A simple chart of accounts for a small business
A chart of accounts (COA) is the list of buckets your bookkeeper sorts every transaction into. You don't need hundreds. Most small service businesses and contractors run fine on 25–40 accounts. This is a starting point to take to your bookkeeper, not advice about your tax situation.
The usual numbering
| Range | Type | Examples |
|---|---|---|
| 1000–1999 | Assets | Business checking, savings, accounts receivable, equipment |
| 2000–2999 | Liabilities | Credit card, accounts payable, sales tax payable, loans |
| 3000–3999 | Equity | Owner's contributions, owner's draws, retained earnings |
| 4000–4999 | Income | Service revenue, product sales, reimbursed expenses |
| 5000–5999 | Cost of goods / job costs | Materials, subcontractors, job supplies |
| 6000–7999 | Operating expenses | Rent, software, advertising, vehicle, meals, travel |
Example expense accounts
| Code | Account | What goes here |
|---|---|---|
| 5100 | Materials & supplies (job) | Things used up on a specific client job |
| 5200 | Subcontractors | Payments to other contractors for client work |
| 6000 | Advertising & marketing | Ads, printing, website hosting for marketing |
| 6100 | Bank & payment fees | Card processing, Gumroad/Stripe/PayPal fees |
| 6200 | Software & subscriptions | SaaS tools, apps |
| 6300 | Office supplies | Paper, ink, small items not tied to a job |
| 6400 | Vehicle & fuel | Fuel, parking, tolls, repairs (ask about mileage vs actual) |
| 6500 | Travel | Flights, lodging for business trips |
| 6600 | Meals | Business meals (often only partly deductible — ask) |
| 6700 | Tools & small equipment | Tools below your capitalization threshold |
| 6800 | Professional fees | Bookkeeper, accountant, legal |
| 6900 | Insurance | Liability, equipment insurance |
| 7000 | Rent & utilities | Workspace, phone, internet |
| 7900 | Uncategorized / ask bookkeeper | Use rarely; review monthly |
Rules that keep it clean
- Agree the list with your bookkeeper once, then don't invent new categories on the fly.
- Separate job costs from overhead (5000s vs 6000s) if you want to see job profitability.
- Keep personal spending out; if it happens, code it to owner's draw.
- Split mixed receipts — a hardware store run can be part job materials, part office supplies.
Make this a 20-second habit: Ledgerlite Receipts lets you photograph a receipt, split it across your bookkeeper's codes and export a CSV + images ZIP. $29 one-time.