a simple way to think about these categories:

Assets are those things that your business owns or money that’s owed to you.
Liabilities are obligations that your business needs to pay.
Equity shows the owner’s stake in a business.
Revenue tracks the money your business brings in from products sold, services provided, and other income sources.
An expense list for small businesses includes the costs of running the business, from payroll and rent to software subscriptions and marketing.

Let’s understand them better with this table:

Account Type	Account Number Range	What It Tracks	Examples
Assets	1000-1999	What the business owns or is owed	Cash, accounts receivable, equipment, prepaid expenses
Liabilities	2000-2999	What the business owes to others	Accounts payable, credit card balances, loans payable, sales tax payable
Equity	3000-3999	Owner's stake in the business	Owner's equity, retained earnings, owner's draw
Revenue	4000-4999	Income from sales or services	Service revenue, product sales, consulting income, interest income
Cost of Goods Sold	5000-5999	Direct costs of delivering products or services	Inventory cost, subcontractor payments, direct labor
Expenses	6000-6999	Operating costs of running the business	Rent, software subscriptions, payroll, marketing, professional fees

Chart of Accounts Numbering System – How it Works?

The numbers in a chart of accounts are structured to group similar accounts, making the chart easier to navigate as the business grows.

Most small businesses use a numbering system similar to this:

1000-1999: Assets
2000-2999: Liabilities
3000-3999: Equity
4000-4999: Revenue
5000-5999: Cost of Goods Sold (COGS)
6000-6999: Expenses

Once you know the ranges, it’s much easier to understand where an account belongs. For example, a Checking Account (1010) and Savings Account (1020) are both asset accounts because they’re part of the 1000 series.

To see how this works in practice, take a look at the sample asset account structure below:

Account Number	Account Name	Type
1000	Current Assets	Asset (parent)
1010	Checking Account	Asset
1020	Savings Account	Asset
1030	Petty Cash	Asset
1100	Accounts Receivable	Asset
1200	Prepaid Expenses	Asset
1500	Fixed Assets	Asset (parent)
1510	Equipment	Asset
1520	Accumulated Depreciation	Asset (contra)

When assigning account numbers, it’s a good idea to leave gaps between accounts.

Using 1010, 1020, and 1030 instead of 1001, 1002, and 1003 makes it easier to add new accounts later without renumbering your entire chart of accounts.

Sample Chart of Accounts for Small Business

If you’re looking for a practical chart of accounts example, the sample below shows a typical setup for a small service-based business:

Account Number	Account Name	Type	Notes
1010	Checking Account	Asset	Primary operating checking account
1020	Savings Account	Asset	Reserve or tax savings account
1030	Petty Cash	Asset	Small cash fund for minor expenses
1100	Accounts Receivable	Asset	Amounts owed by clients for services rendered
1200	Prepaid Expenses	Asset	Expenses paid in advance (e.g., annual software subscriptions)
1510	Equipment	Asset	Computers, cameras, office furniture
1520	Accumulated Depreciation	Asset	Offset account for depreciation on fixed assets
2010	Accounts Payable	Liability	Unpaid vendor or contractor bills
2020	Credit Card Payable	Liability	Outstanding credit card balance
2030	Sales Tax Payable	Liability	Sales tax collected but not yet remitted
2040	Payroll Liabilities	Liability	Payroll taxes and withholdings owed
2100	Short-Term Loans Payable	Liability	Loans due within 12 months
2200	Long-Term Loans Payable	Liability	Loans due beyond 12 months
3010	Owner's Equity	Equity	Cumulative investment and retained earnings
3020	Owner's Draw	Equity	Money taken out of the business by the owner
3030	Retained Earnings	Equity	Profits kept in the business from prior periods
4010	Service Revenue	Revenue	Income from primary service offerings
4020	Consulting Revenue	Revenue	Income from advisory or consulting work
4030	Product Sales	Revenue	Income from physical or digital product sales
4040	Other Income	Revenue	Affiliate income, referral fees, interest earned
5010	Cost of Services	COGS	Direct costs of delivering services (subcontractors, direct labor)
5020	Software and Tools (Direct)	COGS	Tools used directly in client deliverables
6010	Payroll Expense	Expense	Employee wages and salaries
6020	Contractor Expense	Expense	Payments to freelancers and independent contractors
6030	Rent Expense	Expense	Office or co-working space rent
6040	Software Subscriptions	Expense	SaaS tools used in business operations
6050	Marketing and Advertising	Expense	Paid ads, sponsorships, promotional costs
6060	Professional Fees	Expense	Legal, accounting, and advisory fees
6070	Office Supplies	Expense	Stationery, printer ink, small consumables
6080	Travel and Meals	Expense	Business travel, client meals, accommodations
6090	Insurance Expense	Expense	Business liability, professional indemnity, health insurance
6100	Bank Fees	Expense	Monthly service charges, wire transfer fees
6110	Depreciation Expense	Expense	Internet, phone, electricity
6120	Utilities	Expense	Internet, phone, electricity
6130	Education and Training	Expense	Courses, certifications, conferences
6140	Miscellaneous Expense	Expense	Catch-all for small, infrequent costs

