Jul 30, 2021Best Initial Chart of Accounts

As you structure your company’s initial chart of accounts, it can be difficult to know where to start. Each industry is slightly different, necessitating a custom chart of accounts for each business. However, all useful charts have a few characteristics in common. They are easy to understand, well-organized, simple, and comprehensive. Although we won’t offer specific counsel on how to organize your chart of accounts in this article, we’ll give you a flavor for what a great chart of accounts looks like. Below we’ve listed a list of accounts that can serve as a framework when you are building your own. You’ll notice categories of assets, liabilities, and equity, as well as expense accounts. If you’re in the process of building or reassessing your chart of accounts, use this as a baseline to see if you have everything you need. 

Cash Accounts

Bank Checking Account

Bank Savings Account

Merchant Account


Current Asset Accounts

Accounts Receivable

Allowance for Bad Debts

Prepaid Expenses



Asset Accounts

Furniture & Equipment

Computer Equipment

Accumulated Depreciation

Intangible Assets

Accumulated Amortization

Other Assets


Current Liabilities

Accounts Payable

Credit Card

Payroll Liabilities

Benefits Payable

Sales Tax Payable

Unearned Revenue



Long-term liabilities



Cash Contributions

Non-cash Contributions

Owner's draws

Retained Earnings

Partner A Capital

Partner A Contributions

Partner A Distributions

Partner A Retained Earnings

Partner B Capital

Partner B Contributions

Partner B Distributions

Partner B Retained Earnings

Retained Earnings

Capital Stock

Additional paid-in capital

Owner Distribution

Retained Earnings




Returns, Discounts and Allowances

Other Revenue


Other Income

Interest Income



Cost of Goods Sold

Advertising and Promotion


Bank Fees

Dues and Subscriptions



Legal and Professional Fees

Meals - 50% Deductible

Meals - 100% Deductible

Entertainment (nondeductible)

Office Expenses





Repairs and Maintenance

Research & Development

Taxes and Licenses

Penalties & Fines




Charitable Contributions


Salaries and Wages


Contract Labor

Employee Benefit Programs

Pension, Profit-Sharing, etc., Plans

Guaranteed Payments

Payroll taxes

Payroll Processing Fees


Other expenses

Gain/loss on Asset Disposal

Bad Debt Expense

Depreciation Expense

Amortization Expense

Interest Expense


Creating Industry-Specific Chart of Accounts

Even though two industries may share many resemblances, they may still have an entirely different chart of accounts. For example, real estate development, construction, and home repair companies all deal with home ownership, but require different forms of tracking the financials. If all companies had the same income and expenses, we’d only need one chart of accounts that would work for everyone. However, each business and industry is unique. To start building your own chart of accounts, it can be helpful to use an online service like Quickbooks to automatically assess what accounts you may need to open. Beyond that, a qualified accountant can help you examine and organize your books according to your circumstance and industry. The chart of accounts is a helpful tool when the back end work is invested