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What is a chart of accounts?

Your startup’s chart of accounts (COA) is like a roadmap to your financial data. A chart of accounts is a comprehensive list of all the accounts (assets, liabilities, equity, revenue, and expenses) used by your startup to record financial transactions in your startup’s general ledger. Your general ledger is the central repository of all your company’s financial information, down to the smallest expense.

Your chart of accounts tells you where to record each transaction in your general ledger, and also tells you how to look up those transactions later. That means the COA is the backbone of your accounting system, providing a systematic way to organize, categorize, and track your financial activities.

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Charts of accounts can change based on business sector

The chart of accounts is a structured list of all the accounts and categories used by a business to record financial transactions. While every COA typically includes assets, liabilities, equity, revenues, and expenses, the specific accounts and categories within a chart of accounts can vary based on the type of business due to differences in operations, industries, and reporting requirements.

Why is your startup’s chart of accounts important?

Your chart of accounts is critical to good bookkeeping and financial management. The COA allows you to sort and categorize all your startup’s transactions during a specific period. Once you’ve separated your revenue, assets, liabilities, and expenses, you can see how effective the different areas of your business are.

Your chart of accounts helps you with:

  • Financial reporting. A well-structured COA facilitates accurate and standardized financial reporting. It provides your stakeholders with insights into the financial health of the business, aiding in your decisions and strategic planning.
  • Budgeting and forecasting. By categorizing and reviewing expenses and revenues, your business can effectively budget and forecast future financial performance. This helps you set realistic goals and monitor your progress over time.
  • Compliance and taxation. A properly maintained chart of accounts helps make sure that your company is in compliance with regulatory requirements, and simplifies the tax filing process. It also provides a clear audit trail, minimizing the risk of errors or discrepancies.
  • Analysis and insights. With a detailed COA, your business can conduct in-depth financial analysis and gain valuable insights, like identifying cost-saving opportunities or evaluating the profitability of your product.
  • Audit trail. Using the chart of accounts, businesses can quickly identify any discrepancies in their financial statements, helping them investigate and correct problems.

Building a chart of accounts

The basic framework of a chart of accounts is consistent across businesses. However, you’ll have to tailor your COA to the specific needs and structure of your startup. Your COA will consist of the accounts you’ve identified and added to your general ledger for recording transactions. Here are some steps that we follow to create a customized COA for startup clients:

  • Understanding your business. We analyze the nature of your business operations, revenue streams, and the expense categories you use, to make sure your COA is aligned with your company’s goals.
  • Creating hierarchy and structure. We establish a logical hierarchy and structure for your accounts, balancing the need for detail with the ease of use.
  • Build in flexibility. We anticipate future growth and changes in your business environment, and design the COA with scalability and flexibility in mind.

A typical chart of accounts consists of several components:

  • Account Code. Each account is assigned a unique numerical or alphanumeric code for easy identification and reference.
  • Account Name. This is a brief description of the account, providing clarity on its purpose and contents.
  • Account Type. Accounts are categorized into different types such as assets, liabilities, equity, revenue, and expenses, enabling proper classification of financial transactions.
  • Sub-Accounts. Some accounts may have sub-accounts for further granularity and detail. For example, under the “Expenses” category, you might have sub-accounts like “Advertising Expenses,” “Utilities,” etc.

Your accounts will typically be listed in the order that they appear in your financial statements. Normally balance sheet accounts, including assets and liabilities, are listed first. Accounts that feed into your income statement will come next, including revenue and expense accounts. 

While COAs can be flexible to fit the needs of your individual business, most organizations use a common numerical scheme to identify accounts. The first digit of the account number indicates which of the main groups the account is grouped under.


1000 - 1999 2000 - 2999 3000 - 3999 4000 - 4999 5000 - 5999
Assets Liabilities Equity Income or Revenue Expenses

These broad categories correspond to the requirements for two financial statements, the balance sheet and income statement. The balance sheet uses assets, liabilities, and equity, while the income statement relies on income/revenue and expenses.

The common numbering system helps to find and reference specific accounts. The numbering system can vary for individual companies, but they generally follow the standard convention noted above. 


