Creating a chart of accounts for an AI startup
Artificial intelligence (AI) startups are on the forefront of technological innovation. But as you develop cutting-edge AI solutions and revolutionize industries, it’s crucial not to overlook your startup’s financial foundation.
A solid chart of accounts (COA) tailored specifically to the unique needs of your AI venture will help you plan and manage the growth and success of your AI startup.
AI startups have distinct accounting needs
AI startups focus on developing and deploying innovative AI technologies to solve problems, enhance processes, or create new opportunities across various industries. These startups typically leverage machine learning, deep learning, natural language processing, computer vision, and other AI techniques to build intelligent systems capable of understanding, reasoning, and learning from data.
AI startups can operate in diverse sectors such as healthcare, finance, retail, automotive, cybersecurity, and more. They may develop AI-powered products, services, or platforms aimed at improving efficiency, automating tasks, personalizing experiences, or making predictions based on large datasets. These companies often require interdisciplinary teams of data scientists, engineers, domain experts, and business professionals to develop and deploy AI solutions effectively. All of that complexity means that the chart of accounts for an AI startup will have some unique accounts that other businesses may not need.
Founders of artificial intelligence startups will need to not only make sure they are setting up a good chart of accounts, but also that they are setting up an accounting system that can handle splitting of some serious expenses that we know AI companies will have. In particular, the server or hardware costs of these companies can be huge – and some of these expenses are going to be serving customers whereas others are related to training models.
Good founders will want to be able to split these costs – even if they come from the same vendor (often AWS, for example) – so that they can see how much their revenue costs to deliver vs. how much they are spending developing their models.
Accounts that an AI startup might use
Kruze Consulting uses six-digit accounting codes in our charts of accounts, which allows us to create more unique accounts in each category, to capture more information. We have more detail on charts of accounts here.
We use the following categories and number groupings:
| Current Assets | 100000 -199999 |
| Liabilities | 200000 - 299999 |
| Equity | 300000 - 399999 |
| Sales | 400000 - 499999 |
| Cost of Good Sold | 500000 - 599999 |
| Sales, General, and Administrative Expenses | 600000 - 699999 |
| Research & Development Expenses | 700000 - 799999 |
| Other Operating Expenses | 800000 - 899999 |
| Other Income / Expenses | 900000 - 999999 |
Under these accounts, you’ll find sub-accounts that roll up into the main asset category. The first digit of each account number indicates which group the account belongs to.
The table below shows some different types of accounts an AI startup could use, along with some examples of standard account types to illustrate how the accounts are structured. The account numbers follow Kruze’s standard numbering system, but individual account numbers could vary.
NOTE: This is not a comprehensive list – this is just a sample of the accounts your AI company may require.
Some specific artificial intelligence chart of accounts
| Account Number | Account Name | Account Type | Detail Type |
| 104000 | Cash | Current Assets | Checking |
| 120000 | Accounts Receivable | Current Assets | Accounts Receivable |
| 131100 | Prepaid Expenses | Current Assets | Prepaid Expense |
| 152000 | Computer Equipment | Current Assets | Computer Equipment |
| 159000 | Accumulated Depreciation | Current Assets | Accumulated Depreciation |
| 210000 | Accounts Payable | Liabilities | Accounts Payable |
| 220000 | Credit Card Payable | Liabilities | Credit Card |
| 237000 | Deferred Revenue | LIabilities | Deferred Revenue |
| 301000 | Common Stock - Par Value | Equity | Common Stock |
| 309000 | Retained Earnings | Equity | Retained Earnings |
| 401000 | Subscription Revenue | Sales | Subscription |
| 402000 | Consulting Revenue | Sales | Consulting |
| 502000 | Computer Equipment | Cost of Goods Sold | Supplies & Materials - COGS |
| 502002 | Electrical | Cost of Goods Sold | Utilities |
| 601000 | Marketing and Advertising Expenses | SG&A Expense | Marketing |
| 614000 | Rent Expense | SG&A Expense | Rent |
| 604000 | Professional Fees | SG&A Expense | Professional Fees |
| 608000 | Insurance | SG&A Expense | Insurance |
| 700000 | Research & Development Expense | R&D Expense | Other Business Expense |
| 810000 | Depreciation Expense | Other Operating Expense | Depreciation |
| 902000 | Taxes and Licenses | Other Income/Expenses | Taxes & Licenses |
For a company providing AI technology, there might be unique accounts specific to its operations that are not typically found in a standard chart of accounts.
Here are some potential unique accounts:
This account would track revenue generated from subscription-based models, where customers pay recurring fees for access to the company’s AI technology or services.
If the company offers consulting services related to the implementation, customization, or optimization of its AI technology for clients, it would need an account to track revenue from consulting engagements.
This account would capture revenue from licensing the company’s AI technology or software to third-party developers, businesses, or organizations for use in their own applications or products.
Given the nature of developing AI systems, the company would likely have significant expenses related to research, testing, and development efforts to improve and innovate its AI technologies.
Since the company relies heavily on computer equipment for its operations, it may have specific expenses related to maintaining and servicing this equipment to ensure optimal performance and reliability.
To promote its AI products and services, the company may incur expenses for targeted marketing campaigns, advertising, and brand-building activities to reach potential customers and clients.
This account would capture expenses related to hiring external consultants, experts, or advisors for specialized services such as legal advice, intellectual property protection, or technical consultancy.
If the company hosts its AI technology or services on cloud platforms or servers, it would need an account to track expenses for subscription hosting services, including fees for computer resources, data storage, and network bandwidth.
This account would capture expenses related to acquiring or licensing data sets used to train and improve the company’s AI technology, including costs for purchasing data from third-party providers or collecting data through partnerships or collaborations.
Given the importance of ensuring the accuracy and reliability of AI technology, the company may have expenses related to quality assurance testing, validation, and performance monitoring to maintain high standards of performance.
These unique accounts would provide more detailed insight into the financial aspects of the company’s operations and help in accurately tracking revenues and expenses specific to its business model in the AI industry.
The process of building a chart of accounts for your fintech startup begins with a review of your business to create a list of the types of accounts you’ll need.
To find out more about setting up a COA for your business, contact us.
