Customizing the chart of accounts

Your business, your needs

The chart of accounts is at the heart of any QuickBooks Online file. Although you can choose
a default chart of accounts when you sign a client up, you and your client may still need to
customize it to meet their business needs.

How can you and QuickBooks Online help?

You can add value to your client’s business by ensuring that their chart of accounts reflects
the reporting requirements for their business.

There are several ways to edit a chart of accounts in QuickBooks Online to make it work for
your client. In this lesson, we’ll look at using chart of accounts templates for different
business types and other customization options.

To get the most out of this lesson, we recommend that you complete the one on the chart of
accounts first.

The QuickBooks Online ecosystem is constantly evolving to meet your needs.

Your current experience may differ from what you see here.

Learning outcomes

In this lesson, we’ll cover:

 Customizing the chart of accounts, and managing accounts in QuickBooks Online

Topics

 The benefits of having a customized chart of accounts

 Examples of customized charts of accounts
 Creating and using chart of accounts templates
 Enhanced capabilities with chart of accounts templates
 Adding account numbers
 Editing account names
 Merging accounts
 How to merge accounts
 Making an account inactive
 Account-editing limitations
 ProAdvisor challenge
The benefits of having a customized chart
of accounts
Setting up a client’s chart of accounts correctly in QuickBooks Online means paying
attention to their business’s needs and business profiles. Some clients may not want to
include accounts that don’t apply to their business. Still, they may need new accounts that are
specific to their industry or unique to their business.

As a ProAdvisor, you can help your clients reflect their needs in the way you set up their
chart of accounts (COA).

Watch the video to find out more about the benefits of customizing the chart of accounts
for different business types.

How can you and your clients customize their chart of accounts?

As well as adding accounts, edits to a default chart of accounts can include:

 Editing the names of default accounts

 Adding account numbers
 Merging accounts
 Changing the account type and/or detail type of accounts where permitted
 Making unused or redundant accounts inactive. Note that you can’t delete an account

We’ll explore how to make these changes later in the lesson.

Examples of customized charts of accounts

Let’s look at two different business types, their charts of accounts, and how the setup reflects
the accounting profile of each business.

Select each of the tabs to find out more.

 Sample client A
 Sample client B

Client A is a sole proprietor with no employees. Their primary focus when it comes to data
and reporting is customer profitability.

The reports that this client is most interested in are:

 Profit and Loss by Customer

 Unbilled Charges
  Balance Sheet
 Accounts Receivable Aging

How should you set up the chart of accounts for this client?

Because the client deals with job-related expenses in their business, they have two materials
accounts on their chart of accounts:

1. Job Materials (Purchases): Used for categorizing expenses that can be directly
attributed to a job (whether the expenses are billable or not)
2. Materials and Supplies (Overhead): Used for categorizing other expenses not
directly related to a job

Client B is a real estate investment company with a portfolio of multiple properties.

How should you set up the chart of accounts for this client?

Their chart of accounts needs to reflect the business. The client has individual fixed asset
accounts for each property as well as individual liability accounts for each mortgage.

Because the tenants will be set up on the Customer list, the client can have one income
account to collect all the income and the appropriate expense accounts. There is no need to
set up subaccounts for each property.
To help you set up a client’s chart of accounts in a way that reflects the needs of their
business, QuickBooks Online allows you (as an accountant user) to create business-specific
chart of accounts templates and then use them as required. We’ll look at how to do this next.

Examples of customized charts of accounts

Let’s look at two different business types, their charts of accounts, and how the setup reflects
the accounting profile of each business.

Select each of the tabs to find out more.

 Sample client A
 Sample client B

Client B is a real estate investment company with a portfolio of multiple properties.

How should you set up the chart of accounts for this client?

Their chart of accounts needs to reflect the business. The client has individual fixed asset
accounts for each property as well as individual liability accounts for each mortgage.

Because the tenants will be set up on the Customer list, the client can have one income
account to collect all the income and the appropriate expense accounts. There is no need to
set up subaccounts for each property.
To help you set up a client’s chart of accounts in a way that reflects the needs of their
business, QuickBooks Online allows you (as an accountant user) to create business-specific
chart of accounts templates and then use them as required. We’ll look at how to do this next.

Creating and using chart of accounts

templates
As an accountant user, you can create chart of accounts templates and use them as the basis
for configuring a client’s QuickBooks Online file with a chart of accounts tailored to their
business type.