You can use it as a starting point when building your bookkeeping system in QuickBooks or Xero. You can add, remove, or rename accounts to match your services, reporting needs, and business structure.

A bookkeeper or accountant can help tailor the setup and keep financial reports organized as the business grows.

If you need an accountant to clean up your books, AccountsBalance provides you with dedicated bookkeeping support tailored to your business. From the chart of accounts setup and reconciliations to monthly reporting, you’ll get accurate financial records.

Chart of Accounts by Business Type

The accounts inside a chart of accounts can look very different based on the industry. A consultant, marketing agency, SaaS company, and ecommerce store all track revenue, expenses, and profitability in different ways.

The examples below highlight some of the accounts that are commonly added, modified, or emphasized for specific business models:

Service Business Chart of Accounts

A sample chart of accounts for service business owners is usually straightforward. Most revenue comes from services rather than products, inventory is rarely involved, and direct costs often consist of subcontractors or project-specific labor.

Many service businesses also track billable expenses separately from operating expenses to better understand project profitability and client reimbursements.

Common accounts added to a service business chart of accounts include:

Account Name	Type	Purpose
Service Revenue	Revenue	Income from core services
Billable Expense Income	Revenue	Client reimbursements for project-related costs
Subcontractor Payment	COGS	Payments to freelancers and contractors working on client projects
Direct Labor	COGS	Labor costs directly tied to service delivery
Unbilled Receivables	Asset	Revenue earned but not yet invoiced
Billable Expenses Receivable	Asset	Client expenses awaiting reimbursement
Professional Development	Expense	Training, certifications, and continuing education
Software Subscriptions	Expense	Tools used to deliver services and manage operations

Agency or Online Business Chart of Accounts

Agencies and online businesses often have many moving parts. Revenue may come from multiple service lines, contractors may work across different projects, and some expenses are incurred on behalf of clients before being reimbursed.

Some accounts commonly added to an agency or online business chart of accounts include:

Account Name	Type	Purpose
Client Ad Spend (Reimbursable)	Asset	Advertising costs paid on behalf of clients and billed back later
Client Reimbursable Expenses	Revenue	Reimbursements received from clients
Contractor Expense	Expense	Payments to freelancers and contractors working on client projects
Project Management Software	Expense	Tools used to manage projects and client work
Client Communication Software	Expense	Communication and collaboration platforms
Referral Income	Revenue	Revenue earned from partner referrals and affiliate relationships
Merchant Processing Fees	Expense	Payment processor fees from client invoices and subscriptions

SaaS or Subscription Business Chart of Accounts

Monthly subscriptions and annual plans bring a different set of reporting needs than one-time client projects. As a result, SaaS businesses often add accounts for deferred revenue, customer acquisition costs, and infrastructure expenses.

Many SaaS companies also use accrual accounting to track subscription revenue across the periods in which it’s earned, especially when customers pay for a full year upfront.

Some accounts commonly added to a SaaS chart of accounts include:

Account Name	Type	Purpose
Deferred Revenue	Liability	Annual or prepaid subscriptions that have not yet been earned
Monthly Recurring Revenue (MRR)	Revenue	Subscription revenue earned from monthly plans
Annual Recurring Revenue (ARR)	Revenue	Subscription revenue earned from annual plans
Refunds and Credits	Contra Revenue	Subscription refunds, credits, and adjustments
Hosting and Infrastructure	COGS	Cloud hosting, servers, and infrastructure costs
Third-Party API Costs	COSG	Usage-based costs from external software providers
Customer Acquisition Costs (CAC)	Expense	Marketing and sales costs associated with acquiring customers
Customer Support Software	Expense	Platforms used to manage customer support operations

Retail or eCommerce Business Chart of Accounts

Retail and ecommerce businesses have an additional layer of complexity because inventory needs to be tracked alongside revenue and business expenses. Products remain on the balance sheet as assets until they are sold, and many businesses create separate revenue accounts for channels such as Shopify and Amazon.

