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C
CPA_
November 2, 2024
Question

What to select for "Company Type" in Account and Settings for Chart of Accounts in QuickBooks Online

  • November 2, 2024
  • 1 reply
  • 0 views

What determines the "default" chart of accounts (COA). Tax Form or Industry?

 

Is there something to select that will not automatically include Inventory, Cost of Goods Sold and Sales of "Product" Income? Because apparently those accounts in the COA can never be deactivated.

 

Accounts that can’t be deactivated

The following default accounts are created when you set up QuickBooks, or when an event triggers them, like turning on the sales tax setting. You can’t make these accounts inactive or use them for any other purpose.

 

  • Inventory/Stock Asset and Cost of Goods Sold/Cost of Sales: If you try to edit or deactivate these accounts, any edits to your Products/Services will be recreated.
  • Sales of Product Income: This is used to track sales for inventory items. This account is the default account created to track sales for inventory items, and should not be deleted, or renamed. If deleted or renamed, QuickBooks Online will create a new account to take its place.

 

We have clients that perform services only and will never have a need for inventory accounting. Having Inventory type accounts in the COA will only cause problems for accountants to fix later. 

1 reply

C
ChristineJoieR
November 2, 2024

When establishing your QuickBooks Online, the company type describes the nature and structure of your industry. It helps QuickBooks create a default chart of accounts that applies to your business, CPA.

 

QuickBooks Online Plus and Advanced versions automatically include inventory accounts in the Chart of Accounts due to the inventory tracking feature available.

 

However, you can use the QuickBooks Online Simple Start or Essentials instead since these plans will not track inventory.

 

I understand that you are providing services only for your business. However, there isn't an option to exclude this automatically since this is working as designed within the system. I suggest modifying them instead.

 

Here's how: 

 

1. In the Chart of Accounts, choose the Inventory or Cost of goods sold account.

2. Press on the Dropdown arrow. Click the Edit.

3. Modify the Account name, Account Type, and Detail Type.

4. Lastly, press the Save button.

 

Consequently, the Inventory, Cost of Goods Sold, and Sales of Product Income accounts cannot be deactivated in QuickBooks because they are essential for tracking inventory and sales related to inventory items.

 

For more details, refer to this page on how to manages your default and special accounts in QBO: Manage default and special accounts in your QuickBooks Online chart of accounts.

 

Moreover, assigning a number list of accounts you use can help you stay organized and locate them. See this page on how to activate this feature: Use account numbers in your chart of accounts in QuickBooks Online.

 

If you need to clarify things regarding your chart of accounts, I am still available to help you. Just write your comment below, and I'll be there.

C
CPA_ Author
November 2, 2024

So 2 more questions based on your reply.

 

Will the Inventory (Asset), Cost of Goods Sold, and Sales of Product Income accounts appear in "ALL" chart of accounts regardless of what you input for the "Company Type"? 

 

Can the Inventory, Cost Of Goods Sold and Sales of Product Income accounts be "EDITED" to change the "DETAIL TYPE" so there are no accounts in the chart of accounts with an Inventory, Cost of Goods Sold or Sales of Product "detail type"? Or will QuickBooks just create another chart of account for those "Detail Types" if nothing in the chart of accounts has those detail types? 

 

 

 

 

MariaSoledadG
MariaSoledadG
November 3, 2024

Regardless of the company you set up, the Inventory Asset, Cost of Goods Sold, and Sales of Product Income accounts will appear in your Chart of Accounts. To help you navigate these accounts efficiently, I'd like to share some guidance and insights that clarify their purpose and usage. Let me help you with this and elaborate this for you further, CPA.

 

While you can modify the Detail Type field for these accounts, QuickBooks offers a limited selection of options to maintain consistency and accuracy in your records. To assist you further, I've included a screenshot for easy reference and visualization:

 

Also, when setting up a company in QuickBooks Online (QBO), QuickBooks automatically creates certain default accounts in your chart of accounts based on the business entity you select. To better understand which accounts are generated by QuickBooks, I recommend reviewing this informative article: Manage Default and Special Accounts in QuickBooks Online Chart of Accounts. 

 

Additionally, after you're able to organize your Chart of Accounts, consider connecting your bank accounts to QBO. This setup allows for automatic transaction imports, giving you real-time access to your financial data. It also simplifies the reconciliation process by making it easy to match bank statements with your recorded transactions. For a step-by-step guide, check out this resource: Connect Bank and Credit Card Accounts to QuickBooks Online.

 

Let us know if you have further questions or need further assistance about your Chart of Accounts. We're here to make sure everything is covered. Have a nice day!

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