Chart of Accounts Template for Small Business (2026)

In brief

The chart of accounts in four answers.

What is it?

The master category list every transaction files under — five families: assets, liabilities, equity, revenue, expenses. Every report is this list, totaled.

What numbering?

Four digits by thousands — 1000s assets through 7000s other — in gaps of ten so accounts slot in later without renumbering. The full chart is below.

How many accounts?

About 30–45 for most small businesses. Add one only when you'd act differently seeing that line separately — otherwise you're building noise.

What ruins charts?

Two things: parallel duplicates (three flavors of "Insurance") and over-granularity (an account per vendor). Both break the One-Door Rule below.

The template

The working chart — copy it as-is.

Built for a small service business with a product line — the most common real shape. Prune what you don't sell; the adaptation steps follow the tables.

1000s · Assets

No.	Account	What lives here
1010	Business checking	The operating account — most transactions live here
1020	Business savings	Reserves, tax set-asides
1100	Accounts receivable	Invoices issued, not yet paid
1200	Prepaid expenses	Insurance or subscriptions paid ahead, spread monthly
1500	Fixed assets	Equipment, vehicles — things that outlast a year
1510	Accumulated depreciation	The contra account that tracks asset consumption

2000s · Liabilities

No.	Account	What lives here
2010	Accounts payable	Bills received, not yet paid
2100	Credit card payable	One per card in real use
2200	Payroll liabilities	Withheld taxes and employer amounts owed
2300	Sales tax payable	Collected for the state, never yours
2500	Loans payable	One per loan — principal balance only

3000s · Equity

No.	Account	What lives here
3010	Owner contributions	Money you put in
3020	Owner draws / distributions	Money you take out — never an expense
3900	Retained earnings	Accumulated profit; the system maintains it

4000s · Revenue

No.	Account	What lives here
4010	Service revenue	The core thing you sell
4020	Product sales	If you also sell goods
4900	Other income	Interest, refunds, genuine one-offs

5000s · Cost of goods sold

No.	Account	What lives here
5010	Materials & supplies (COGS)	What goes into what you sell
5020	Direct labor	Wages that scale with delivery
5030	Subcontractors	The sub on the job — not the office

6000s · Operating expenses

No.	Account	What lives here
6010	Rent & occupancy	Lease, utilities if bundled
6020	Payroll — admin & office	Non-delivery wages + employer taxes
6030	Insurance	Liability, property, workers' comp
6040	Software & subscriptions	The stack, one account — not one per app
6050	Marketing & advertising	Ads, website, sponsorships
6060	Professional fees	Bookkeeper, CPA, attorney
6070	Office & supplies	The non-COGS consumables
6080	Vehicle & travel	Business mileage, fuel, travel
6090	Bank & merchant fees	Card processing, account fees

7000s · Other

No.	Account	What lives here
7010	Interest expense	The interest slice of loan payments
7020	Depreciation expense	The P&L side of asset consumption

Thirty accounts, on purpose. Notice what's not here: no "Miscellaneous," no "Ask My Accountant," no account-per-subscription. A suspense account isn't a category — it's a postponed decision, and postponed decisions are how a chart this clean ends up needing a cleanup.

Making it yours

Six steps from template to your chart.

Thirty minutes, once — against years of faster categorizing and readable reports.

1 · Start from the template, not from zero

Copy the chart below into QuickBooks (or hand it to whoever sets up the file). A proven skeleton beats a blank page — customization comes next, not first.

2 · Strip what you don't sell

No products? Delete product sales and COGS materials. No employees? Drop payroll lines. Every account you'll never use is a wrong door waiting for a transaction.

3 · Rename to your business's language

"Service revenue" becomes "Design fees" or "Repair labor." You'll categorize faster and read reports faster when the words are yours — the numbers keep the structure.

4 · Set the equity section to your entity type

Sole proprietor: contributions and draws. Partnership or multi-member LLC: one contribution and draw pair per partner. S-corp: shareholder distributions, and owner wages move to payroll — not draws.

5 · Leave the number gaps alone

The gaps between 6010 and 6020 are deliberate — room to add accounts later without renumbering. A chart that grows into its gaps stays ordered for years.

6 · Apply the One-Door Rule from day one

Every dollar should have exactly one obvious account. If a transaction could plausibly land in two places, merge or rename until it can't — that single habit prevents most future cleanups.

Setting up in QuickBooks specifically — including the setup decisions beyond the chart — is its own service page: QuickBooks setup. And a chart is only half the discipline; the other half is the monthly close that keeps transactions landing in the right doors.

A Westgate framework · why charts decay

The One-Door Rule.