Profitability is also influenced by merchant fees, shipping costs, returns, and inventory valuation. Tracking these items separately makes financial reporting more useful and easier to analyze.

Accounts commonly added to a retail or ecommerce chart of accounts include:

Account Name	Type	Purpose
Inventory Asset	Asset	Value of products currently held for sale
Product Sales - Shopify	Revenue	Revenue generated through Shopify
Product Sales - Amazon	Revenue	Revenue generated through Amazon
Costs of Good Sold (COGS)	COGS	Cost of inventory sold during the period
Merchant Processing Fees	Expense	Credit card and payment processor fees
Shipping Expense	Expense	Shipping and fulfillment costs
Returns and Allowances	Contra Revenue	Product returns, refunds, and customer credits

How to Build Your Chart of Accounts in QuickBooks

QuickBooks creates a default chart of accounts when you set up a company file. You still need to customize it to match your operating style.

Here’s how you can build your chart of accounts on QuickBooks:

Step 1: Create Your Account Names

Start by listing all the accounts your business uses. These account names represent the transactions you’ll record throughout the year.

Common examples include checking accounts, accounts receivable, sales revenue, bank fees, and rent expense.

Step 2: Assign Account Numbers

As mentioned above, most businesses follow a standard numbering system when setting up their chart of accounts:

1000-1999: Assets
2000-2999: Liabilities
3000-3999: Equity
4000-4999: Revenue
5000-5999: Cost of Goods Sold (COGS)
6000-6999: Expenses

Leaving some space between account numbers gives you room to add new accounts later. For instance, you might create a PayPal Fees sub-account under Bank Fees instead of reorganizing your entire chart.

Step 3: Categorize Each Account

Once you’ve assigned specific account names and numbers, the last step is to place each account in the appropriate category.

After grouping similar accounts together, you end up with a chart like this:

Account #	Account Name	Account Category
1010	Checking Account	Assets
2010	Accounts Payable	Liabilities
4010	Service Revenue	Income
6100	Bank Fees	Expenses
6120	Rent Expense	Expenses

Once the setup is done, you can continue adding accounts and refining the structure as your reporting needs evolve.

Frequently Asked Questions

Here are answers to the questions small business owners most commonly ask when setting up or reviewing their chart of accounts:

What Is the Difference Between a Chart of Accounts and a General Ledger?

A chart of accounts is the framework that organizes your financial records into categories such as revenue, expenses, assets, and liabilities.

The general ledger contains the actual transactions recorded under each of those categories. Together, they provide the information needed to produce financial reports.

How Many Accounts Should a Small Business Have in Its COA?

Most small businesses do well with somewhere between 30 and 60 accounts. Too few accounts can make reporting less useful, while too many can make reports difficult to read and maintain.

The right number depends more on business complexity than business size. A solo consultant may only need 35 accounts, while a 10-person agency could require 60 or more.

Can I Change My Chart of Accounts After I Start Using It?

Yes. It’s common for a chart of accounts to evolve as a business grows.

Just be careful with accounts that already contain transaction history, as changes can affect historical reporting. If you’re planning a major cleanup, the start of a new fiscal year is usually the easiest time to do it.

What Is the Difference Between an Expense and a Cost of Goods Sold Account?

Cost of Goods Sold (COGS) tracks the direct cost of delivering a product or service, while expenses track the cost of running the business.

For example, subcontractor payments may be recorded as COGS for a service business, while office rent is an expense. For a retailer, inventory costs are COGS, and marketing costs are expenses.

Does My Chart of Accounts Need to Match My Tax Return Categories?

Not exactly, but the two should be aligned.

Your chart of accounts should support day-to-day reporting while making tax preparation straightforward. Reviewing your chart of accounts with a CPA before filing taxes can help avoid unnecessary cleanup later.

Conclusion

A chart of accounts is one of the first building blocks of a reliable bookkeeping system. Just start with a structure that fits your business today, then refine it as your services, products, and reporting needs evolve.

Many business owners don’t realize their chart of accounts needs attention until reports become difficult to trust or tax season turns into a cleanup project.

If you want the setup handled correctly from the start, AccountsBalance can help. We help businesses maintain organized books with dedicated bookkeepers, fixed monthly pricing, and financial reports delivered by the 15th of each month.

Explore our monthly bookkeeping services for ongoing support beyond the initial setup.