Bookkeeping
A chart of accounts that survives your Series A.
43 accounts, numbered and grouped, built so your P&L still reads clearly at $20M in revenue.
43 accounts, numbered and grouped, built so your P&L still reads clearly at $20M in revenue.
Free download
Startup chart of accounts
Excel (.xlsx) · 3 tabs · 43 accounts · no email required
What is in the file
The default chart of accounts your accounting software creates is built for a generic small business. It has accounts for things you will never do and no account for the things you spend the most on. Most founders never change it, which is why so many startup P&Ls have a $400,000 line called "Other expenses".
This is a starting chart built for a company that intends to grow. Forty-three accounts is enough detail to answer a board question and few enough that somebody can still code a transaction correctly.
Accounts are numbered in blocks, with gaps left inside each block:
| Range | Type | Example |
|---|---|---|
| 1000–1999 | Assets | 1010 Operating bank account |
| 2000–2999 | Liabilities | 2010 Accounts payable |
| 3000–3999 | Equity | 3010 Preferred stock |
| 4000–4999 | Revenue | 4010 Subscription revenue |
| 5000–5999 | Cost of revenue | 5020 Hosting and infrastructure |
| 6000–7999 | Operating expenses | 6010 Salaries and wages |
The gaps are the point. When you add a second revenue line in eighteen months it becomes 4020 and sits next to 4010 in every report. Without gaps it becomes 4011 or, worse, gets shoved to the end of the list where nobody reading the P&L notices it.
Getting the split between cost of revenue and operating expense right is the single highest-value decision in your chart of accounts, because it determines your gross margin, and gross margin is what an investor uses to decide what kind of company you are.
The rule is whether the cost scales with the number of customers you serve. Hosting for production workloads, payment processing fees, third-party APIs consumed per-customer, and the salaries of people doing implementation or support all belong in cost of revenue. Your sales team, your office, your accountant and the engineers building next year's product do not.
Putting all engineering salary in cost of revenue. It makes gross margin look like 35% for a company that should be reporting 78%, and it is the first thing a diligence process unwinds. Split the team: people who keep the existing product running for existing customers are cost of revenue, people building new things are R&D.
Do not create separate expense accounts per department — "Sales salaries", "Engineering salaries", "Marketing salaries" and so on. That is what classes in QuickBooks and tracking categories in Xero are for. One salary account tagged by department gives you both views; forty accounts gives you a chart nobody can navigate and a P&L that runs to three pages.
The QuickBooks tab is in the column order QBO's importer expects, so it uploads without rearranging. Import into a fresh company file if you can — merging a new chart into an existing file with a year of transactions against the old accounts is a much bigger job, and is usually better done as a mapped re-classification at a period end.