So, you’ve started a small business.

Or maybe you’ve been in business for a while.

Regardless, you have a chart of accounts in your accounting software. (I recommend QuickBooks Online, though there are other options, like Xero.)

But do you have your chart of accounts set up correctly? (FYI, I can do it for you! Reach out to learn more.)

This is what your accountant wishes you’d done first, and not just at tax time. 🙂

– Start by setting up clear income and cost of goods sold (COGS) accounts at the top of your chart of accounts. Include sales or revenue, returns, and other income, along with COGS accounts like purchases, direct labor, materials, and inventory if applicable.

– Use expense accounts that line up with common tax deductions to simplify filing.

– Keep owner, payroll, and tax related accounts separate so nothing gets mixed or misreported

– Skip overusing the “Miscellaneous” account. Lumping too many expenses into a catch-all category makes it harder to track deductions accurately.

– Review and adjust your chart of accounts as your business changes and grows

A tax ready chart of accounts keeps reports clear, tax prep smooth, and communication with your accountant easier.

If you’re not sure whether your chart of accounts is set up the right way, book a call and let’s make sure it’s truly tax ready. I can also do your taxes, or I’ll work with your current tax accountant to make sure everything’s right for your business!