Structured Accounting - Get Ahead

A. Chart of Accounts Structure

Standard Numbering Scheme

Sub-Accounts for Clarity

• Marketing:
   - Marketing: Online Ads
   - Marketing: Events
  
  

• Equipment:
   - Equipment: Computers
   - Equipment: Furniture
  
  

Regular Review Best Practices

• Quarterly: Scan for unused, redundant, or confusing accounts; consolidate where needed.
  
  

• Year-End: Archive old accounts but maintain numbering for historical reporting consistency.
  
  

B. Accounting Software: Best Practices & Alternatives

Wave (Free Option)

• Great for very small businesses.
  
  

• Lacks payroll and offers limited reporting.
  
  

• Note: Some banks require re-authentication every 30 days for bank feeds.
  
  

QuickBooks Online (QBO)

• Industry-specific setups (e.g., contractors, nonprofits).
  
  

• Strong automation tools: rules, batch categorization, mobile receipt capture.
  
  

Xero

• Excellent multi-currency support.
  
  

• Unlimited users.
  
  

• Automated overdue invoice reminders.
  
  

Recommended Add-Ons & Integrations

• Bill.com: AP automation.
  
  

• Gusto / ADP: Payroll integration.
  
  

• Hubdoc: Auto-fetch bills and receipts.
  
  

C. Expanded Monthly Checklist for Financial Hygiene

Reconcile Carefully

• Check for duplicates and missing transactions.
  
  

• Review uncategorized reports for stray entries.
  
  

Adjusting Entries

• Prepaid Expenses: Allocate monthly (e.g., insurance).
  
  

• Accrued Liabilities: Record wages/utilities incurred but unpaid.
  
  

Trial Balance Review

• Confirm Debits = Credits before closing the month.
  
  

• Investigate any discrepancies immediately.
  
  

Inventory Counts (If Applicable)

• Match physical inventory to your general ledger.
  
  

• Book any necessary adjustments.
  
  

Payroll Reconciliation

• Ensure payroll liabilities on the balance sheet match reports from payroll providers.
  
  

Sales Tax Preparation

• Run “Sales Tax Liability” reports.
  
  

• Separate taxable vs. non-taxable sales.
  
  

Backup & Security

• Export backups from QBO/Xero or download Wave CSVs monthly.
  
  

• Store backups offsite or in encrypted cloud storage.
  
  

Review Key Financial Metrics

• Gross Profit Margin = (Revenue – COGS) / Revenue
  
  

• Current Ratio = Current Assets / Current Liabilities
  
  

• Burn Rate = Monthly Cash Outflow (essential if pre-revenue)
  
  

D. Pro Tips & Common Pitfalls

Automation Tips

• Automate recurring transactions (rent, subscriptions, loan payments).
  
  

Classes & Locations

• Use these tools if operating multiple product lines or locations.
  
  

• Enables P&L breakdowns by segment.
  
  

Separate Revenue Streams

• Distinguish between product COGS and service-related expenses.
  
  

Outsource or In-House?

• If bookkeeping exceeds 2 hours/week, consider hiring a virtual bookkeeper or part-time CPA.
  
  

Stay Audit-Ready

• Retain receipts for 3–5 years minimum.
  
  

• Label digital scans with date, vendor, and purpose for easy retrieval.