Chart of Accounts for Startups: A Simple Template
A practical guide to setting up your startup's chart of accounts, with a ready-to-use template and best practices for organization.
Your chart of accounts (COA) is the backbone of your financial reporting. It determines how transactions are categorized, what your financial statements look like, and how useful your financial data is for decision-making.
Get it right from the start, and you'll have clean, insightful financials. Get it wrong, and you'll spend hours trying to analyze data that's organized in unhelpful ways.
What This Guide Includes
We'll cover the fundamentals of chart of accounts structure, provide a ready-to-use template for startups, and share best practices to keep your books clean and organized.
What Is a Chart of Accounts?
A chart of accounts is simply an organized list of all the accounts where your financial transactions are recorded. Think of it as your filing system for financial data.
Simple Analogy
Imagine a filing cabinet where every financial transaction goes into a specific folder. Your COA defines what folders exist, how they're organized, and what type of things go in each one. When someone asks "how much did we spend on marketing?" you can pull the Marketing folder and have the answer.
Why It Matters
- Financial statement structure: Your P&L and balance sheet are built from your COA
- Analysis and insights: The right structure lets you answer business questions quickly
- Reporting consistency: Clear categories mean consistent categorization across time
- Tax preparation: Proper organization makes tax time much easier
- Investor due diligence: Clean, logical structure signals financial maturity
The Five Account Types
Every account in your chart of accounts falls into one of five categories. Understanding these is fundamental to accounting.
1. Assets
What your company owns or is owed. Assets increase with debits.
Examples: Cash, accounts receivable, prepaid expenses, equipment, inventory, security deposits
2. Liabilities
What your company owes. Liabilities increase with credits.
Examples: Accounts payable, credit cards, accrued expenses, deferred revenue, loans, payroll liabilities
3. Equity
The owners' stake in the company. Assets minus liabilities equals equity.
Examples: Common stock, preferred stock, additional paid-in capital (APIC), retained earnings
4. Revenue
Income from your operations. Revenue increases with credits.
Examples: Product revenue, subscription revenue, service revenue, implementation fees, other income
5. Expenses
Costs of running your business. Expenses increase with debits.
Examples: Salaries, rent, marketing, software, professional services, travel, cost of goods sold
The Accounting Equation
Assets = Liabilities + Equity
This equation must always balance. Every transaction affects at least two accounts, keeping the equation in balance.
Startup Chart of Accounts Template
Here's a comprehensive COA template designed for seed to Series A SaaS and tech startups. Customize as needed for your specific business.
Assets (1000-1999)
| Account # | Account Name | Type |
|---|---|---|
| 1000 | Operating Checking Account | Bank |
| 1010 | Savings Account | Bank |
| 1100 | Accounts Receivable | Accounts Receivable |
| 1200 | Prepaid Expenses | Other Current Asset |
| 1210 | Prepaid Insurance | Other Current Asset |
| 1220 | Prepaid Software | Other Current Asset |
| 1300 | Security Deposits | Other Asset |
| 1500 | Computer Equipment | Fixed Asset |
| 1510 | Furniture & Fixtures | Fixed Asset |
| 1600 | Accumulated Depreciation | Fixed Asset |
Liabilities (2000-2999)
| Account # | Account Name | Type |
|---|---|---|
| 2000 | Accounts Payable | Accounts Payable |
| 2100 | Corporate Credit Card | Credit Card |
| 2200 | Accrued Expenses | Other Current Liability |
| 2210 | Accrued Payroll | Other Current Liability |
| 2300 | Deferred Revenue | Other Current Liability |
| 2400 | Payroll Liabilities | Other Current Liability |
| 2500 | Sales Tax Payable | Other Current Liability |
| 2700 | Notes Payable - Short Term | Other Current Liability |
| 2800 | Notes Payable - Long Term | Long Term Liability |
Equity (3000-3999)
| Account # | Account Name | Type |
|---|---|---|
| 3000 | Common Stock | Equity |
| 3100 | Preferred Stock | Equity |
| 3200 | Additional Paid-In Capital | Equity |
| 3500 | Retained Earnings | Equity |
Revenue (4000-4999)
| Account # | Account Name | Type |
|---|---|---|
| 4000 | Subscription Revenue | Income |
| 4100 | Implementation Revenue | Income |