To get started, in QuickBooks Online Accountant, go to Accountant tools and then select
COA templates.
Select each tab to find out more.

 Creating a new template

 Applying a template

1. To create a new template, select Add new template from the Chart of accounts templates
screen
2. Select the type of template you want to create, followed by Next

3. Enter a name for the template and toggle on account numbers if required

The template is prepopulated with accounts based on the type of template you chose.
 4. To add more, select Add a new parent account

5. Enter a name for the new account, and select the appropriate account type and detail type.
To add a subaccount to an account, select Add new subaccount and fill in the necessary
details

6. Continue these steps until you have added all the extra accounts you need, then select Save.

The new template will now appear in the list on the Chart of accounts templates screen.
 1. To apply a template to a client’s chart of accounts, select Apply template

2. Select the client from the dropdown, then select Save

The client’s chart of accounts will now be set up with the accounts you added and configured
in the template.
You can
further
customiz
e the
chart of
accounts
if
required
, using
the
methods
describe
d in this
lesson.
Enhanced capabilities with chart of
accounts templates
Creating a suite of business-specific templates is a good start when setting up your clients
with a customized chart of accounts. However, you can do more with templates to further
tailor a client’s chart of accounts—and save yourself time in the process.

Select the dropdowns to learn more about using chart of accounts templates.

Creating a template from scratch

Importing a template
Duplicating, editing and deleting templates
Applying a template to a client with existing accounts

ProAdvisor tip

Next, we’ll look at how you can customize a chart of accounts in QuickBooks Online,
starting with how to number the various accounts.

Adding account numbers

You might want to customize a client’s account numbering and hierarchies to create
consistency across all clients or to comply with the industry or the government’s accounting
standards.

Before you can add numbers to a client’s account, you need to enable numbering. Let’s see
how to do that, and then add some account numbers.

Watch the video to see how it’s done. The individual steps are below for you to follow.

To enable account numbers:

1. Select the Gear icon, then Account and settings

2. Select the Advanced tab from the left
3. Select anywhere in the Chart of accounts section to enable editing
4. Move the slider next to the Enable account numbers option. Note that this setting will affect
all users in the client’s company
5. Next, check the Show account numbers option. This setting allows account numbers to show
on the chart of accounts and on reports. If it is not selected, account numbers will be hidden
on reports—but clients will still be able to search for an account by number when they
record transactions
6. Select Save
7. Then select Done

QuickBooks Online now allows account numbers in the chart of accounts. It may
automatically assign account numbers, but these can be changed if needed.
To do this:

1. Select the Gear icon, then Chart of accounts

Alternatively, select Transactions from the left-hand navigation and select Chart of accounts
2. Select the Pencil icon above the Action column
3. In the Number column, enter the desired account numbers. These can be up to 20 digits long
4. When done, select Save

That’s it.

Editing account names

Sometimes, it’s a good idea to edit default account names to make them more appropriate or
easily identifiable for clients. This can help avoid errors such as posting transactions to the
wrong accounts.

To edit an account name, you need to be in the chart of accounts.

1. Find the account to rename and, from the Action column dropdown, select Edit

2. In the Edit account panel, enter the new account name in the Account name field
3. When done, select Save
Merging accounts
Merging accounts is a common practice when there are duplicates or two accounts are being
used for the same thing.

Note that the merging process is permanent and can’t be reversed. Any transactions in
merged accounts are also merged and appear under one category in reports.

What do you need to be aware of when merging accounts?

To successfully merge accounts, the Account Type and Detail Type must be the same.

If the Account Type or Detail Type of the accounts doesn’t match, you may be able to edit it
to make it match. Note that the Account Type and Detail Type can’t be changed for most
default accounts or accounts linked to products and services.

To change the Account Type or Detail Type, find the account in the chart of accounts, and
from the Action column dropdown, select Edit.
To change the Account Type, select one of the icons at the top of the Edit account panel or
choose a new type from the Save account under dropdown. If changing the Detail Type,
select the new type from the Tax form section dropdown. Select Save when done.

What about subaccounts?

You can merge subaccounts that are under the same parent account. The Account Type and
Detail Type must be the same to do this. Also, the subaccount Account Type must be
identical to the parent Account Type.
How to merge accounts
Now let’s look at the process for merging accounts in the chart of accounts.

