Why the Chart of Accounts is Important For Your Ad Agency Accounting
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The Chart of Accounts is the backbone of your accounting system. It is the complete list of all the accounts you need to categorize your business activities. When you integrate with Function Point it helps to break down where your creative agency is excelling in revenue and shows which services need more attention.
What Types of Data to Track
Grab a pen and paper just to jot down how you want your company to make revenue and what expenses you think you will have while in business and then categorize them into small groups.
What are Account Ranges?
Account ranges are used to differentiate your business into Profit and Loss. Those are broken down even further to:
- 1000-1999 Asset
- 2000-2999 Liability
- 3000-3999 Equity
- 4000-4999 Revenue
- 5000-5999 Cost of Goods Sold
- 6000-6999 Expenses
- 7000-7999 Other Revenue
- 8000-8999 Other Expenses
When using Function Point to export transactions into QuickBooks one key aspect to look at is to have numbering and naming of the accounts on your chart of accounts match the list you have in Function Point.
Picking the Number to Use for Sub-Accounts
For each type of account you will have sub accounts the best practice is to allow room for account growth. If you have an account 2000 Current Liabilties the next number to use would be 2010 Tax Payable, giving you enough room just in case you need to add accounts in between Current Liabilties and Tax Payable.
Founder & CEO
Chris started Function Point over 20 years ago in his basement as a way to help professional service agencies run their businesses more efficiently. Since then he’s grown FP into an international success, working with over 600 agencies from around the world and continues to run the company from the head office in Vancouver, Canada.