What Exactly Should Your Chart of Accounts Look Like—And Why Does It Matter? February Workshop Recap: Building a COA That Works for Your Business
If your Profit & Loss feels cluttered or unclear, chances are your chart of accounts (COA) needs a cleanup.
In our February workshop, Michelle broke down how a properly designed COA can turn your books into a decision-making tool—not just a record-keeping task. We also looked at what makes a COA too bloated, too vague, and just right.
The Goldilocks Rule of Chart of Accounts
We kicked things off with a simple but powerful metaphor:
Papa Bear’s chart: Too long, too cluttered, and impossible to scan
Mama Bear’s chart: Too short, missing key data for real decisions
Baby Bear’s chart: Customized, just detailed enough, and built around how you think about your business
If you’ve ever scrolled endlessly through your P&L trying to find meaning in rows like “Dues,” “Subscriptions,” or “Miscellaneous,” this workshop was for you.
Highlights from the Workshop
✔️ Customize Your COA—Don’t Settle for the Default
What comes out of the box with QuickBooks wasn’t designed for your business. Michelle emphasized that your COA should match your operations, values, and decision-making needs—not some accounting template.
“The right COA should help you sleep better at night—not give you another spreadsheet to ignore.”
✔️ Use Categories That Make Sense to You
Ditch outdated or vague terms. Be specific:
“Subscriptions” → split into “Software” vs. “Memberships”
“Contractor” → break down into categories like “Marketing” or “Plumbing”
“Miscellaneous” → eliminate it completely (if it’s not worth naming, it’s not worth tracking)
And always use parent and sub-accounts to stay organized.
✔️ Track Revenue Streams Separately
We explored why breaking out income types—like recurring vs. project-based—helps you understand which parts of your business are stable, profitable, or ripe for growth.
Real examples:
A pool company tracking “build” vs. “service” revenue
A marketing firm separating “project income” and “recurring hosting”
These distinctions help you price smarter, plan hiring, and shift strategy over time.
✔️ Clarify Cost of Goods Sold (COGS)
Michelle explained how service businesses can think about COGS differently:
Include labor and tools used to deliver the service
Add expenses tied directly to revenue (like franchise fees)
Use gross profit as your early warning system
✔️ Make Your Books Reflect Your Values
We loved this takeaway: If something matters to you, track it. One of our clients even created a “Books” category in their budget because learning and growth is a core company value.
This Isn’t Just Bookkeeping. It’s Strategic Design.
When you create a chart of accounts that works for your brain and your business model, your reports finally become useful:
You can see where to cut, where to invest, and what to watch
You spend less time decoding numbers and more time using them
You build a business with clarity, not chaos
Keep Learning: Read the March Workshop Recap
In March, we tackled one of the most important numbers in your business: your Monthly Nut.
If you’ve ever wondered how much you actually need to earn to cover your essentials, pay yourself, and build stability—this blog is for you.
Read: Calculating Your Monthly Nut →
Learn how to find your true baseline and plan with confidence.