Watch the video to see how it’s done. The individual steps are below for you to follow.

1. Find the account that you want to keep and, in the Action column dropdown, select Edit
2. In the Edit account panel, copy the exact Account name by highlighting and selecting the
name, then copying it
3. Select Cancel to close the Edit account panel
4. Back in the Chart of Accounts list, find the other account to be merged and—as before—
select Edit in the Action column dropdown
5. In the Edit account panel, paste the name of the previous account into the Account name
field. You need to replace the current name with the one that you copied from the first
account
6. Select Save
7. QuickBooks Online will ask you to confirm that you want to merge the account. To proceed,
select Yes, merge accounts
8. Finally, select Save again

These accounts are now merged in the chart of accounts.

Making an account inactive

When setting up a client file, you may want to make some default accounts inactive. This
helps keep the chart of accounts tidy and prevents clients from posting transactions to the
wrong or redundant account by mistake.

QuickBooks Online lists inactive accounts as deleted on reports. However, transactions in

inactive accounts remain part of the company data. They appear on reports if they were
posted to the account when it was active.

Select the headings to see how to make accounts inactive—and how to reactivate them.

 How to make an account inactive

 How to make an account active again

You can make accounts inactive individually or in batch.

To make a single account inactive:

1. In the Chart of Accounts screen, select the down arrow from the Action column for the
relevant account, then choose Make inactive
 2. In the pop-up, select Yes, make inactive to confirm

To make multiple accounts inactive at once:

1. Select each one by placing a checkmark in the box to the left

2. Then, from the Batch actions dropdown, select Make inactive

 3. To confirm, select Yes, make inactive

Use this same technique in the future to inactivate accounts that won’t be used again (such as
loans that have been paid off).

What happens when a balance sheet account is made inactive?

If your client needs to inactivate a balance sheet account, its balance will be moved to their
Opening balance equity account.

It’s therefore best practice to zero out the balance sheet account in question manually using
the appropriate date(s) and account(s), then make it inactive. A journal entry is created for the
day the account is made inactive.

Account-editing limitations
Because QuickBooks Online requires some default accounts to carry out essential functions,
customization has certain limitations.

You can edit the following accounts’ names, but they can’t be made inactive or merged:

 Accounts Receivable
 Opening Balance Equity
 Retained Earnings
This may appear under a different name to better suit a client’s business, such as if they are a
sole proprietor or a partnership. Be sure to check which of your client’s accounts has the
detail type of Retained Earnings (they can only have one)
 Reconciliation Discrepancies
 Unapplied Cash Payment Income
  (Sales tax agency name) Payable
Such as California Department of Tax and Fee Administration Payable
 Services
 Sales of Product Income
 Uncategorized Asset
 Uncategorized Expense and Uncategorized Income

The Inventory/Stock Assets and Cost of Goods Sold/Cost of Sales accounts can also be
renamed. They can be made inactive, too, as long as they aren’t assigned to a Product/Service
item.

Knowledge check
Which of the following options is NOT true regarding editing a chart of
accounts?

 Account numbers can be up to 20 digits long

 Merging accounts isn’t possible for all account types
 All transactions are deleted from an account if you make it inactive
 You can make an account active once it has been made inactive

Importing the chart of accounts, products

and services, customers, and vendors
Making things simple

QuickBooks Online makes it easy for you and your clients to set up a new account,
product/service, customer, or vendor from scratch.

However, some of your clients may already have a chart of accounts, or lists of their
products/services, customers, or vendors. It’s time-consuming to enter all these items into
QuickBooks Online manually, and mistakes can happen when entering data.
How can you and QuickBooks Online help?

QuickBooks Online has a built-in importing tool that allows you and your clients to import
external lists. The tool also makes it easy to map the data to the correct fields in QuickBooks
Online.

However, clients are likely to need the know-how of an experienced ProAdvisor to configure
the data so that it maps to the correct fields in QuickBooks Online.

The QuickBooks Online ecosystem is constantly evolving to meet your needs.

Your current experience may differ from what you see here.

Learning outcomes

In this lesson, we’ll cover:

 Importing accounts, products and services, customers and vendors into QuickBooks
Online

Topics
  What’s involved in importing lists into QuickBooks Online?
 Importing a list into QuickBooks Online
 ProAdvisor challenge

What’s involved in importing lists into

QuickBooks Online?
Importing a list into QuickBooks Online is a straightforward process. The most time-
consuming aspect is making sure the list is configured in the correct format before you import
it.

