Do This, Not That: Chart of Accounts (COA)
Do This:
Regularly review your Chart of Accounts (COA) to ensure it reflects meaningful financial insights. Consolidate small accounts with transactions less than 1% of revenue into broader categories to simplify reporting. Use tools like QuickBooks Online (QBO) to run a Profit & Loss (P&L) report as a percentage of income and sort by descending order to quickly identify material accounts. Break out specific categories for key insights when needed.
Not That:
Don’t let your COA become overly complex with too many granular accounts, or you risk cluttering your financial reports. Avoid overlooking accounts that could provide valuable insights if broken out separately. Neglecting regular reviews can lead to confusion and missed opportunities for better financial clarity.
A well-organized COA enhances your financial reporting and decision-making. Need assistance with optimizing your COA? Let’s connect!
