When Was the Last Time You Redecorated... Your QuickBooks?

Wait... what does interior design have to do with bookkeeping?

You may not realize it, but one of the reasons you may hate your bookkeeping software is, well, it wasn't made for you. The good news is you can change that.

First, let me explain one of the features you need here: the Chart of Accounts. In QBO, you can find this by clicking the Accounting item on the left-hand menu panel. It should look like the below picture.

Think of this as your bookshelf. Each account represents a binder where you store your transactions based on the business purpose of the transaction.

QBO gives you default accounts like "Sales," "Loan Payable," and "Prepaid Expenses." However, if you run an online coaching business, you will not need most of these default accounts. You would be better off tracking your income streams and measuring your profitability by income stream.

For example, instead of using "Sales" to track all of your income, wouldn't it be great if you could see 1:1 coaching sales, group coaching and course sales all in different buckets? That way you could actually see if these offers are individually profitable and making you money. we call these "income centers." Similarly, you can also create "cost centers" that tie to your specific offers as well so you can see your profit specifically for an offering.

Here is how we approach it:

When you onboard with us, we do a Chart of Accounts design. We get intentional about how accounts are labeled and the degree of detail you need. We agree on how the accounts will be presented and discuss this with clients. Very often, bookkeepers and accountants use the generic defaults, but we realize this does not help you as a business owner understand what you need.

PRO TIP - While you may think you only need a few categories of expenses because you have only a few simple costs, understand that if the IRS spots a large lump sum under a particular category, especially if it is vague or unclear like "other" or "miscellaneous," you could be asking for an audit. Instead, break out your accounts into sub-accounts or more descriptive categories as much as possibe.

For example:

Office Expenses & Software

becomes:

Office Supplies

Office Equipment

Website

Software

Software - Marketing

Software - Client Management

Software - Accounting

Note that products like QuickBooks Self-employed (QBSE) do not allow any account customization. Therefore, if you use this option, you will find yourself dumping everything into "Sales" and "Other Expenses," which is not very useful if you want to make quality business decisions using this data. Invest in a more robust product like QuickBooks Online Essentials. It is worth it.

We recommend taking some time each year to re-evaluate your Chart of Accounts and to add new accounts when you need to, like when you open up new offers or realize you need to break out expenses into multiple categories.

Want your own Chart of Accounts overhaul? Contact our team at info@fitnancialsolutions.com or submit a form using the link on our website homepage at www.fitnancialsolutions.com.