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. Let’s look at a more detailed breakdown of some of the Asset category for a startup with three different checking accounts. 

Account Number Account / Subaccount Name Parent Account Number Parent Account Name Details
100000 Current Assets N/A N/A N/A
101000 Bank Account 1 100000 Current Assets Checking
102000 Bank Account 2 100000 Current Assets Checking
103000 Bank Account 3 100000 Current Assets Checking

What items go into the COA categories?

The basic categories noted above are the ones that most startups will want to include in their charts of accounts, along with other categories tailored to your business. Let’s look at each category in more detail.

Remember, these lists aren’t comprehensive; your startup may have other categories based on the type of business it conducts.


Assets are the funds that your startup has on hand, any funds owed to you, and any property your startup owns. Some examples are:

  • Cash (main checking account).
  • Cash for payroll.
  • Marketable securities, like Treasury bills
  • Savings accounts.
  • Prepaid expenses.
  • Accounts receivable, which is money owed to you by customers for your products or services.
  • Property your company owns, like equipment, vehicles, and real estate, but also intangibles like patents or trademarks.
  • Inventory, which includes products you have ready for sale but also pre-paid materials, supplies, and parts.

Liabilities are money that your startup owes or are due for payment. Examples include:


Equity is the value of your startup after you deduct all the liabilities from the assets. You’ll see it represented by the balance sheet formula: Assets - Liabilities = Shareholders’ Equity. Not that this is an accounting definition (it’s actually called the “accounting equation”) but it’s not equal to the valuation that VCs put on your business when they invested equity. Examples of items in this category include: :


Income or revenue is the money you generate from business activities, like:

  • Sales of your product or service.
  • Interest income from bank accounts or other investments.
  • Sales returns and allowances.
  • Grant revenue for certain businesses.
  • Fees earned.

Expenses are often divided into direct and indirect expenses. Direct expenses feed into your cost of goods sold (COGS) are linked to a specific cost object (any item for which costs are being separately measured). Direct expenses include items like:

  • Labor costs like salaries, employee benefits, and any employment taxes your company is responsible for. 
  • Material costs such as parts or raw materials you need to build your product.
  • Subcontractor or non-employee expenses that are required for your product or service.
  • Equipment cost, including both equipment your startup owns and rents.

Indirect expenses, also known as selling, general, and administrative (SG&A) expenses or overhead, are expenses that are associated with your entire business, and can’t be attributed to a cost object. These expenses can include:

  • Administrative costs including labor and administrative software.
  • Office expenses like rent or office supplies.
  • Taxes including income and sales taxes.
  • Insurance like liability, workers compensation, and automotive.

Managing your chart of accounts

The process of recording a startup’s financial transactions is known as bookkeeping. Each specific transaction is recorded in an account created for that type of transaction. The individual accounts make up your company’s general ledger, a comprehensive listing of every transaction. 

The first step in bookkeeping is entering transactions in a journal. This is a chronological record of every transaction. After a transaction is recorded in a journal, those amounts are posted to the appropriate accounts. 

Transactions are recorded using the double-entry accounting system, with each transaction having an equal and opposite effect in at least two different accounts. Called debits and credits, debits increase asset accounts or decrease liability accounts. Credits increase liability accounts and decrease asset accounts. Debits and credits must always balance. 

Sample chart of accounts

A chart of accounts that’s compatible with generally accepted accounting principles (GAAP) contains all the information needed for your startup’s balance sheet (assets, liabilities, and equity) and the income/profit and loss statement (income/revenue and expenses). Along with unique account numbers, each account is assigned a name. 

As your startup grows, you may need to make changes to your chart of accounts. You might want to add an account because you just started using a new credit card. Or you might want to delete an account because you’re not using it any longer. It’s okay to add an account to the COA during the year, but you shouldn’t delete any accounts until your books are closed at the end of the year. 

The following table includes the standard chart of accounts that Kruze uses for our clients. This COA is customized based on the individual company and the industry it serves. For example, a SaaS company’s chart of accounts could include Software Subscription Revenue under the Income parent account category.

