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.




Here is my 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

Insurance

Interest

Legal and Professional

Office Expense

Equipment Rental

Repairs

Supplies (Not Cost of Goods Sold)

Purchases: (Cost of Goods Sold)

Tax Paid Purchases  (Broken down by sales tax region)

Non-Tax Paid Purchases  (Broken down by sales tax region)

Taxes and Licenses

Entertainment

Employee Wages: (If you hire employees)

Wages

Federal Tax Withholding

State Tax Withholding

Medicare

FICA

SDI (Disability Insurance)

Other Expenses