What are the Best ways to Optimize our Chart of Accounts in QuickBooks?
Thousands of clients are using QuickBooks Online services. The chart of accounts is being neglected most of the time and sometimes categories are run that are not required. If your charts of account is not organized it will not show the useful reports by using them. That is why user always prefer to organize there charts of account. There are many ways that a user can optimize chart of accounts.
1) Don’t Stick with the Default Accounts
The default chart of accounts provides you with a copied set of reports based on the industry you choose. This reports are very useful at initial stage of organization. But it is possible for the user to customize it further to reflect on the uniqueness of their business to determine major revenue and cost according to their needs. Some of them include creating the accounts for the bank, credit card and loan accounts, as well as any other asset or liability accounts are the line items the user should see on his income statement. User can use the default chats of accounts and go through with it first and if needed user can add new accounts and they can use the modification features of accounts. And if you find that there is some account that you don’t need, you can simply delete those accounts.
2) Organizing Accounts:
The default chart of accounts shows all the accounts in alphabetical order. This means that if you have any account which is having limited annual activity, such as the “Dues and Subscriptions” would view near the Income Statement. On the other hand, the major expense account such as “Salaries” will view near the bottom due to its alphabetical ordering. The user needs to re-order this chart to make sure it’s accurately reflecting the priorities. Take the most useful accounts like income and expense accounts at the top. Organizing in QuickBooks Desktop is very easy as user can drag any account and drop at any place he needs. But QuickBooks Online will not allow to re-order accounts outside of alphabetical order. If you have to set priority of any account you have to use number before the accounts or you can simply give a number to account according the way you want and it will organize your charts of account accordingly.
3) Make Use of Parent and Subaccounts feature:
There is feature in QuickBooks that you can make sub accounts like if you have any main account but it will keep records of other accounts so you can make second accounts as child account of parent account. This will show your charts of accounts in most viewable way. But the account type of both parent account and child account should be same otherwise it will not allow you to add sub account. For example if you have an expense account but you want to categorize expense like transport expense, office expense and miscellaneous expense. By making categorized account as sub account it will allow you to run collapsed and expended reports.
4) Use additional categorization tags:
Mostly charts of account use to analyze the overall business. But many clients also use it to see project profitability, cost performance, etc. So its very import to keep chart of accounts simple and additional use of classes and categories. Location features allows to categorize income and expense transaction in QuickBooks Online. This classes and categories will help user to customize reports and analyze business on different aspects. You can check with bookkeeper to analyze the right use if these accounts so that you can maximize your reporting results.