4 Reasons to Use QuickBooks Account Numbers

QuickBooks is one those accounting systems where you can choose to enter transactions in the general ledger by using account names instead of account numbers. For many people who do not work with accounting data that often this seems like a logical way to do things, and it can be. However, there are some very valid reasons why using QuickBooks Account Numbers may be a better way to go. Here are a few of the main ones.

Accounting Personnel

Whether accounting employees, accounting contractors and temps, or a CPA firm are working with your QuickBooks, you will find that these individuals usually prefer account numbers. It makes sense to use account numbers since these are the people who use the accounting system the most.

Sorting

There are 10 QuickBooks Account Types, such as Bank, Accounts Receivable, Income, and Expense. When QuickBooks sorts the chart of accounts it sorts first according to the account type. That sort is preset in QuickBooks to generally place accounts in the correct order. Then within each account type it sorts alphabetically if you are not using account numbers and numerically if you are using account number. This is significant as this means you may not see accounts in the order you desire within account types unless you use QuickBooks Account Numbers. For example, imagine in the Expense type account you have the following accounts:

Miscellaneous Expenses

Office Payroll

Office Supplies

Payroll Tax Expenses

Rent

Note that these are sorted alphabetically. However, it may not be desirable to see them in this order. For example, you may want to see Office Payroll first, followed immediately by Payroll Tax Expenses. Since Miscellaneous Expenses is very likely to be a fairly small amount, you may desire it to be last.  In order to create a sort order that you prefer, QuickBooks Account Numbers can be used. In that case your account sequence might look like this:

6100    Office Payroll

6200    Payroll Tax Expenses

6300    Rent

6400    Office Supplies

6900    Miscellaneous Expenses

Notice that you now have Payroll Tax Expenses just after Office Payroll, which is a logical arrangement. Also notice that Miscellaneous Expenses is now at the end. Since it is somewhat of a catch-all account, this also is a logical arrangement.

Sub-Accounts

It is not uncommon to have multiple accounts for the same kind of information. Above you may want the ability to show more break down of the details for Payroll and for Office Supplies. By using QuickBooks Sub-accounts you can accomplish this and still see information where you desire. Below is an example:

6100 Payroll

6110 Sales Payroll

6120 Marketing Payroll

6130 Administrative Payroll

6200 Payroll Tax Expenses

6300 Rent

6400 Office Supplies

6410 Sales Materials

6420 Marketing Materials

6430 Administrative Office Supplies

6900 Miscellaneous Expenses

Notice how all of the payroll expenses are in one area of the chart of accounts. This makes it much easier to review this category. It is also important to remember that when QuickBooks Sub-accounts are used that entries in a category are only coded to the sub-accounts and not the summary account. In the case above you would use the sub-accounts 6110, 6120, and 6130 when coding payroll expenses. You would not use the account 6100 as this is merely a summary account. Coding for office supplies would be done in the same manner. Also note that the alphabetical sequence of the sub-accounts is not important as the sorting is done on sub-accounts.

Data Entry

When you use account numbers it facilitates coding. What this means is that only the basic numbers need to be known. In the case of Office Supplies if someone wants to code something to Marketing Materials they really only need to know that all Office Supplies start with the numbers 64. When they enter 64 in an account field QuickBooks will bring up a list of the sub-accounts to choose from. Also, if you look at the example in sub-accounts section above you will notice that the last two numbers of the Payroll and Office Supplies accounts are 10 for sales, 20 for marketing, and 30 for administrative. While you may not use this scheme, it is another way to minimize what someone most know to code accounting data and to create new accounts.

These are a few of the reasons that using QuickBooks account numbers makes sense. Once you get use to this method you likely will find it easier and appreciate the flexibility it creates. If you are uncertain how to use account numbers, need help getting QuickBooks set up, or simply want to get more out of QuickBooks, AimCFO is ready to help.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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