How to Customize and Manage the Chart of Accounts in QuickBooks Online

Chart of Accounts Basics: Account Types, Detail Types, and Where Things Land

Every account in QBO has two important attributes:

• Account type – controls how the account shows on core reports (Balance Sheet vs. Profit & Loss) and whether it behaves like an asset, liability, equity, income, cost of goods sold, or expense.
• Detail type – a more specific categorization within the account type. It helps choose the right account and improves consistency, but the account type is what ultimately drives report placement.

Rule of thumb: choose the correct Account type first, then pick the best-fitting Detail type. If you’re unsure, start with a generic detail type under the right account type rather than forcing a wrong type.

Plan your COA structure (before you change anything)

Spending 15–30 minutes to plan will save hours of cleanup later. Use this quick planning checklist:

• Top-level categories: Assets, Liabilities, Equity, Income, Cost of Goods Sold (COGS), Expenses, Other Income/Expense.
• Subaccounts for meaningful rollups: Create subaccounts only if you need a summarized parent total (e.g., IT Expense → Software, Cloud Hosting, Domain & DNS).
• Use Classes and Locations for cross-cuts: If you want to compare the same accounts across departments, stores, funds, or service lines, use Classes and Locations instead of over-splitting with subaccounts.
• Set naming rules: Keep names short and consistent. Example: “Bank—Operating (Chase)” instead of “Chase Bank Operating Checking Account #1234.”
• Decide numbering conventions: Sketch the ranges you’ll use (see section on account numbers below).

Add accounts and subaccounts

1. Open Settings (gear icon) → Chart of accounts.
2. Select New.
3. Choose the correct Account type and Detail type.
4. Enter an Account name. Keep it clear and unique.
5. (Optional) Check Make this a subaccount and select the parent.
6. (Optional for balance-sheet accounts) Enter an Opening balance and As of date. Use the statement date/amount you’re starting from.
7. Save.

Caution on opening balances: Opening balances post to Opening Balance Equity and affect reconciliations. If you’re midway through a fiscal year, enter the bank’s statement ending balance for the “as of” date you’re adopting, or ask your accountant to create a proper journal entry.

Pro tip: For corporate cards with multiple users, create a parent Credit Card account and subaccounts for each cardholder. Connect each subaccount to its bank feed so reconciliations match statements cleanly.

Edit accounts safely

You can change names, numbers, detail types, and subaccount structure. Changing the account type is more impactful—do it carefully.

1. Go to Chart of accounts, find the account, open the dropdown at the end of its row, and choose Edit.
2. Update Name, Number (if enabled), Account type, Detail type, or toggle Subaccount status.
3. Save. If QBO warns that changing the type affects your accounting, review recent transactions and reports before confirming.

If a parent has subaccounts: QBO may require you to temporarily un-nest subaccounts before you can change the parent’s account type. Re-nest them after saving.

Merge duplicate accounts (irreversible but powerful)

Merging moves all transactions from one account into another and permanently deletes the duplicate. This cannot be undone, so proceed methodically.

1. Decide which account you will keep. Note its exact Name, Account type, and Detail type.
2. Open the duplicate account, choose Edit, and make the name exactly match the account you’re keeping. Ensure the account type and detail type also match. If they’re subaccounts, the parent must match too.
3. Save. QBO prompts to merge—confirm.

Before merging bank/credit-card accounts: Save or print reconciliation reports for the account you’ll eliminate. Transactions remain reconciled, but the old account’s separate reconciliation history won’t be available after the merge.

Enable and use account numbers

1. Go to Settings → Account and settings → Advanced.
2. In the Chart of accounts section, turn on Enable account numbers (and Show account numbers to display them on forms/reports).
3. Return to the COA and select ✎ Batch edit to add numbers quickly.

