“What on earth is Chart of Accounts, and will the world end if I neglect it?”
Well that’s a little dramatic, but no. Although, keeping track in business might get tougher for you.
You’re afraid. You don’t even want to know what Chart Of Accounts means. When you face accounting terms like COA, it may feel like you’re facing an army of men in hazmat suits. And you don’t know what you’re dealing with. When you get to that part of signing up on financio.co, you scream and run scared. When it’s really nothing at all.
Introduction to Chart of Accounts
Every successful business needs a bookkeeping system to track its finances. A good updated system will ensure your business runs smoothly and can be used as reference in the long term (logging GST, analyzing your data).
At the foundation of bookkeeping is the Charts of Accounts or also referred to as the COA. Sounds weird right? It’s a simple system but as we can agree, sometimes less is more.
“What is a Chart of Accounts?”
It helps you track your business transactions. Beginning to sound like rocket science? Well, it isn’t. It is made up of two areas:
Accounts – which is your Balance Sheet, what your business owns and what it owes
Categories – which is your Income Statement (or Profit & Loss accounts), how much money your business took in and how much money it spent.
How could you not do without this stuff, right?
“Do I need the Chart of Accounts if I am using account automation software?”
Yes. It’s the core of all accounting software. But you can update it at any time, according to your business needs.
“Sounds like a big sum of data to be kept. Where should I store this important information?”
There are 2 options available. Either you get really BIG books; or use an accounting software available online, hey, like Financio.
“Will Financio build my Chart of Accounts?”
Sort of… During the Business Setup process, if you don’t know what your business requirement are, Financio will automatically spawn basic Accounts and Categories in your COA. No worries, you can remove or amend them manually later.
As you run your business, Financio will keep a record of every transaction made and will automatically add them into your charts.
Phew. Now that we’ve got past that, let’s see you get past step four of signing up.
See you on the other side!