Make your chart of accounts work for you!
Bookkeeping is often a role that falls to someone within a business that isn’t necessarily trained to do it. Secretaries, administrators or assistants are often the most likely to get involved, but business owners also dabble. It’s therefore really important that it’s made as easy as possible, particularly if several people contribute. Consistency is vital, and the chart of accounts that’s used can be a huge help.
Both Xero and Quickbooks have a ‘standard’ chart of accounts. This is a list of all of the accounts items can be allocated to. Many of the items may be straightforward, but you don’t have to stick with the standard list.
Add new codes.
Many businesses offer multiple services or products, and tailoring your chart of accounts can help enormously to track the success of those different lines.
You can do this by adding extra codes for the variations within those services. You might also choose to add a suffix to a code to differentiate between different types of the same thing, perhaps where the frequency of billing differs. Or add a suffix to reflect the type of customer or duration of the service.
The standard code list can work well, but when more than one person is involved, consistency can suffer.
Instead of keeping the standard names in the code list, why not change them to suit your business? For example, ‘Printing and Stationery’ could serve better as ‘Office Supplies’, which makes it easier to know that coffee should go here too!
One of the easiest ways to ensure consistency is to use a system like Dext (Formerly ReceiptBank, and included in your standard fees), Hubdoc (included in your Xero subscription) or Autoentry, all of which can take the information from the source information and feed it directly into your system, using the correct nominal codes.
Each is slightly different, so please get in touch if you’re considering them for your business.
If you’d like to check that you’re getting the most from your chart of accounts, and the efforts that are going into your bookkeeping, please get in touch. It’s a relatively quick process for us to review your system with you, and recommend any changes to streamline things. The results to your business and the bookkeeping effort required could be dramatic!
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