Your accounting program keeps track of money for you by putting each check you write, bill you pay, invoice you create into a bucket (called an account). The $50. you spent to buy office supplies goes into an account called “Office Supplies”. When we want a report of how much we spent on office supplies, we look in that bucket or account.
QuickBooks is a bunch of lists and they all talk to each other. There is a customer list, a vendor list, an employee list, and other lists. The Chart of Accounts is even more essential than the other lists. You have to have a Chart of Accounts in your company file. You do not have to have a customer list (although then you may wonder why you are doing any of this).
The Chart of Accounts is the spine of your accounting system. The job of the spine is to take task information from the brain, run it down the spine to your extremities, and then your arms and legs can work. You know how painful life can be if your spine is in pain, blocked, diseased or dysfunctional. It is financially painful and crippling to have a Chart of Accounts that is not set up correctly. And it is financially draining to have one that is not working – you will waste more time trying to get information out of a bad chart of accounts than you can imagine. Use that time to setup your chart of accounts perfectly!
Okay, we all know there is no such thing as perfect. But over the many years I have been teaching QuickBooks and setting up company files for clients, I have developed a template that will be probably the best beginning point for new users.
Many lists in QuickBooks can be exported out of one company file and imported to another company file. The list files that import and export are tagged as follows: xxx.iif. These are extensions you see many times throughout your computer use. Word documents use a “.doc” extension; Excel files are saved with a “.xls” extension; QuickBooks uses “.qbw” for a working company file and “.qbb” for backup files.
You can easily create your new QuickBooks company file, and choose None for the template chart of accounts that they suggest. You will then have a new company file with no Chart of Accounts and you can import the perfect one into your new company. From there you can add or delete appropriate accounts to fit your business model.
And of course, the Queen does have a perfect chart of accounts template for you. If you would like to have a copy of the Queen’s Perfect Chart of Accounts template in a .iif file format for importing into your own new QuickBooks company file, please enter your name and email address below and we will send you a copy.