Chart Of Accounts - Home Bakery

Business By KalliCakes Updated 18 Dec 2010 , 10:24pm by -K8memphis

KalliCakes Posted 16 Dec 2010 , 6:55pm
post #1 of 18

Hi all! :0) I'm finally making the plunge to get my records into accounting software but as you all know, there isn't any accounting without a chart of accounts! I was wondering if anyone would be willing to share their chart of accounts or share some accounts (or categories) they thought were really great and have value? I've brainstormed on some, and I know businesses differ as far as what each company wants to use their financial for. But, I wanted to see if you all had any great ideas that I hadn't thought of--how they break out COGS, etc. (I'm sure you have!!). Thanks so much!! I hope everyone is having a FABULOUS day!! :0)

17 replies
jason_kraft Posted 16 Dec 2010 , 7:28pm
post #2 of 18

I kept our CoA relatively simple: two income accounts (food sales and delivery charges), two COGS (ingredients and supplies), and the standard expense accounts (advertising, bad debt, business meals, insurance, etc.).

KalliCakes Posted 16 Dec 2010 , 8:49pm
post #3 of 18

Thanks Jason!

I think I'm trying to over do it--I'm a CPA turned CBO (cake business owner). My accounting experience has mostly been with international manufacturers who have hundreds and hundreds of accounts. My mind is swimming with all of the little detailed accounts I can set up and all of the fun reports I can generate. Just need to remember that I don't want the accounting to be my full-time job, that's why I left it! LOL!

AmysCakesNCandies Posted 16 Dec 2010 , 10:26pm
post #4 of 18

Jason has got it right.. the simpler the better.

indydebi Posted 17 Dec 2010 , 12:30am
post #5 of 18

definitely the "keep it simple" method. In addition to jason's list, here are a few others that I used ......

Sales - taxable
Sales - nontaxable
COGS sold
Prof Fees (attorney, accountant)
Vehicle expense
phone
bank fees
office supplies (included cleaning supplies)
rent
utilities

KalliCakes Posted 17 Dec 2010 , 1:39am
post #6 of 18

Thanks you all! You are being extremely helpful!! thumbs_up.gif

Annabakescakes Posted 17 Dec 2010 , 2:31am
post #7 of 18

Oh, man....I just realized I need some help with this stuff. I have no plans for this type of thing yet. Anybody know of a good e-book or article to read? lol...My SIL is an accountant, but her voice KILLS me, it is like nails on a chalkboard.

We are starting construction after Christmas! We are clearing the garage and the making room for the plumbing NOW!

Would it be completely stupid to just start REAL small? Oh, man, what do I do???

jason_kraft Posted 17 Dec 2010 , 5:06pm
post #8 of 18
Quote:
Originally Posted by Annabakescakes

Oh, man....I just realized I need some help with this stuff. I have no plans for this type of thing yet. Anybody know of a good e-book or article to read?



I would advise taking a class on QuickBooks, beginning classes should also go into the basics of accounting. I've seen QB classes offered at community colleges, trade schools like DeVry, and adult education programs in some cities/counties.

Alternatively, you can hire outside help to take care of all your accounting for you, or you can have them set up QuickBooks on your computer and show you the basics (creating invoices, entering expenses, generating reports).

A "chart of accounts" is nothing more than a list of categories your income and expenses can be assigned to. The three main types of categories relevant here are income accounts (your sales go here), cost of goods sold (or COGS, which are expenses directly related to making products, i.e. ingredients), and expense accounts (overhead such as insurance and rent). Each of these categories will have one or more accounts, and you will assign all your sales and expenses (based on invoices and receipts) into one of these accounts in QuickBooks.

These categories are used to generate a Profit & Loss (P&L) report for the business, also known as an income statement. A simplified view: The report starts by adding up all the sales assigned to income accounts to produce a number for Revenue. Then it subtracts items in the COGS accounts from the Revenue number to reach Gross Profit. Finally, the items in the expense accounts (sometimes known as SG&A, or selling/general/administrative expenses) are subtracted from Gross Profit to come up with Operating Income. The Operating Income number (less any interest payments from outstanding business loans = Net Income) is typically what you pay tax on.

In my day job I manage a SAP BW financial reporting system for a global corporation with several thousand accounts and very complex suites of P&L reports (which sometimes take months to build), but most small businesses should be fine with a dozen or so accounts and the QuickBooks default P&L report.

