All About the Chart of Accounts

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What is a chart of accounts? A chart of accounts is basically your label maker. It’s the master list of categories your project or organization uses to tag every single dollar coming in or going out.

Think ticket sales, grants, artist fees, studio rentals, marketing. These categories show up everywhere: in your budget, in your profit and loss statement, and in your bookkeeping system.

Why does it matter? Because consistent labels mean clear records. When your chart of accounts is clean and aligned, everything connects, your budget aligns with your reports, your reports make sense with your fiscal sponsor, and your future self doesn’t have to decode mystery expenses six months later.

A few categories most folks find useful are:

Earned income. That’s tickets, merch, workshops.
Then there’s contributed income: grants or donations,
Personnel expenses, artists and staff pay.
And then there’s operating and admin expenses, insurance, office, marketing.
Direct program expenses too. That means venue, sets, costumes, supplies, wigs. (I don’t wear wigs. This is my hair.)

You don’t need a million categories. Start simple. You can always add more later. If you’re unsure where to begin, ask around. Look at examples from organizations like yours. Borrow what works. A clear chart of accounts keeps your financial life organized, consistent, and much easier to manage over time.

What is a Chart of Accounts?

A chart of accounts is an organized list of categories that you use to track your money. You’ll group those categories together based on what they’re about — types of income, expenses, assets, and liabilities. The ones you’ll use the most are for income and expenses.

You might hear the chart of accounts abbreviated as “COA” or “CofA”’. The chart of accounts forms the backbone for all of your financial processes, from paying people to running reports like the Profit and Loss or Balance Sheet.

Where do I get a Chart of Accounts?

There’s no need to start from scratch! Check out the downloadable templates below, and adapt them to your needs. If you’re working with a bookkeeper, they may also have a template you can use.

What goes into a Chart of Accounts?

An “account” in the context of bookkeeping and accounting isn’t a bank account. It’s just a category label you use to see what buckets your money is coming in from and going out in.

It’s customary for each account to have a number and a name. The number part is helpful so that you can keep your accounts in order and make subgroups. For example, on the income side, you might have categories for contributed revenue, and inside contributed revenue you’d have separate accounts for foundation grants, government grants, and donations. To keep things clear, you might use these numbers:

4000 REVENUE
    4100 CONTRIBUTED REVENUE
        4110 Foundation Grants
        4120 Government Grants
        4130 Individual Donations

Then, you might have different ways of earning revenue directly, like ticket sales, workshops, merchandise (merch) sales, and contracts (like when a festival contracts with you as a performer). You’d continue your chart of accounts numbering with:

    4200 EARNED REVENUE
        4210 Contract & Performance Fees
        4220 Ticket Sales
        4230 Merchandise & Concessions Sales
        4240 Workshop & Teaching Revenue

On the expense side, the most important distinction you should make is between money you pay to people (performers, a/v tech, teaching artists, marketing contractors, grantwriters, etc) versus money you pay for supplies, licenses, software, printing — anything where the thing you’re paying for is not labor.

The reason to split labor from non-labor expenses is because you need to keep track of how much money you pay to individual people because you may need to send them an IRS Form 1099-NEC at the end of the year (more on that in the W9, 1099, and Document Management learning guide).

So your list of accounts on the expenses side might look something like this:

5000 PERSONNEL EXPENSES
     5100 INDEPENDENT CONTRACTORS
         5110 Admin Contractors
              5111 Accounting, Bookkeeping, & Tax Prep
              5112 Grantwriting & Development Consultants
              5113 Admin & Operations Support Contractors
         5120 Program Contractors
             5121 Artistic Director
             5222 Choreographers
             5223 Costume & Set Design
             5224 Dancers
             5224 Lighting Design
             5225 Musicians & Composers
             5226 Production & Technical Contractors
             5227 Teachers
             5228 Videography, Photography & Documentation
             5229 Other Program & Production Contractors

If you have employees, you would have separate categories (accounts) for salaries and wages, payroll taxes, and benefits as well.

Once you’ve got your people accounted for, the next buckets are operating expenses and program expenses. Accounts for those might look something like:

   6000 GENERAL & ADMINISTRATIVE EXPENSES
      6100 Operating Expenses
         6130 Insurance
         6145 Office Rent, Utilities & Telephone
         6150 Office Supplies & Equipment
         6160 Postage, Delivery & Printing
         6170 Software, Technology & Website
         6180 Taxes, Fees & Licenses
         6199 Other G&A Expenses

   7000 PROGRAM EXPENSES
      7930 Program Marketing & Outreach
      7950 Program Printing & Postage
      7960 Program Supplies, Materials & Equipment
      7970 Program Travel & Lodging
      7980 Venue & Space Rental Expenses
      7990 Other Program Expenses

How do I use a Chart of Accounts?

Every transaction you record as part of your regular bookkeeping process gets assigned to exactly one account in your chart of accounts — no more, and no less. This is what allows you to zoom out to see a profit and loss statement or a balance sheet, and to see how your budget lines up with what actually happens during the course of a year.

How many layers of specificity you should add depends on your organization. For the IRS’ sake, all you need to track is contractors as an overall group. But for your internal tracking, it will be helpful to know how much you’re spending in different areas.

For grant applications, you will likely need to submit budgets that give a more detailed breakdown. It’s to your advantage to make your Chart of Accounts more detailed, so that your organizational budget already has the information you need for a project or grant budget, versus needing to start over from scratch every time.

Pro tip: your COA will never match the budget categories that every single funder gives you to use, so it’s important to have the categories that work for YOU first and then translate into funder categories as needed.

Using a nested numbering system allows you to run reports that give you a “roll-up” number. For example, using the accounts listed in the previous section, you could run a report to see how much you’re paying independent contractors overall by pulling a report for all transactions with accounts that start with 51. Or, you could see how much you brought in through earned revenue by running a report for all transactions with accounts starting with 42.

What should I look for in a Chart of Accounts?

To see if your Chart of Accounts works for you, ask these questions:

Do I have separate sections for assets, liabilities, net assets, income, and expenses?
- This one is a clear yes or no!
Do the category (account) labels make sense for my organization?
- For example, if you’re a visual arts organization but your chart of accounts has a lot of separate accounts for different types of performing artists, you need to adapt that to fit you better.
Are my categories too vague, too specific, or just right?
- If you have a lot of transactions each year (say, more than 100), it’s probably to your advantage to have more categories to adequately capture the story of what’s going on.
- If you only have a few transactions each year, it may not be worth your time to split out everything in a lot of detailed categories, especially if you only have one or two transactions per category.
- Don’t get rid of an account just because there are no transactions in it, though! That can be useful information, too. For example, if you have $0 in individual donations, that tells you that there’s a whole area of income you haven’t tapped into yet.
- The common theme is: how well do these accounts help me tell the story of my organization?