The One-Door Rule: every dollar that enters or leaves the business should have exactly one obvious account — one door it walks through, with no plausible alternative. Both of the failure modes that ruin charts are violations of it in opposite directions. Parallel duplicates give a dollar several doors: "Insurance," "Insurance — General," and "Business insurance" all live in the same file, each holding a third of the real spend, and the P&L shows three small lines where one honest trend line should be. Over-granularity builds a door per pebble: an account per software subscription, per vehicle, per vendor — categorization slows, reports sprawl to sixty lines, and the reader's eye gives up before the signal appears.

The One-Door Rule with real stakes: split across three parallel accounts, $355/month of insurance reads as three ignorable lines and the creep hides. Through one door, the trend is visible the month it moves.

The rule has a corollary that keeps charts honest for years: when you're unsure where a transaction goes, fix the chart, not the moment. Parking it in a suspense account postpones the decision; guessing teaches the file inconsistency. If two doors were both plausible, merge or rename until only one is — the minute that takes is the cheapest bookkeeping work you'll ever do. It's the same merge discipline that opens the cleanup checklist's structure phase — running it on day one is what keeps you off that page.

The honest section

Do you even need a custom chart?

Maybe not. QuickBooks generates a workable chart from your industry answers at setup, and for a simple single-owner service business, that default plus thirty minutes of pruning against this template is genuinely enough — that's not a concession, it's the recommendation. The value here isn't exotic structure; it's the discipline: fewer doors, real names, entity-correct equity, gaps left for growth.

Where it stops being a DIY task is where judgment stakes rise: inventory and COGS layering, multiple revenue streams that need honest margin separation, class or location tracking across jobs or sites, or an S-corp's payroll-versus-distribution split. Those decisions shape your taxes and your lender conversations, and getting them wrong is quiet until it's expensive. That's setup work we do with the file in hand — and if an old chart has already tangled the books, the untangling is a cleanup, structure phase first. Day to day, a clean chart is maintained by the bookkeeping running on top of it.

Want your actual chart looked at — too many doors, wrong equity section, suspense buildup? The free assessment reads it and tells you plainly what to merge.

Free books assessment

Chart of accounts FAQ · Updated July 2026

The questions owners ask about the chart.

What is a chart of accounts?

The chart of accounts is the master list of categories every transaction in your books gets filed under — the filing structure of your entire accounting system. It has five families: assets (what you own), liabilities (what you owe), equity (what the owners have put in and built), revenue (what you earn), and expenses (what you spend, split between the direct cost of delivering and the cost of running the business). Every report you'll ever read — P&L, balance sheet — is just this list, totaled. A clean chart produces readable reports; a messy one guarantees unreadable ones.

What numbering system should a small business chart of accounts use?

Four digits, grouped by thousands: 1000s assets, 2000s liabilities, 3000s equity, 4000s revenue, 5000s cost of goods sold, 6000s operating expenses, 7000s other income and expense. Number in gaps of ten (6010, 6020, 6030) so new accounts slot in later without renumbering anything. The scheme isn't law — it's the convention lenders, CPAs, and accounting software all expect, which is exactly why it's worth following.

How many accounts should a small business have?

Fewer than you think — most small service businesses run well on 30 to 45 accounts, and the template on this page has about 30. The instinct to add an account for everything ('a category per software subscription, per vendor, per truck') feels precise and reads terrible: your P&L becomes sixty lines of noise where six would show the trend. Add an account only when you'd genuinely act differently based on seeing that line separately. Otherwise, one door.

Can I change my chart of accounts mid-year?

Adding accounts is safe any time — that's what the numbering gaps are for. Renaming is safe too; history follows the account. The careful operations are merging and deleting: merge duplicate accounts (QuickBooks moves the transactions into the survivor) rather than deleting, and do structural surgery at a month boundary with a backup taken first, so before-and-after reports stay comparable. What you shouldn't do mid-year is recategorize old transactions wholesale — that rewrites reports you may have already relied on.

What equity accounts do an LLC, sole proprietor, and S-corp need?

Same skeleton, different names — and one real trap. A sole proprietor needs owner contributions, owner draws, and retained earnings. A multi-member LLC or partnership repeats the contribution/draw pair per member. An S-corp uses shareholder contributions and shareholder distributions — and critically, owner-operators on payroll take wages through payroll expense, not draws; distributions are separate from salary, and mixing the two is one of the most common (and tax-sensitive) miscategorizations we clean up. If you're unsure which entity rules apply, that's a question for your CPA — the chart just needs to give each answer its own account.

Should I use the default QuickBooks chart of accounts?

It's a genuinely workable starting point — QuickBooks generates a reasonable chart from your industry answers during setup, and for a simple business it's better than an over-engineered custom one. Its weaknesses are the ones this template fixes: it tends to create more accounts than you need, its generic names slow categorization, and it can't know your entity type's equity structure. The pragmatic path: let QuickBooks generate, then spend thirty minutes pruning and renaming against the template here. That half hour pays back monthly, forever.

Want the chart set up and kept clean for you? That's bookkeeping, from setup onward. More guides: the guides hub →

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