At Accela Finance, we think a chart of accounts is really exciting – it’s the anatomy of your business! And while we do appreciate that not everyone gets as excited about a spreadsheet as us, our team of Xero-certified advisors is here to make them as simple and painless as possible.

What is a chart of accounts?

It’s basically the first step in business accounting. At Accela, we use Xero software for our clients’ accounting, and the first thing we do when onboarding a client is to create a chart of accounts for them in the system.

Each line of your chart corresponds to a transaction category, like transport, salaries, web development, cleaning and printing, etc.

When you’re doing this in Xero, it’s very easy to assign each of these categories and subcategories a code, and all your transactions can be tracked against these codes.

This will allow you to see all the money that has come in and out of your business over a certain time period, and you can then see which areas of your business are operating more efficiently than others.

You might have heard of a balance sheet and a profit and loss statement (known as a P&L). These can be generated from your chart of accounts through Xero in a single click.

How do I start?

Think of the chart of accounts as the foundation of your business. You need it to be strong, and robust, so nothing falls through the cracks.

Look at your bank statements and write a list of all the things you’re spending money on, and all the things you expect to be, soon.

Assign each of these a category in Xero, then set a budget for each line item. Everyone who is transacting on behalf of the company will be able to see the real-time budget they are working with, and stick to it.

If your company has multiple entities, you’ll need the COA to be both fluid and structured. Each market will have different categories and filing deadlines but they should all be reported in an identical way.

If you are doing your own books with a chart of accounts referred from an open market and want someone to check them, but don’t want to invest in a full audit, Accela Finance can also conduct what we call a review of books, which is a bit of a hygiene check.

This will also allow us to highlight areas in your business that could be tightened up to increase profitability, and to make sure you are complying with ACRA standards.

Deadlines to keep in mind

The statutory deadline for December year end reporting is 31 July, for those filing with ACRA. If you’re feeling overwhelmed by what’s required, Accela Finance can help you file correctly, powered by Xero software.