The chart of accounts is at the heart of any QuickBooks Online file. Although you can choose a default chart of accounts when you sign up a client, you and your client may still need to customize it to meet the needs of their business.

 

Customizing the Chart of Accounts in QuickBooks Online: A Practical Guide

Introduction: Why Customizing the Chart of Accounts Matters

The Chart of Accounts (COA) is the backbone of every QuickBooks Online file. While QuickBooks provides a default chart of accounts during setup, most businesses need customization to accurately reflect how they operate.

A well-structured chart of accounts improves reporting, simplifies bookkeeping, and provides meaningful insights into a client’s financial performance.

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Benefits of a Customized Chart of Accounts

Customizing a client’s chart of accounts ensures it aligns with their:

• Business model

• Industry requirements

• Reporting priorities

• Tax obligations

Some businesses may not need certain default accounts, while others require specialized accounts unique to their operations.

As a QuickBooks ProAdvisor, tailoring the chart of accounts helps your clients get clearer, more relevant financial data.

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Ways to Customize the Chart of Accounts in QuickBooks Online

Beyond adding new accounts, customization can include:

• Renaming default accounts for clarity

• Adding account numbers

• Merging duplicate accounts

• Making unused or redundant accounts inactive
  (Note: Accounts cannot be deleted, only made inactive)

These changes help keep the chart of accounts clean and easy to manage.

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Sample Client A: Sole Proprietor Focused on Customer Profitability

Client Profile

• Sole proprietor

• No employees

• Not subject to corporate tax

• Focused on customer-level reporting

Key Reports Needed

• Profit and Loss by Customer

• Un-invoiced Charges

• Balance Sheet

• Accounts Receivable Aging

Recommended Chart of Accounts Setup

Because this client incurs job-related expenses, the chart of accounts should separate billable and non-billable costs.

Suggested Accounts:

1. Job Materials (Purchases)
   Used for reimbursable expenses tied to billable jobs

2. Materials and Supplies (Overhead)
   Used for general business purchases not tied to customers

This structure supports accurate customer profitability reporting.

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Sample Client B: Real Estate Investment Company

Client Profile

• Real estate investment business

• Multiple rental properties

Recommended Chart of Accounts Setup

The chart of accounts should clearly reflect property-specific activity.

Suggested Structure:

• Separate mortgage accounts for each property

• A combined property income account

• Expense subaccounts for each property

• An escrow cost account to track purchase-related costs until a property is sold

This setup allows detailed tracking while keeping reports organized and meaningful.

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How to Enable Account Numbers in QuickBooks Online

Account numbers can improve organization, especially for accountants and advanced reporting.

Steps to Enable Account Numbers

1. Select the ⚙ Gear icon, then Account and settings

2. Choose Advanced from the left menu

3. Locate the Chart of accounts section

4. Turn on Enable account numbers
   (This affects all users in the company)

5. Check Show account numbers to display them on reports

6. Click Save, then Done

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How to Edit or Assign Account Numbers

QuickBooks Online may auto-assign account numbers, but you can change them.

Steps to Edit Account Numbers

1. Select the ⚙ Gear icon, then Chart of accounts
   or go to Accounting → Chart of accounts

2. Click the ✏️ Pencil icon above the Action column

3. Enter account numbers in the Number column
   (Up to 20 digits allowed)

4. Click Save

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Best Practices for Customizing the Chart of Accounts

• Keep the chart simple and scalable

• Avoid unnecessary or duplicate accounts

• Customize based on reporting needs, not just preferences

• Review changes with the client regularly

• Always consider tax and compliance implications

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Final Thoughts

A customized chart of accounts is essential for accurate reporting and smarter decision-making in QuickBooks Online. By tailoring the COA to each client’s business model, you create clarity, improve efficiency, and deliver real value as a ProAdvisor.