Chart of Accounts

Quick Definition

A categorized list of all accounts used to record financial transactions in the general ledger.

What is a Chart of Accounts?

The Chart of Accounts is your financial filing system. It lists every account where transactions can be recorded, organized by type: assets, liabilities, equity, revenue, and expenses. Each account has a number and name.

Why Chart of Accounts Matters

A well-designed chart of accounts makes financial reporting easy. A poorly designed one makes it impossible to answer basic questions like "How much did we spend on marketing last quarter?"

For SaaS founders, your chart should separate recurring revenue from professional services, distinguish hosting costs from other COGS, and track customer acquisition costs clearly.

Setting Up Your Chart

Start simple and add accounts as needed. Too many accounts creates complexity without insight. Too few obscures important distinctions. Most startups need 30-50 accounts initially.

Formula

Standard Account Numbering:

• 1000-1999: Assets
• 2000-2999: Liabilities
• 3000-3999: Equity
• 4000-4999: Revenue
• 5000-9999: Expenses

Example

Sample SaaS Chart of Accounts (partial):

• 1010 - Cash
• 1200 - Accounts Receivable
• 2010 - Accounts Payable
• 2100 - Deferred Revenue
• 4010 - Subscription Revenue
• 4020 - Professional Services Revenue
• 5010 - Hosting Costs
• 6010 - Salaries - Engineering
• 6020 - Salaries - Sales
• 7010 - Marketing - Paid Ads

Related Terms

[General Ledger]

The master record containing all financial transactions organized by account.
Learn more

[Journal Entry]

A record of a single financial transaction with corresponding debit and credit entries.
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[Balance Sheet]

A financial snapshot showing what a company owns (assets), owes (liabilities), and the residual value to shareholders (equity).
Learn more

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