Accountants: How to Manage Your Clients’ Chart of Accounts in FreshBooks

Make day-to-day accounting easier for your clients with a customizable Chart of Accounts.

Two women sit at table covered with financial reports while smiling

Some of your clients’ finances are probably straightforward and easy to organize. Others… not so much. To get around this, chances are that you’ve used accounting software that gives you a certain level of control over how your clients’ financial information is tracked.

We’ve compiled tons of feedback from accounting professionals and small business owners and have made exciting improvements to our Chart of Accounts. To help keep your clients’ books organized, FreshBooks Chart of Accounts now gives users more flexibility to track the financial data that matters most to them.

For accounting professionals, that means you have more control over how your clients’ financial information is organized and can run additional reporting. You can also help your clients manage more of their own day-to-day bookkeeping—giving you back time for higher-value work (like advisory services).

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    What’s Included in the Chart of Accounts?

    Let’s take a look at what’s included in the Chart of Accounts and what that means for you.

    Enhanced Default Chart of Accounts

    New FreshBooks users have all the typical accounts needed to run a small business pre-loaded into their accounts, including Deposits, Prepaid Expenses, Accruals, and Income Tax Payable.

    For a lot of small business owners, these accounts will give them the foundation to get off to a good start with their bookkeeping (without necessarily needing an accountant to set up their books). It’ll also make things a lot easier for you if you’re helping a client who’s already using FreshBooks since their accounts will automatically be set up according to Generally Accepted Accounting Principles (GAAP).

    Manage the Chart of Accounts Structure

    As businesses grow, their accounting needs tend to get more complicated. While the default Chart of Accounts is a good starting point for many users, you can help your clients customize it to fit their unique needs. This includes the ability to:

    • Customize the parent and sub-account structure
    • Create, edit, and archive accounts
    • Re-order Cost of Goods Sold (COGS) and Operating Expense accounts
    • Track more details for each account with a customizable account number and account description

    After you’ve set up your client’s business profile, you can show them how to manage their account day-to-day—which will free up time for you to move into more of an advisory role and provide clients with higher-value services.

    Advanced Accounting for Owners

    With the Chart of Accounts enhancements, we’re now giving accounting-savvy business owners the option to turn on Advanced Accounting. This gives business owners the ability to customize their chart of accounts and create and edit manual journal entries. For existing users who are not part of the beta release, only those with the Accountant role will have the ability to create manual journal entries.

    We know Advanced Accounting isn’t right for every small business owner. This is why we’ve enabled an alert for users who attempt to turn on Advanced Accounting that advises them to only turn on this feature if they have accounting experience or are doing so in collaboration with an accountant. In-app guides and warnings also alert users of reporting and accounting implications when certain actions are taken (e.g., editing an account that will affect prior reporting periods and accounting).

    What’s Changing With Expenses and Bills?

    Expense accounts are a huge part of financial reporting. To give owners more flexibility in their reporting, businesses can categorize expenses and bills as COGS in FreshBooks. New parent and sub-accounts for COGS can also be created.

    In FreshBooks, expense categories are considered to be expense accounts. Just like other accounts in the Chart of Accounts, they can be created, edited, and archived.

    Custom Income Accounts

    Do your clients have multiple income streams? Create custom Income Accounts for them in their Chart of Accounts so they can categorize the Items and Services on their invoices into these custom accounts. Now, their P&L report will show the breakdown of income from each account so they (and you) can see where their income is concentrated.

    Get the Full Picture With Updated Reporting

    Whether it’s for a grant application, business loan, or to help your client see how their business is doing, there are plenty of reasons you might draft a financial report.

    With the changes to the Chart of Accounts, a Journal Entry Report is now available to reflect the granularity of new sub-accounts. It shows all manual journal entries created in a given date range made by you or your client (if they have Advanced Accounting enabled).

    Other FreshBooks reports also reflect the new Chart of Accounts structure, including:

    • General Ledger
    • Trial Balance
    • Balance Sheet
    • Profit & Loss (P&L)
    • Expense Report
    • Sales Tax Summary
    • Cash Flow

    What Does This Mean for Balance Sheets?

    The flexibility in the Chart of Accounts extends to the Balance Sheet, too. Accountants and their clients using Advanced Accounting can make edits to their Asset and Liability accounts—giving you complete control over how you track transactions like loans, equipment, and property. You’ll find these edits reflected throughout your clients’ reporting.

    How Do I Help My Clients Set Up Their Chart of Accounts?

    The first step to setting up your client’s Chart of Accounts is to get a detailed understanding of their business needs. From there, you can make any required changes to the default Chart of Accounts.

    You’ll also want to assess your client’s understanding of accounting principles and discuss what services they need help with. For example, they might just need some training to get started, but then want to manage most of their day-to-day bookkeeping with Advanced Accounting turned on. Check out this blog post for Owners on using the new Chart of Accounts.

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    Looking For Additional FreshBooks Training?

    Check out our Accounting Partner Program to bring your clients even more value through comprehensive training and becoming a FreshBooks-Certified Partner. Learn at your own pace with a video library of tutorials designed specifically for accounting professionals.

    As an added bonus, membership in the program includes access to our Partner Community, which has plenty of networking and professional development opportunities for accounting professionals.

    We’re Always Here to Help If You Need It

    Need help getting started? Get more information on managing the Chart of Accounts here.

    Our award-winning Support team is also here to help and can be reached at 1-866-303-6061 or for more information.

    This post was updated in October 2023.

    Samantha Stephens

    Written by Samantha Stephens, Product Manager, FreshBooks

    Posted on July 20, 2022