Deciding on Your Chart of Accounts
The structure of your chart of accounts is important, and you need one that will meet the needs of your business. Remember that the chart of accounts determines what level of information is available.
MoneyWorks comes with several account templates that might be of use to you, or at least serve as a good starting point. These accounts are made available to you when you create a new MoneyWorks document —see Creating Your New File.
Your accountant will also have standard charts of accounts that might be appropriate. However remember that your accountant’s requirements are different from yours, and that the information that you require to manage your business on a day to day basis may differ markedly from what your accountant wants1.
So what level of detail is appropriate? Only you can answer that question, but the following examples may highlight some of the issues:
- Your business uses the fax machine for disseminating information to customers throughout the country. Do you include all the fax toll charges as part of your normal telephone expenses, or do you treat it separately so that you can monitor the costs involved?
- Your business operates three vehicles. Do you have a single “vehicle expenses” account against which all running costs are charged, or is it important to know how much each vehicle is costing? If so, you should have a separate account for each vehicle2.
- You sell several different types of products. Do you have one “Sales” account code, or do you have one for each product range so that you can determine the revenue generated for each range?
These sorts of decision will differ from business to business, and can only be made by you.
Security on your Accounts
In larger organisations, security of access to the general ledger becomes an issue, normally around sensitive general ledger accounts like Wages or Directors Fees. The MoneyWorks general ledger allows you to put a security level on each account, allowing you to hide accounts from people with a lower security level. When you are setting up your accounts, you should also think about what level of security each should have.
1 In fact MoneyWorks offers a parallel chart of accounts, so you can use your preferred coding structure and still give your accountant information in their preferred structure — see Accountant’s Code:. ↩