| 4200 | Professional Services Revenue | Income |
| 4900 | Other Income | Income |
Cost of Revenue (5000-5999)
| Account # | Account Name | Type |
|---|---|---|
| 5000 | Hosting & Infrastructure | Cost of Goods Sold |
| 5100 | Customer Support Payroll | Cost of Goods Sold |
| 5200 | Payment Processing Fees | Cost of Goods Sold |
| 5300 | Third-Party Software (COGS) | Cost of Goods Sold |
Operating Expenses (6000-8999)
| Account # | Account Name | Category |
|---|---|---|
| 6000s - Payroll & People | ||
| 6000 | Salaries & Wages | Payroll |
| 6100 | Payroll Taxes | Payroll |
| 6200 | Employee Benefits | Payroll |
| 6300 | Contractors | Payroll |
| 6400 | Recruiting | Payroll |
| 7000s - Sales & Marketing | ||
| 7000 | Advertising | Marketing |
| 7100 | Marketing Software | Marketing |
| 7200 | Events & Conferences | Marketing |
| 7300 | PR & Communications | Marketing |
| 8000s - General & Admin | ||
| 8000 | Rent | Facilities |
| 8100 | Insurance | G&A |
| 8200 | Legal | Professional Services |
| 8210 | Accounting | Professional Services |
| 8300 | Software Subscriptions | G&A |
| 8400 | Travel | Travel |
| 8500 | Meals & Entertainment | Travel |
| 8600 | Bank Fees | G&A |
| 8700 | Office Supplies | G&A |
| 8800 | Depreciation Expense | G&A |
| 8900 | Other Expenses | G&A |
Best Practices
Use Logical Numbering
Group similar accounts together (all marketing in 7000s, all payroll in 6000s). Leave gaps between numbers for future accounts.
Keep Names Consistent
Pick one naming convention and stick with it. Don't have both "Marketing" and "Advertising" as separate accounts unless they mean different things.
Start Simple, Add as Needed
Begin with core accounts. It's easy to add accounts later but painful to consolidate or rename them.
Think About Analysis Needs
Will you need to see hosting costs separately from other infrastructure? Create accounts that let you answer the questions you'll ask.
Include All Necessary Balance Sheet Accounts
Don't forget deferred revenue, prepaid expenses, and accrued liabilities. These are essential for accrual accounting.
Common Mistakes
Too Many Vendor-Specific Accounts
Don't create "Google Ads" and "Facebook Ads" and "LinkedIn Ads" as separate accounts. Use one "Advertising" account. Use classes or tags for vendor-level detail if needed.
Too Few Expense Categories
Having just "Operating Expenses" as a single account means you can't analyze where money goes. Break it down by functional area at minimum.
Missing Deferred Revenue
If you have any prepaid subscriptions, you need a deferred revenue account. This is a critical account for proper revenue recognition.
Inconsistent Categorization Over Time
Putting AWS in "Software" one month and "Hosting" the next makes month-over-month analysis meaningless. Document your policies.
Using "Miscellaneous" for Everything
If your "Miscellaneous" or "Other Expenses" account is one of your largest categories, you need more granular accounts.
The Cost of Poor Structure
A messy COA makes financial analysis nearly impossible. We've seen startups spend weeks cleaning up and re-categorizing transactions before due diligence because their original structure was too vague. Get it right from the start.
Customizing for Your Business
The template above works for most SaaS startups, but you may need to customize:
E-commerce/Physical Products
Add inventory accounts, cost of goods sold detail (materials, shipping, etc.), and possibly warehouse/fulfillment expenses.
Marketplace Business
Separate gross transaction value from net revenue. Add accounts for seller payables and platform-specific costs.
Multiple Products/Lines
Consider separate revenue accounts per product line, or use classes/segments to track revenue and costs by product.
International Operations
May need foreign currency accounts, intercompany accounts, and region-specific expense categories.
Setting Up in QuickBooks/Xero
Most accounting software comes with a default COA that's not optimal for startups. Here's how to customize it:
In QuickBooks Online
In Xero
Pro Tip
Do this setup before entering transactions. Changing your COA after you have data means re-categorizing historical transactions. It's much easier to set up correctly from the beginning.
Related Articles
Startup Accounting 101
Complete accounting fundamentals guide
Cash vs Accrual Accounting
Choose the right accounting method
Monthly Close Process
Step-by-step checklist
Accounting Mistakes to Avoid
Don't hurt your fundraise
Need Help Setting Up Your Books?
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