Chart of Accounts: Examples and Numbering for Small Business
Updated November 6, 2026
The chart of accounts is the list of every account a business records transactions in. Each sale, bill and bank fee lands in one of these accounts, and the financial statements are built by adding them up. A clear chart makes the books faster to keep and the reports easier to read; a cluttered one makes every month-end slower.
The five account types
Every account belongs to one of five types. The first three make up the balance sheet, the last two the profit and loss statement.
| Type | What it holds | Normal balance | Examples |
|---|---|---|---|
| Assets | What the business owns or is owed | Debit | Checking, accounts receivable, equipment |
| Liabilities | What it owes | Credit | Credit cards, sales tax payable, loans |
| Equity | The owners’ stake | Credit | Owner’s equity, owner’s draw, retained earnings |
| Income | Money earned from customers | Credit | Sales, service revenue |
| Expenses | Costs of running the business | Debit | Rent, software, advertising |
Cost of goods sold (COGS) is a group of expense accounts for businesses that sell products or subcontract their work: it’s kept separate so the P&L can show gross profit.
A numbering system
Numbers keep accounts in a logical order and make them easy to find. A common US convention:
| Range | Type |
|---|---|
| 1000–1999 | Assets (cash first, then receivables, then fixed assets) |
| 2000–2999 | Liabilities (current first, then long-term) |
| 3000–3999 | Equity |
| 4000–4999 | Income |
| 5000–5999 | Cost of goods sold |
| 6000–7999 | Operating expenses |
| 8000–8999 | Other income and expenses (interest, depreciation, gains) |
Leave gaps between numbers (1000, 1010, 1100…) so new accounts fit in later without renumbering everything.
A sample chart for a service business
| Number | Account | Type |
|---|---|---|
| 1000 | Business Checking | Bank |
| 1010 | Business Savings | Bank |
| 1100 | Accounts Receivable | Accounts receivable |
| 1250 | Prepaid Expenses | Other current asset |
| 1500 | Furniture and Equipment | Fixed asset |
| 1590 | Accumulated Depreciation | Fixed asset |
| 2000 | Accounts Payable | Accounts payable |
| 2100 | Business Credit Card | Credit card |
| 2200 | Sales Tax Payable | Other current liability |
| 2300 | Payroll Liabilities | Other current liability |
| 2700 | Business Loan | Long-term liability |
| 3000 | Owner’s Equity | Equity |
| 3100 | Owner’s Draw | Equity |
| 3900 | Retained Earnings | Equity |
| 4000 | Consulting Income | Income |
| 4100 | Retainer Income | Income |
| 5000 | Subcontractors | Cost of goods sold |
| 6000 | Advertising and Marketing | Expense |
| 6050 | Bank and Merchant Fees | Expense |
| 6200 | Insurance | Expense |
| 6250 | Meals | Expense |
| 6300 | Office Supplies and Software | Expense |
| 6350 | Professional Fees | Expense |
| 6400 | Rent | Expense |
| 6500 | Telephone and Internet | Expense |
| 6550 | Travel | Expense |
| 6700 | Vehicle Expenses | Expense |
| 8000 | Interest Expense | Other expense |
| 8100 | Depreciation Expense | Other expense |
A retail or e-commerce business adds Inventory (an asset), Product Sales and Shipping Income, and Cost of Goods Sold with shipping and fulfillment costs. A restaurant splits COGS into food and beverage costs. The chart of accounts template starts from a list for services, retail, restaurants, construction or rental property, so you only adjust it.
How many accounts?
Fewer than you think. Most small businesses work well with 30 to 60 accounts. A good test for a new expense account: will you or the owner make a decision based on that number, or does the tax return need it on its own line? If not, it belongs in an existing account.
- Match the tax return. For a sole proprietor or single-member LLC, expense accounts that line up with the categories on Schedule C make tax time much faster. For corporations and partnerships, use the categories of their return.
- Use sub-accounts for detail, such as Vehicle Expenses with Fuel and Repairs beneath it, so reports can be shown in summary or in detail.
- Track people and projects elsewhere. Customers, vendors, jobs and locations belong in the software’s customer, vendor, class or tag features, not in separate accounts.
Mistakes to avoid
- An account per vendor, such as “Staples” or “Amazon”. The vendor is already recorded on each transaction; the account should say what was bought.
- “Miscellaneous” as a catch-all. It grows every month until nobody knows what’s in it. Keep it, if at all, for genuinely rare items.
- Owner draws recorded as expenses. Money the owner takes out of a sole proprietorship is equity (Owner’s Draw), not an expense, and it doesn’t reduce profit.
- Loan payments recorded entirely as expense. Only the interest is an expense; the principal reduces the loan liability.
- Equipment expensed by mistake. Larger purchases with a useful life of several years are usually fixed assets and depreciated; the depreciation calculator shows the yearly amounts. Follow your tax preparer’s capitalization policy.
- Renaming or deleting accounts mid-year. It makes reports for earlier periods hard to compare. Make inactive the accounts you no longer use instead of deleting them.
Importing into QuickBooks or Xero
QuickBooks Online and Xero both import a chart of accounts from a spreadsheet, which beats typing dozens of accounts by hand. QuickBooks Desktop imports lists from IIF files. The chart of accounts template exports a QuickBooks Online CSV, a QuickBooks Desktop IIF file or an Excel workbook, with each account’s type mapped to the names that software expects.
Once the chart is in place, every transaction has a home: the general ledger template shows each account’s activity and running balance, and the profit and loss template turns the income and expense accounts into a statement.