Types of Accounts Under a Chart of Accounts

If you’re running a business-or managing one for a client-you’ve probably seen the term Chart of Accounts (COA). But what exactly is it? And what types of accounts are included?

Whether you’re new to bookkeeping or just want to make sense of your financial reports, understanding the chart of accounts is a foundational step.

What Is a Chart of Accounts (COA)?

A Chart of Accounts is a structured list of all accounts used to record financial transactions in your bookkeeping system-typically QuickBooks or Xero.

Think of it as the blueprint of your books.

Every entry, from your rent payment to a product sale, is categorized under one of these accounts.

5 Main Types of Accounts in a COA

Every COA typically includes the following five categories:

1. Assets

These are resources your business owns.
Examples:

• Cash
• Accounts Receivable
• Equipment
• Inventory

2. Liabilities

These are obligations you owe to others.
Examples:

• Loans Payable
• Credit Card Balances
• Accounts Payable

3. Equity

This shows the owner’s value or stake in the business.
Examples:

• Owner’s Capital
• Retained Earnings
• Owner’s Draw

4. Revenue (Income)

This tracks your earnings from sales or services.
Examples:

• Sales Income
• Consulting Income
• Interest Income

5. Expenses

These are costs incurred to run your business.
Examples:

• Rent Expense
• Payroll Expense
• Utilities

Why the Chart of Accounts Matters

A well-organized COA helps you:

• Track business performance
•  File taxes accurately
•  Generate CPA-ready reports
•  Avoid misclassified expenses

It’s also essential when you request a quote or bring on a tax advisor. Clean COA = faster, cheaper financial prep.

Test Case: Real Estate Broker Simplifies Reporting with a Clean COA

A multi-agent real estate brokerage came to Remote Books Online with quickbooks cleanup and 4 years of improperly categorized transactions.

After cleaning their chart of accounts and restructuring it to match industry norms, we were able to:

• Produce CPA-ready reports for 3 prior years
• Identify $22,000 in missed deductible expenses
• Set up class tracking by agent for monthly performance

FAQs

How many accounts should a COA have?
Most small businesses have 30-50 accounts. Too few = lack of clarity. Too many = confusion.

Can I rename or reorganize my chart of accounts?
Yes, but be careful-it can affect historical reporting. Use a professional if unsure.

Does QuickBooks create a COA automatically?
Yes, but it’s generic. You’ll likely need to customize it for your business or industry.

Is it worth outsourcing bookkeeping just for COA setup?
Absolutely. A proper COA structure sets the foundation for clean, accurate books.

Final Thoughts

Understanding the chart of accounts-and the five main account types-is the first step toward clear, accurate financial records. Whether you’re DIYing your books or working with a firm like Remote Books Online, a solid COA structure pays off in clarity and compliance.

---

Need to fix errors or outdated data in QuickBooks? Start with our expert QuickBooks cleanup services.

Explore our full range of bookkeeping services designed for small businesses looking for accuracy, simplicity, and CPA-reviewed financials.