KalliCakes Posted 17 Dec 2010 , 7:17pm
post #9 of 18
Quote:
Originally Posted by jasonkraft

Quote:
Originally Posted by Annabakescakes

Oh, man....I just realized I need some help with this stuff. I have no plans for this type of thing yet. Anybody know of a good e-book or article to read?


I would advise taking a class on QuickBooks, beginning classes should also go into the basics of accounting. I've seen QB classes offered at community colleges, trade schools like DeVry, and adult education programs in some cities/counties.

Alternatively, you can hire outside help to take care of all your accounting for you, or you can have them set up QuickBooks on your computer and show you the basics (creating invoices, entering expenses, generating reports).

A "chart of accounts" is nothing more than a list of categories your income and expenses can be assigned to. The three main types of categories relevant here are income accounts (your sales go here), cost of goods sold (or COGS, which are expenses directly related to making products, i.e. ingredients), and expense accounts (overhead such as insurance and rent). Each of these categories will have one or more accounts, and you will assign all your sales and expenses (based on invoices and receipts) into one of these accounts in QuickBooks.

These categories are used to generate a Profit & Loss (P&L) report for the business, also known as an income statement. A simplified view: The report starts by adding up all the sales assigned to income accounts to produce a number for Revenue. Then it subtracts items in the COGS accounts from the Revenue number to reach Gross Profit. Finally, the items in the expense accounts (sometimes known as SG&A, or selling/general/administrative expenses) are subtracted from Gross Profit to come up with Operating Income. The Operating Income number (less any interest payments from outstanding business loans = Net Income) is typically what you pay tax on.

In my day job I manage a SAP BW financial reporting system for a global corporation with several thousand accounts and very complex suites of P&L reports (which sometimes take months to build), but most small businesses should be fine with a dozen or so accounts and the QuickBooks default P&L report.




Annabakescakes--Jason's right about the Quickbook classes, the local trade schools offer them here for a reasonable price. Good luck! It's not too complicated!

Jason--
So, you don't do anything with the Balance Sheet? I realize most of the small businesses that run from home have limited assets and liabilities and run on a cash basis of accounting, but you don't want to forget about them! There is important information "hiding" in them.

jason_kraft Posted 17 Dec 2010 , 9:02pm
post #10 of 18
Quote:
Originally Posted by KnticEnerG

Jason--
So, you don't do anything with the Balance Sheet? I realize most of the small businesses that run from home have limited assets and liabilities and run on a cash basis of accounting, but you don't want to forget about them! There is important information "hiding" in them.



I do have a few balance sheet accounts -- on the assets side I have one for each of my two business checking accounts, another one for PayPal, and petty cash. We have no fixed assets, since we rent a commercial kitchen.

The only liability account is my business credit card, which pays all expenses -- technically some bills are paid with cash or check but I consolidate everything into one account to simplify the books. Since I charge enough to the business to operate at a loss, I just run an accumulated deficit under equity.

Annabakescakes Posted 18 Dec 2010 , 4:05am
post #11 of 18

Do you think it would be financially feasible for a real small business of 1 with less than $2000 a month to hire out the accounting? I have a learning disability and I just can't seem to "get" some things. I have to see it done, and then do it with instruction, and then do it on my own with supervision, before I learn these things, and I need a "cheat sheet." I was a manager in one of my jobs and I could do the nightly paperwork, but not without looking at the previous night for "hints." After 2 days off I would get really mixed up and have to play with the numbers to figure out how to do it all over again. I am bright enough to know when it is wrong, though.

I was in business school when I met my husband, and in my accounting class, all I could think about was him! I also have mild dyslexia, and wound up dropping out due to accounting. Now I am kicking myself in the butt.

jason_kraft Posted 18 Dec 2010 , 4:15pm
post #12 of 18
Quote:
Originally Posted by Annabakescakes

Do you think it would be financially feasible for a real small business of 1 with less than $2000 a month to hire out the accounting?



I have no idea how much it would cost to have an accountant take care of everything, but someone who knows QB and has a good understanding of accounting could probably set up QB on your own computer and write up directions for entering invoices and receipts on your own in an hour or two. The alternative would be sending your invoices (you'd have to make your own in Word) and receipts to the accountant's office, that could get expensive.

