So, What Exactly Is the Chart of Accounts?
Imagine you're running your startup, XYZ Corp, creating groundbreaking widget software. Every financial transaction your company makes—be it revenue from sales, expenses for software subscriptions, or investments in new equipment—needs a home. The Chart of Accounts is like the roadmap that tells you where each of these transactions should go. It's a structured list of all the accounts in your General Ledger, organized in a way that makes sense for your business.
But let's face it: traditional COAs can be overwhelming, filled with endless account numbers and categories that might not even apply to your startup. That's where Puzzle steps in to simplify things.
Why We Built a Streamlined Chart of Accounts in Puzzle
We noticed a couple of things:
Complexity Overload: Traditional accounting software often presents an overly complicated COA that's better suited for large corporations than nimble startups.
Customization Needs: Startups require flexibility to tailor their financial tracking to their unique operations.
Our solution? A default Chart of Accounts that's both comprehensive and easy to navigate, with the flexibility to customize it as your business grows.
Why Should You Care About the Chart of Accounts?
Clarity and Organization: A well-structured COA helps you keep your financial data organized, making it easier to understand where your money is coming from and where it's going.
Efficient Reporting: It streamlines the preparation of financial statements, providing accurate insights for decision-making.
Scalability: As your startup grows, a flexible COA ensures your accounting system can grow with you without becoming a tangled mess.
Diving into Puzzle's Chart of Accounts
We've designed our COA to cover all the essentials while keeping it straightforward. Here's a high-level overview:
10000-Series: Asset Accounts
Current Assets (10000-14999): Cash, cash equivalents, accounts receivable, prepaid expenses, and inventory.
Noncurrent Assets (15000-19999): Long-term investments, fixed assets like equipment and buildings, intangible assets, and goodwill.
20000-Series: Liability Accounts
Current Liabilities (20000-25999): Accounts payable, short-term loans, accrued expenses, and deferred revenue due within a year.
Noncurrent Liabilities (26000-29999): Long-term debts and obligations due beyond one year.
30000-Series: Equity Accounts
Stock and Investments (30000-32999): Common stock, preferred stock, and SAFEs (Simple Agreements for Future Equity).
Retained Earnings (34000-34999): Cumulative net income retained in the business.
Other Equity (35000-39999): Additional paid-in capital and other equity-related accounts.
40000-Series: Revenue Accounts
Operating Revenue (40000-49999): Income from subscriptions, services, transactions, usage fees, partnerships, and miscellaneous sources.
50000-Series: Cost of Revenue Accounts
Direct Costs (50000-59999): Expenses directly tied to generating revenue, such as materials, hosting fees, payment processing fees, and allocated salaries.
60000-Series: Operating Expense Accounts
Standard Operating Expenses (60000-69999): Payroll, travel, meals and entertainment, professional services, marketing, software, facilities, and general operations.
70000-Series: Other Operating Expenses
Non-Cash and Miscellaneous Expenses (70000-79999): Depreciation, amortization, and bad debt expenses.
80000-Series: Non-Operating Income and Expenses
Miscellaneous Financial Activities (80000-89999): Interest income and expenses, taxes, credit card rewards, and other non-operational items.
90000-Series: Uncategorized Transactions
Needs Attention (91000-92999): Uncategorized revenue and expenses that require your review and proper categorization.
How to Customize Your Chart of Accounts in Puzzle
We get it—every startup is unique. That's why we've made it easy for you to tailor the COA to fit your specific needs.
Adding a New Account
Navigate to the Accounting Tab:
Go to the "Accounting" section in the sidebar.
Access the Chart of Accounts:
Click on "Chart of Accounts".
Create a New Account:
Click the "+ New Account" button.
Choose a Parent Account:
Select an existing account under which your new account will be categorized, or create a new parent account.
Assign an Account Number:
Enter a 5-digit number that logically fits within our numbering convention. This keeps your COA organized.
Select the Account Type:
Choose the type that best fits your new account (e.g., Asset, Liability, Revenue).
Name Your Account:
Give it a clear and descriptive name.
Add a Description and Keywords (Optional):
This helps with future categorization and clarity.
Review and Create:
Double-check the details and click "Create".
Editing an Existing Account
Note: Currently, accounts connected via integrations (like bank accounts) cannot be renamed directly, as they sync with the provider's name.
For other accounts:
Click the three-dot menu (⋮) next to the account.
Select "Edit".
Make your changes and save.
Exporting Your Chart of Accounts
While we don't have a direct export feature just yet, you can:
Copy and Paste:
Highlight the accounts in the "Chart of Accounts" section and copy them into a spreadsheet.
Use the Trial Balance Report:
Navigate to "Reports" > "Trial Balance".
Download the report and adjust it in Excel or Google Sheets to view your accounts as needed.
Understanding Account Numbering Conventions
Our numbering system is designed to keep your accounts logically organized:
Ending Conventions:
005, 050, 500: Used for contra-accounts (accounts that offset the parent account).
9, 99, 999: Used for adjustment accounts.
Example:
If 40000 is your main revenue account, 40500 might be a contra-account for discounts or returns.
The Bottom Line
The Chart of Accounts is more than just a list—it's the framework that supports all your financial reporting and analysis. With Puzzle's intuitive COA, you get the structure you need without the complexity you don't. It's all about giving you control, transparency, and ease when managing your financial data.