Chart of Accounts: The Backbone of Your Financial System

The Chart of Accounts (COA) is the foundation of your financial system.

Customizing it in FreshBooks ensures your books aren’t just accurate for tax work, they’re useful for running and growing your business.

Why it matters:

The COA determines how transactions are classified and summarized.

A clear, well-structured COA makes your P&L and balance sheet meaningful.

Messy COA = messy books

Customizing the COA in FreshBooks is good form.

Out of the box, FreshBooks comes with a COA that you can customize to fit your business. The default COA is not perfect and can use a few tweaks for all businesses. Here are two tweaks I recommend.

Archive (you can’t delete) the Personal Expense Account. For clean bookkeeping, you should not have personal expenses.

Add appropriate accounts under Equity for Owner’s Contributions and Owner’s Distributions. This may vary depending on how many owners you have in your business. Meaning, for a solopreneur, the above suffices. If you have partners, you need a contribution and distribution account for each partner.