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.

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.

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.

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