What You Should Know About Your SaaS Chart Of Accounts

The chart of accounts is an essential part of any SaaS startup’s accounting processes—it determines how you categorize transactions and forms the basis of key financial statements. The level of detail you establish in the chart of accounts dictates whether you can generate reports on specific expense and revenue categories or only have high-level financial data.

However, most people outside of the finance team aren’t aware of what the chart of accounts is or how it impacts other financial processes. Let’s take a look under the hood at how a SaaS chart of accounts works.

‍

Looking for expert help setting up your SaaS chart of accounts? Click here to book a demo with Zeni.

What is a SaaS chart of accounts?

To understand what a chart of accounts is, you first need to know about general ledger accounts. Simply put, a general ledger (GL) account is a category of transactions. For example, most businesses have a GL account that groups together all their office expenses, another GL account for their payroll expenses, and so on.

‍

A chart of accounts (also known as a COA) is a list of all the GL accounts you use to categorize your business’s transactions.

‍

The design of your startup’s chart of accounts requires a balance between too much and too little detail. How much detail should be presented in the chart of accounts depends on the data needs of the business. However, it is important to remember that it is always possible to aggregate data if you require less detail; should you require more detail than you initially planned for, disaggregating data after the fact is much more difficult and incredibly time consuming. When in doubt, err in the direction of more detail than less.

‍

Below is a sample SaaS chart of accounts.

NUMBER	NAME	TYPE	DETAIL TYPE
11100	Chase Checking	Bank	Checking

11200	Chase Savings	Bank	Checking
11400	Stripe USD	Bank	Checking
12100	Accounts Receivable	Accounts receivable (A/R)	Accounts Receivable (A/R)
14100	Prepaid Expenses	Other Current Assets	Other Current Assets
14200	Vendor Advances	Other Current Assets	Other Current Assets
14300	Loans Receivable	Other Current Assets	Loans To Officers
15100	Computer & Office Equipment	Fixed Assets	Fixed Asset Computers
15200	Furniture & Fixtures	Fixed Assets	Fixed Asset Furniture
15400	Leased Computer Equipment	Fixed Assets	Leasehold Improvements
16100	Accumulated Depreciation - Computers	Fixed Assets	Accumulated Depreciation
16200	Accumulated Depreciation - Furniture	Fixed Assets	Accumulated Depreciation
16400	Accumulated Depreciation - Leased Computer Equipment	Fixed Assets	Accumulated Depreciation
17100	Intangible Asset - Domain	Fixed Assets	Intangible Assets
18100	Accumulated amortization	Fixed Assets	Accumulated Amortization
19100	Security Deposits	Other Assets	Security Deposits

21100	Accounts Payable	Accounts Payable (A/P)	Accounts Payable (A/P)
21200	Credit Card	Credit Card	Credit Card
22100	Other Liabilities	Other Current Liabilities	Payroll Clearing
22300	Accrued Expenses	Other Current Liabilities	Other Current Liabilities
22350	Accrued Legal Expenses	Other Current Liabilities	Other Current Liabilities
22800	Deferred Revenue	Other Current Liabilities	Other Current Liabilities
24100	Capitalized Lease STL	Other Current Liabilities	Loan Payable
28110	Loan	Other Current Liabilities	Loan Payable
28200	Capitalized Lease LTL	Long Term Liabilities	Other Long Term Liabilities
31100	Class A Common Stock	Equity	Common Stock
31150	Class B Common Stock	Equity	Common Stock
31200	Preferred Stock - Series Seed-1	Equity	Preferred Stock
31220	Preferred Stock - Series A	Equity	Preferred Stock
31230	Issuance Cost	Equity	Preferred Stock
32100	Retained Earnings	Equity	Retained Earnings
41100	Sales	Income	Sales of Product Income
41110	Activation Fee Sales	Income	Sales of Product Income
41120	Flat Rate Pilot Sales	Income	Sales of Product Income

41150	Monthly Minimum Commitment Sales	Income	Sales of Product Income
41170	Monthly Minimum Commitment Rebates	Income	Sales of Product Income
41200	Billable Expense Income	Income	Sales of Product Income
41300	Sales of Product Income	Income	Sales of Product Income
49998	Unapplied Cash Payment Income	Income	Unapplied Cash Payment Income
51100	Cost of Goods Sold	Cost of Goods Sold	Cost of labor - COS
51300	COS - Hosting/Server Cost	Cost of Goods Sold	Cost of labor - COS
51310	Referral Fees	Cost of Goods Sold	Other Costs of Services - COS
51400	Cost of Goods Sold-1	Cost of Goods Sold	Supplies & Materials - COGS
61101	Salaries	Expenses	Payroll Expenses
61104	Contractors	Expenses	Payroll Expenses
61105	Executive Contractors	Expenses	Payroll Expenses
61110	Bonus	Expenses	Payroll Expenses
61200	Executive	Expenses	Payroll Expenses
61200	Marketing	Expenses	Payroll Expenses
61200	Payroll Tax Expense	Expenses	Payroll Expenses
61400	Health Care Expense	Expenses	Payroll Expenses
61410	Worker's Compensation	Expenses	Payroll Expenses
61500	Office Meals/Food	Expenses	Entertainment Meals
62200	Airlines & Transportation	Expenses	Travel
62300	Travel Lodging	Expenses	Travel
64100	Office Expenses	Expenses	Office/General Administrative Expenses
64105	Equipment < $2,500	Expenses	Office/General Administrative Expenses