Account Number Account / Subaccount Name Parent Account Number Parent Account Name Details
100000 Current Assets N/A N/A N/A
101000 Bank Escrow 100000 Current Assets Checking
102000 Bank Operating 100000 Current Assets Checking
103000 Online Payments 100000 Current Assets Cash on hand
104000 Bank Checking 1 100000 Current Assets Checking
105000 Bank Checking 2 100000 Current Assets Checking
106000 Money Market 1 100000 Current Assets Checking
107000 Checking 3 100000 Current Assets Checking
111000 Invoicing Money Out Clearing 100000 Current Assets Checking
112000 Invoicing Money In Clearing 100000 Current Assets Checking
120000 Accounts Receivable 100000 Current Assets Accounts Receivable (A/R)
130000 Other Current Assets 100000 Current Assets Other Current Assets
131000 Prepaids 100000 Current Assets Prepaid Expenses
131100 Prepaid Expenses 100000 Current Assets Prepaid Expenses
131200 Prepaid Rent 100000 Current Assets Prepaid Expenses
132000 Payroll Receivable 100000 Current Assets Other Current Assets
133000 Clearing Account 100000 Current Assets Other Current Assets
133100 Clearing Account 1 100000 Current Assets Other Current Assets
133200 Clearing Account 2 100000 Current Assets Other Current Assets
133300 Other Clearing 100000 Current Assets Other Current Assets
134000 Deferred Cost of Revenue 100000 Current Assets Other Current Assets
135000 Deferred Refunds & Discounts 100000 Current Assets Other Current Assets
136000 Accrued Revenue 100000 Current Assets Other Current Assets
137000 Loan to Shareholder 100000 Current Assets Other Current Assets
138000 Undeposited Funds 100000 Current Assets Undeposited Funds
150000 Fixed Assets 100000 Current Assets Depletable Assets
151000 Furniture & Fixtures 100000 Current Assets Fixed Asset Furniture
152000 Computers 100000 Current Assets Fixed Asset Computers
153000 Office Equipment 100000 Current Assets Fixed Asset Copiers
154000 Machinery & Equipment 100000 Current Assets Machinery & Equipment
155000 Autos & Trucks 100000 Current Assets Vehicles
156000 Building 100000 Current Assets Buildings
157000 Land 100000 Current Assets Land
158000 Leasehold Improvements 100000 Current Assets Leasehold Improvements
159000 Accumulated Depreciation 100000 Current Assets Accumulated Depreciation
160000 Intangible Assets 100000 Current Assets Intangible Assets
161000 Domain 100000 Current Assets Intangible Assets
162000 Trademarks 100000 Current Assets Intangible Assets
163000 Patents 100000 Current Assets Intangible Assets
164000 Intangible Asset 1 100000 Current Assets Intangible Assets
165000 Intangible Asset 2 100000 Current Assets Intangible Assets
169000 Accumulated Amortization 100000 Current Assets Accumulated Amortization
170000 Accumulated Depreciation 100000 Current Assets Other fixed assets
170000 Other Assets 100000 Current Assets Other Long-term Assets
171000 Security Deposit 100000 Current Assets Security Deposits
172000 Interest Receivable 100000 Current Assets Other Long-term Assets
200000 Liabilities N/A N/A N/A
210000 Accounts Payable 200000 Liabilities Accounts Payable (A/P)
220000 Credit Cards 200000 Liabilities Credit Card
221000 Credit Card 1 200000 Liabilities Credit Card
222000 Credit Card 2 200000 Liabilities Credit Card
223000 Credit Card 3 200000 Liabilities Credit Card
224000 Credit Card 4 200000 Liabilities Credit Card
225000 Credit Card 5 200000 Liabilities Credit Card
230000 Other Current Liabilities 200000 Liabilities Other Current Liabilities
231000 401(k) Payable 200000 Liabilities Other Current Liabilities
232000 Loan from Shareholder 200000 Liabilities Other Current Liabilities
233000 Payroll Liabilities 200000 Liabilities Payroll Clearing