Select the headings to discover more about importing lists into QuickBooks Online.

How do you import a list?

You or your clients can import a list from within the relevant center in QuickBooks Online.
For example, to import a products and services list from the Products and Services center,
select the down arrow next to New, then select Import.

If importing a products and services list, the chart of accounts must be set up first. This is
because each product and service is mapped to an account in the chart of accounts. So if you
need to import the chart of accounts, do this before importing the products and services list.

You or your clients can also import lists by going to the Gear icon and selecting Import
data.
Then choose the list type to import.

The second method works well if clients want to import several different types of lists into
QuickBooks Online, but they can only import one list at a time.

Note: The process for importing a list is covered in more detail later in the lesson.

What format do lists need to be in?

QuickBooks Online can import lists saved as Excel or CSV files. Clients can also connect to
a file in Google Sheets.
You need to ensure each list is set up or configured in the correct format so that QuickBooks
Online can map each data item to the correct field.

How do you know how to configure a list correctly?

QuickBooks Online includes sample files for each list type so that you and your clients know
how to format every list before you import it. You or your clients can download the sample
file by choosing the relevant list type from the Import screen and selecting either Download
a sample file for Excel or Preview a sample for Google Sheets.

Each sample file is preformatted with the column headings that QuickBooks Online needs in
order to add the data to the company correctly. Here’s a sample file for the chart of accounts:
If importing from Excel, we recommend downloading and saving the sample file as a
template then copying and pasting your client’s data into each column. Remember to delete
the sample data in each column first. Pay attention to which columns (fields) are included in
the template, their names, and their order.

Alternatively, you can update your client’s existing spreadsheet to match the sample file.

Once the list is configured correctly, you or your client can import it into QuickBooks
Online.

What if the client already has a chart of accounts, products and services, customers, and/or vendors?

When importing a chart of accounts or a customer/vendor list, it won’t update or replace the
existing data if the record already exists. Instead, you’ll get an error message.

However, when importing a products and services list, you or your client can choose to
overwrite and update items already in QuickBooks Online. This makes it easy to import new
prices for existing products and services.

ProAdvisor tip

You’ll find more detail on importing lists into QuickBooks Online in the lessons on
exporting lists from QuickBooks Desktop and importing lists into a QuickBooks Online
company.

Importing a list into QuickBooks Online

Let’s look at how to import a list into QuickBooks Online.

We’ll look at how to import a products and services list from the Products and Services
center. The procedure is the same for importing a chart of accounts or a customers or vendors
list (except you can’t choose to overwrite these lists).

Watch the video to see how it’s done. The individual steps are below for you to follow.

1. Go to the Products and services tab in the Sales center

2. Select the arrow next to New and select Import
3. Next, select Browse
4. Find the spreadsheet to be imported and select Open to upload it
5. Select Next
6. Check that the column headers in the list are mapped to the correct fields in QuickBooks
Online. The column headers in the spreadsheet are referred to as “Your Field” here

If “Your Field” says “No Match,” it means that QuickBooks Online doesn’t know which
 column should be mapped to the QuickBooks Online field. It may be that the required
column doesn’t exist on the spreadsheet, or it has no data in it.
7. When you’re ready, select Next
8. On the next page, enter any data that’s missing from the spreadsheet, such as the income or
expense account, or sales or purchase price

In order to select the necessary accounts for products and services, the chart of accounts
must be set up first.
9. If importing a products and services list, select the checkbox in the bottom left corner if you
wish to overwrite and update any items already in QuickBooks Online that have identical
names to those in the spreadsheet

If you try to import a new products and services list containing items that already exist in
QuickBooks Online without selecting this checkbox, you’ll see an error message and the list
won’t be imported.
10. Once you’ve done this, select Import

That’s it! You’re done.

Knowledge check
Here is the Customers center in a client’s QuickBooks Online company:

Where can you go to import a customer list into QuickBooks Online? Select
all that apply.

 Customer types, then select Import customers

 The Gear icon, then select Import data
 The Gear icon, then select Account and settings
 New customer, then select Import customers
 The down arrow by New customer, then select Import customers