64150	Software Subscription	Expenses	Office/General Administrative Expenses
64200	Dues & Subscriptions	Expenses	Office/General Administrative Expenses
64250	Business License & Fees	Expenses	Office/General Administrative Expenses
64400	Bank Service Charges	Expenses	Bank Charges
64500	Postage and Shipping	Expenses	Shipping, Freight & Delivery
64550	Bad Debts	Expenses	Bad Debts
65100	Advertising	Expenses	Advertising/Promotional
65150	Marketing / Website	Expenses	Advertising/Promotional
65200	Marketing Contractors	Expenses	Advertising/Promotional
65250	Sales Contractor	Expenses	Advertising/Promotional
65800	Client Meals & Entertainment	Expenses	Promotional Meals
66500	Charitable Contributions	Expenses	Charitable Contributions
67120	Research & Testing	Expenses	Other Business Expenses
67125	Research & Testing - Acquisition	Expenses	Other Business Expenses
67130	Research & Testing - Management	Expenses	Other Business Expenses
67450	Development Tools	Expenses	Office/General Administrative Expenses
68100	Professional Fees	Expenses	Legal & Professional Fees
68110	Accounting Fees	Expenses	Legal & Professional Fees
68200	Recruitment Expense	Expenses	Legal & Professional Fees
68300	Legal Services	Expenses	Legal & Professional Fees
69100	Rent	Expenses	Rent or Lease of Buildings

69200	Insurance	Expenses	Insurance
69300	Telecom	Expenses	Utilities
69301	Utilities	Expenses	Utilities
69500	Repairs and Maintenance	Expenses	Repair & Maintenance
69900	Depreciation	Expenses	Other Business Expenses
71100	Interest Income	Other Income	Interest Earned
71150	Interest Income - Related Party	Other Income	Other Miscellaneous Income
71200	Other Income	Other Income	Other Miscellaneous Income
69950	Amortization	Other Expense	Amortization
71300	Foreign Exchange Gain / Loss	Other Expense	Exchange Gain or Loss
72100	Interest Expense	Other Expense	Other Miscellaneous Expense
81100	Corporate Taxes	Other Expense	Other Miscellaneous Expense

‍

It’s important to note that every business’s chart of accounts will look different. For example, because SaaS businesses gradually recognize subscription revenue over the course of customer contracts, a SaaS company chart of accounts will include a GL account for deferred revenue as a liability. For other industries, this account may not be necessary.

‍

3 Key Elements Of A SaaS Chart Of Accounts

1. Account Names

The name of each GL account describes the transactions that it groups together. You should choose account names that make sense for your business model and are instantly understandable for your finance team. For example, in the sample chart of accounts above, there are eight GL accounts that the business uses to categorize various types of fixed assets:

Computer & Office Equipment

Furniture & Fixtures

Leased Computer Equipment

Accumulated Depreciation - Computers

Accumulated Depreciation - Furniture

Accumulated Depreciation - Leased Computer Equipment

Intangible Asset - Domain

Accumulated amortization

‍

For more guidance on managing startup expenses, see: 4 Tips To Optimize Expense Management For Startups.

2. Account Types

The COA groups the GL accounts into broad categories known as account types. The account types will be similar for most businesses because they correspond with the key sections in the income statement (also known as the profit and loss statement or P&L) and the balance sheet. Some businesses choose to use more detailed categories, but there are five basic account types:

Assets—Used in the balance sheet.

Liabilities—Used in the balance sheet.

Equity—Used in the balance sheet.

Revenue—Used in the income statement.

Expenses—Used in the income statement.

‍

Based on the account type listed in the chart of accounts, software such as QuickBooks will automatically pull the data for each GL account to the relevant section in the financial statements. For example, the eight GL accounts listed in the previous section are grouped into the account type ‘Fixed Assets’. This tells your accounting software to use the data from these accounts in the assets section of the balance sheet.
‍

3. Account Numbers

Each GL account is assigned a unique number that allows you to code transactions to the right account. Most SaaS charts of accounts have account numbers between four and seven digits. Using more digits gives you space to add accounts in the future, so if you’re expecting to grow, use at least five digits in your account numbering system.

‍

The first digit in the account number indicates the financial statement and section to which it corresponds. For example:

‍

Financial Statement	Financial Statement Section	Account Number
Balance sheet	Assets	10000-19999
Balance sheet	Liabilities	20000-29999
Balance sheet	Equity	30000-39999
Income statement	Revenue	40000-49999
Income statement	Cost of Sales	50000-59999
Income Statement	Operating Expenses	60000-69999
Income Statement	Other Income	71000-712999
Income Statement	Other Expenses	7200-72999
Income Statement	Tax Expenses	81000-81999

Your income statement and balance sheet are generated using the information in the chart of accounts and may include the account name, account type, and type detail. For example, the following income statement is generated from the sample chart of accounts shown earlier in this article.

Looking for help building your chart of accounts?

At Zeni, our team of experts has years of experience helping SaaS startups build a financial foundation that supports their growth—including creating and managing the startup chart of accounts. Zeni is a modern, full-service finance firm that provides SaaS startups with outsourced bookkeeping, accounting, and CFO solutions to handle everything from startup budgeting to financial modeling. Zeni’s accountants will help you decide on the level of detail, design a GAAP-compliant chart of accounts, and set it up in your accounting software, so you have everything you need to generate financial reports.

‍Ready to get professional support with your SaaS accounting setup? Click here to book a call with Zeni.

‍

What You Should Know About Your SaaS Chart Of Accounts

Looking for expert help setting up your SaaS chart of accounts? Click here to book a demo with Zeni.

What is a SaaS chart of accounts?

3 Key Elements Of A SaaS Chart Of Accounts

1. Account Names

2. Account Types

3. Account Numbers

Looking for help building your chart of accounts?

‍Ready to get professional support with your SaaS accounting setup? Click here to book a call with Zeni.

Recommended Posts

Products

NAvigation

USEFUL LINKS

CONTACT INFO