234000 Payroll Tax Liabilities 200000 Liabilities Payroll Tax Payable
235000 Accruals 200000 Liabilities Other Current Liabilities
235100 Accrued Expenses 200000 Liabilities Other Current Liabilities
235200 Accrued Rent 200000 Liabilities Other Current Liabilities
235300 Accrued Vacation 200000 Liabilities Other Current Liabilities
235400 Employee Reimbursement Liability 200000 Liabilities Other Current Liabilities
236000 Taxes Payable 200000 Liabilities Other Current Liabilities
236100 Sales Tax Payable 200000 Liabilities Other Current Liabilities
236200 Use Tax Payable 200000 Liabilities Other Current Liabilities
236300 SF Tax Payable 200000 Liabilities Other Current Liabilities
237000 Deferred Revenue 200000 Liabilities Other Current Liabilities
238000 Sublease Deposit & Prepaid Rent 200000 Liabilities Other Current Liabilities
240000 Long Term Liabilities 200000 Liabilities Other Long Term Liabilities
241000 Notes / Bonds Payable 200000 Liabilities Notes Payable
242000 Accrued Interest 200000 Liabilities Notes Payable
300000 Equity N/A N/A N/A
301000 Common Stock 300000 Equity Common Stock
301001 Common Stock - Par Value 300000 Equity Common Stock
301002 Common Stock - Additional Paid-In Capital (APIC) 300000 Equity Common Stock
320000 Preferred Stock 300000 Equity Preferred Stock
320000 Series Seed: Preferred Stock 300000 Equity Series Seed
320000 Series Seed: Preferred Stock - Par Value 300000 Equity Series Seed
320000 Preferred Stock: Series Seed - Additional Paid-In Capital (APIC) 300000 Equity Series Seed
320000 Preferred Stock: Series Seed - Financing Costs 300000 Equity Series Seed
320000 Preferred Stock: Series A 300000 Equity Preferred Stock
320000 Preferred Stock: Series A - Par Value 300000 Equity Series A
320000 Preferred Stock: Series A - Additional Paid-In Capital (APIC) 300000 Equity Series A
320000 Preferred Stock: Series A - Financing Costs 300000 Equity Series A
320000 Preferred Stock: Series B 300000 Equity Preferred Stock
320000 Preferred Stock: Series B - Par Value 300000 Equity Series B
320000 Preferred Stock: Series B - Additional Paid-In Capital (APIC) 300000 Equity Series B
320000 Preferred Stock: Series B - Financing Costs 300000 Equity Series B
330000 Treasury Stock 300000 Equity Treasury Stock
340000 SAFE Notes 300000 Equity Preferred Stock
400000 Sales N/A N/A N/A
401000 Product 1 400000 Sales Sales of Product Income
402000 Product 2 400000 Sales Sales of Product Income
403000 Product 3 400000 Sales Sales of Product Income
404000 Discounts 400000 Sales Discounts/Refunds Given
405000 Refunds 400000 Sales Discounts/Refunds Given
500000 Cost of Goods Sold N/A N/A N/A
501000 Direct Labor 500000 Cost of Goods Sold Cost of Labor - Cost of Services (COS)
502000 Direct Parts & Materials 500000 Cost of Goods Sold Supplies & Materials - Cost of Goods Sold (COGS)
502001 Direct Parts & Materials: Mechanical 500000 Cost of Goods Sold Other Costs of Services (COS)
502002 Electrical 500000 Cost of Goods Sold Other Costs of Services (COS)
503000 Freight & Delivery 500000 Cost of Goods Sold Shipping - Cost of Services (COS)
504000 Overhead Allocation 500000 Cost of Goods Sold Other Costs of Services (COS)
505000 Hosting Fees 500000 Cost of Goods Sold Other Costs of Services - COS
600000 Sales, General, and Administrative (SGA) Expenses N/A N/A N/A
601000 Sales & Marketing 600000 SGA Expenses Advertising/Promotional
601300 Sales & Marketing: Paid Ads 600000 SGA Expenses Advertising/Promotional
601400 Sales & Marketing: Promotional Items 600000 SGA Expenses Advertising/Promotional
601500 Sales & Marketing: Conferences 600000 SGA Expenses Advertising/Promotional
601600 Sales & Marketing: Sales Commission 600000 SGA Expenses Advertising/Promotional