If you're concerned about data entry errors you can always have someone else enter the invoices and receipts on your computer.

-K8memphis Posted 18 Dec 2010 , 4:29pm
post #13 of 18

You can get some real good hand holding with the Quickbooks. You can get online help and/or you can also get someone to come over and set it up and teach you too. Now that I'm set up my QB lady will login to my system and tell me this or that when I have a further question.

I really think you can do this if I can.

Now be sure to ask if you are paying for mileage to and from--the QB people charge from the minute the get in their car to drive over till the time they arrive back at home base. All the drive time both ways. They charge a lot but ($125 per hour if memory serves--but I'm a non-profit) but it's worth it--it will cost less in the long run to learn it. It's really easy now.

-K8memphis Posted 18 Dec 2010 , 4:38pm
post #14 of 18

And Anna, QB has these nice little 'bumpers' or 'stoppers'--clearly easy to see and easy to respond to--for example as I enter daily receipts I can tell at a glance if it does not total correctly--so I just go find the discrepancy.

Say I didn't notice that it did not balance--I would be notified when I tried to close the program.

AFTER someone set it up for me it is really very user friendly even for me who never had accounting.

Annabakescakes Posted 18 Dec 2010 , 7:18pm
post #15 of 18

Wow, I think $125 an hour would be a nice tidy sum to be paid, but NOT to pay! I'd have a cow! icon_eek.gif Especially if I wasn't expecting it. I'm definitely going to look into it though. I need user friendly, I can do math, and love fractions, but formulas are tough for me, I always had a cheat sheet like (a+b)(c-d)=f f-g=h and then had every column labeled a-h, or whatever. I think my mom has had some experience with it. (or is that Quicken? Is that the same thing?) Is there an Open Source program I can use?

-K8memphis Posted 18 Dec 2010 , 7:28pm
post #16 of 18

QB is different than Quicken. I'm only familiar with QB--the whole thing is pricey--but in the long run it would be cheaper than having an accountant.

We bought ours at Sam's--it's just software you download -- very pricey stuff but I really like mine...now.

Yes the QB guru puts all your stuff in there and shows you how to navigate--it's wonderful. Since they are so pricey I'd recommend maybe exchanging a few emails or something to be assured you have a good fit with yours. My first one did not work out. Make sure they understand that you want them to teach you what to do after they set it up for you. A lot of them have special deals for the first visit.

My point of sale system was supposed to interface with QB to make it easier for me--ha! Not! Both my QB teachers said agh no, they saw no advantage to the interface.

Once you get it set up--it does all your thinking for you. It prints my checks, sends invoices--keeps track of everything. Has more reports than I ever care to think about. I just input stuff & reconcile it. Perfect.

jason_kraft Posted 18 Dec 2010 , 7:50pm
post #17 of 18
Quote:
Originally Posted by Annabakescakes

Wow, I think $125 an hour would be a nice tidy sum to be paid, but NOT to pay!



Considering it's essentially a one-time setup process, I don't think that's an unreasonable amount.

Quote:
Quote:

I need user friendly, I can do math, and love fractions, but formulas are tough for me



With a typical setup you will not need to deal with any formulas, QB handles all that behind the scenes. All you'll need to do is enter sales and expenses.

Quote:
Quote:

Is there an Open Source program I can use?



There's an OSS accounting program called GNU Cash, but I haven't had experience with it, and it might be difficult to find people who know how to use it. QB Pro itself is only $160 from Amazon though, that's a drop in the bucket when you consider other startup expenses.

http://www.gnucash.org/

-K8memphis Posted 18 Dec 2010 , 10:24pm
post #18 of 18
Quote:
Originally Posted by jasonkraft

Quote:
Originally Posted by Annabakescakes

Wow, I think $125 an hour would be a nice tidy sum to be paid, but NOT to pay!


Considering it's essentially a one-time setup process, I don't think that's an unreasonable amount.




It's really not unreasonable. But be sure you understand the terms under which they will be charging you--don't shy away from asking them to spell it out for you --then repeat it back to be sure you got it straight. Also that you expect them to empower you to run this after it is set up.

Would be nice to go with someone who has the capability to login to your system too. But you can also fax whatever issues might come up too.

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