Chart of Accounts

What is a chart of accounts?

A chart of accounts is essentially your financial filing system. It's a complete list of every category where you record money coming in or going out. Each account has a name and often a number, making it easy to organize transactions consistently.

Think of it as folders for your finances—when money moves, it gets filed into the appropriate account so you can later see how much you've spent on materials, earned from services, or paid in taxes.

Standard account categories

Most charts of accounts include five main types:

• Assets — What you own: bank accounts, equipment, accounts receivable
• Liabilities — What you owe: loans, credit cards, accounts payable
• Equity — Owner's stake in the business
• Revenue — Income accounts: service revenue, product sales
• Expenses — Cost accounts: materials, rent, utilities, insurance

Setting up your chart of accounts

Most accounting software comes with a default chart of accounts that you can customize. For contractors, you might add specific expense categories like "Materials," "Subcontractor Fees," or "Vehicle Expenses." Keep it simple—too many accounts makes bookkeeping tedious, too few makes reports less useful.