602000 Payroll Expense 600000 SGA Expenses Payroll Expenses
602100 Wages 600000 SGA Expenses Payroll Expenses
602102 Bonuses 600000 SGA Expenses Payroll Expenses
602103 Vacation Expense 600000 SGA Expenses Payroll Expenses
602104 Payroll Taxes 600000 SGA Expenses Payroll Expenses
602105 Employee Benefits 600000 SGA Expenses Payroll Expenses
602106 Workers’ Compensation 600000 SGA Expenses Payroll Expenses
602200 Payroll Expense - International 600000 SGA Expenses Payroll Expenses
602201 Wages - International 600000 SGA Expenses Payroll Expenses
602202 Payroll Taxes - International 600000 SGA Expenses Payroll Expenses
602203 Employee Benefits - International 600000 SGA Expenses Payroll Expenses
602300 Payroll Processing Fees 600000 SGA Expenses Payroll Expenses
603000 Software & Web Services 600000 SGA Expenses Office/General Administrative Expenses
604000 Professional Fees 600000 SGA Expenses Legal & Professional Fees
604100 Professional Fees: Legal 600000 SGA Expenses Legal & Professional Fees
604200 Professional Fees: Accounting 600000 SGA Expenses Legal & Professional Fees
604300 Professional Fees: Recruiting 600000 SGA Expenses Legal & Professional Fees
604400 Professional Fees: Contractors & Consultants 600000 SGA Expenses Legal & Professional Fees
605000 Travel Expenses 600000 SGA Expenses Travel
606000 Meals 600000 SGA Expenses Travel
607000 Entertainment / Team Events 600000 SGA Expenses Other Business Expenses
608000 Insurance Expense 600000 SGA Expenses Insurance
609000 Office Furniture / Equipment 600000 SGA Expenses Office/General Administrative Expenses
610000 Office Supplies & General Expense 600000 SGA Expenses Office/General Administrative Expenses
611000 Telephone / Internet Expense 600000 SGA Expenses Office/General Administrative Expenses
612000 Utilities Expense 600000 SGA Expenses Office/General Administrative Expenses
613000 Bank Charges 600000 SGA Expenses Bank Charges
614000 Rent Expense 600000 SGA Expenses Rent or Lease of Buildings
615000 Gifts 600000 SGA Expenses Office/General Administrative Expenses
700000 Research & Development (R&D) Expenses N/A N/A N/A
710000 Direct Labor - R&D 700000 R&D Expenses Other Business Expenses
720000 Machinery & Equipment 700000 R&D Expenses Other Business Expenses
730000 Supplies 700000 R&D Expenses Other Business Expenses
740000 Freight & Delivery - R&D 700000 R&D Expenses Other Business Expenses
750000 Other Indirect Costs 700000 R&D Expenses Other Business Expenses
800000 Other Operating Expenses N/A N/A N/A
810000 Depreciation Expense 800000 Other Operating Expenses Other Business Expenses
820000 Amortization Expense 800000 Other Operating Expenses Other Business Expenses
900000 Other (Income) / Expenses N/A N/A N/A
901000 Interest (Income) / Expense 900000 Other (Income) / Expenses Other Miscellaneous Expense
902000 Taxes & Licenses 900000 Other (Income) / Expenses Other Miscellaneous Expense
902100 R&D Tax Credit Income 900000 Other (Income) / Expenses Other Miscellaneous Expense
903000 Bad Debt Expense 900000 Other (Income) / Expenses Other Miscellaneous Expense
904000 Misc Other (Income) / Expenses 900000 Other (Income) / Expenses Other Miscellaneous Expense

A Chart of Accounts Can Guide Your Business Decisions

The chart of accounts is more than a list of numbers and names; it’s a powerful tool that drives financial transparency, efficiency, and strategic decision-making. For startup founders, a well-crafted chart of accounts is the cornerstone of sound financial management. For more information about charts of accounts and accounting for startups, contact us.

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