What Should My Chart of Accounts Look Like?

Since the 1040 Schedule C is your basic profit and loss statement, I set up my chart of accounts to match the Schedule C as closely as possible.  You should need very few categories that aren’t listed on the Schedule C.  If your state has a sales tax and you have differing tax rates in your area you should break down your sales by tax region.  Also, keep track of tax paid on materials purchases by tax region.

Chart of Accounts

Income Accounts

Labor Sales (Broken down by sales tax region)
Materials Sales (Broken down by sales tax region)
Sales Tax Collected (Broken down by sales tax region)

Expense Accounts

Advertising
Car and Truck
Contract Labor
Entertainment
Equipment Rental
Insurance
Interest
Legal and Professional
Non-Tax Paid Purchases  (Broken down by sales tax region)
Office Expense
Purchases: (Cost of Goods Sold)
Repairs
Supplies (Not Cost of Goods Sold)
Tax Paid Purchases  (Broken down by sales tax region)
Taxes and Licenses

Employee Wages (If you have workers)

Wages
Federal Tax Withholding
FICA
Medicare
SDI (State Disability Insurance)
State Tax Withholding

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