welcome to the fit small business quickbooks online training course in
this lesson we're going to cover how to set up the chart of accounts in
QuickBooks Online to follow along with me log in to your QuickBooks Online
account now or click the link below this video for a free 30-day trial of
QuickBooks Online you can also find a link below this video to our full
QuickBooks Online course and other helpful resources let's get started the
chart of accounts is the backbone of your bookkeeping and accounting system
all of the transactions that you enter into QuickBooks are categorized
behind-the-scenes using the chart of accounts so that financial statements
such as your profit and loss statement or income statement can be generated for
the purposes of this video we will use a fictitious company called paul's plumbing
as you view this video think about how the information might differ for your
business QuickBooks Online will create a chart of accounts list based on the
industry that you select it when you set up your account a few of the accounts
that QuickBooks will automatically create for you our accounts receivable
accounts payable inventory asset sales tax payable and retained earnings if you
want to keep track of something that is not on the default chart of accounts
list you will need to create a new account some things to consider when
deciding if you need to create a new account are what items would you like to
track that are not currently on your chart of accounts list for example if
you want to keep a close eye on the fees that your bank charges you then you
could set up an expense account for Bank service charges what accounts are on the
list that you know you will never use for example if you don't sell products
then you would have no use for an account that tracks shipping and
delivery fees once you have decided what account you would like to add or delete
you are ready to make the necessary changes in QuickBooks we will use our
fictitious business pulse plumbing to walk through how to add delete or modify
the chart of accounts list in the written step-by-step lesson you will
find a quick reference chart to assist you with setting up new accounts and to
give you the big picture of what's happening behind the scenes in
QuickBooks just click on this link to access the written instructions for this
lesson Paul would like to track the income that he makes from his residence
customers separate from the income that he makes from commercial customers let's
set up these two accounts for Paul's plumbing to begin after you have logged
into your QuickBooks Online account click on the gear icon located to the
left of your company name and select the chart of accounts from the drop down the
chart of accounts list will display to set up a new account just click the blue
new button and here are the fields that we need to create to set up a new
account category type if you click the drop-down for category type is going to
be income this lets QuickBooks know how we want this particular account to be
set up so we'll select income from the drop-down here detail type typically you
will select sale of product income if you sell products or service fee income
if you sell services so we'll select service fee income here and in the
account name field we want to put residential income and then the
description field typically can be the same as the account name field or if you
have a much more detailed description that you'd like to indicate here you can
do that as well so we'll go ahead and put services sold to residential
customers for our detailed description for this account our options for saving
this information are we could just save and close this if we were done setting
up accounts or we have the option to save and create a new account which will
save this account and it will keep the screen open so that we can set up the
commercial income account so that's what we'll do select save and new and then
we'll go ahead and set up the commercial income account
so again category type is income detail type is service fee income and we will
call this commercial income we'll go ahead and save and close this time since
we are done setting up our account this will take us back to the chart
of accounts list where we can see the new accounts we set up there's our
commercial income account and then if we scroll down we will also see our
residential income account you should delete accounts that you do not plan to
use this can be helpful because the account won't accidentally be used in
transactions and it makes your try to accounts list much more manageable
you should never delete an account that you have already used in a transaction
to delete an account you are going to click the arrow to the right of the run
report link and select delete and the next screen QuickBooks wants to confirm
that you actually want to take this action
once you select delete there is no automatic undo button if you
accidentally delete an account you will have to add it back again so we'll go
ahead and say yes we want to delete this account QuickBooks allows you to modify
an account at any time to modify an account in QuickBooks you want to click
the drop down arrow to the right of run report once again and select edit you
want to make sure that you do not change the category type if you have already
entered transactions using this account if you do so it could impact your
financial statements so we'll go ahead and modify the account name to be office
supplies and we'll go ahead and clued that in the description as well and save
our changes that wraps up the section on how to set up the chart of accounts in
QuickBooks online to access this course or any of the others in the series click
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