Suggested ranges (adapt to your needs):

• 10000–19999 Assets (e.g., 10100 Checking, 10200 Savings, 12000 A/R, 14000 Inventory)
• 20000–29999 Liabilities (e.g., 20100 Accounts Payable, 21000 Credit Cards, 23000 Loans)
• 30000–39999 Equity (e.g., 30000 Owner’s Equity, 31000 Retained Earnings)
• 40000–49999 Income (e.g., 40100 Product Sales, 40200 Service Income)
• 50000–59999 Cost of Goods Sold
• 60000–69999 Operating Expenses
• 70000–79999 Other Income
• 80000–89999 Other Expenses

Pro tip: Leave gaps (e.g., 40100, 40150, 40200) so you can insert new accounts later without renumbering everything.

Make accounts inactive (archive) and restore later

In QuickBooks Online, you rarely “delete” accounts. Instead, you make them inactive to hide them from lists while preserving historical transactions and report integrity.

1. Open the COA. From the account’s dropdown, choose Make inactive and confirm.
2. To restore, click the small gear above the list, check Include inactive, find the account, and choose Make active.

Dependencies: If an account is used by Products/Services, Recurring transactions, rules, or bank connections, QBO may require you to reassign those items before you can inactivate the account.

Special/default accounts you can’t remove (and how to handle them)

QBO uses certain “system” accounts for core workflows. They’re permanent and generally can’t be merged or inactivated. Examples include:

• Undeposited Funds – holds payments before you record a bank deposit.
• Opening Balance Equity – a temporary plug created by opening balances; it should be cleared to equity once setup is complete.
• Retained Earnings – QBO posts prior-year profit/loss here automatically at year-end; avoid manual entries unless directed by your accountant.
• Inventory Asset and Cost of Goods Sold controls – tied to inventory workflows.
• Uncategorized Income/Expense – used when a transaction lacks a category; fix the transaction rather than trying to remove these accounts.

Accidentally created a duplicate “Undeposited Funds”? Rename the duplicate and merge it into the real system account (the true Undeposited Funds has a special lock icon and cannot be deleted).

Import or export your Chart of Accounts

Import from CSV/Excel (or Google Sheets)

1. Go to Settings → Import data → Chart of accounts.
2. Upload your file or connect Google Sheets. Map columns to QBO fields: Name, Account type, Detail type, Number, Description.
3. Review the preview for type/detail type mismatches and import.

Template shortcut: If you skipped an industry template during company setup, you can still import a curated COA later. Customize it to your reporting needs before posting transactions.

Export/print your COA

From the COA list, use Run report, then export to Excel or PDF. Keep an exported snapshot before large cleanups (merges, renames, inactivations). It doubles as documentation for auditors and advisors.

Real-world scenarios

1) U.S. small business owner reconciling monthly bank & credit-card accounts

• Create separate Bank accounts for each checking/savings account. For corporate cards, set one parent Credit Card account with individual cardholder subaccounts.
• Enable account numbers and group cash/credit/clearing accounts together (e.g., 10100 Checking, 10200 Savings, 11000 Cash on Hand, 21000 Credit Cards, 12000 A/R).
• After closing a card or bank account, make it inactive only after final reconciliation and keep the reconciliation reports for your records.

2) Travel agency creating recurring invoices for tour packages

• Use Income subaccounts: Tour Packages, Add-ons, Commissions. Map Products/Services to the appropriate income accounts so sales reports and margins are accurate.
• Split COGS to reflect supplier costs: Boat Charters, Hotel Allotments, Transfers.
• If you discover duplicate income accounts like “Tour Sales” vs. “Package Sales,” merge them after month-end close to avoid confusing in-period reports.

3) Wellness clinic tracking expenses across service categories

• Keep a concise Expense tree (e.g., Clinical Wages, Medical Supplies, Rent, Software).
• Use Classes for service lines (Chiropractic, PT, Massage) to compare P&L by modality without creating dozens of nearly identical subaccounts.
• Turn on numbers so front-desk staff pick the right category quickly when entering bills/expenses.

Common mistakes to avoid

• Wrong account type. A credit card should be type Credit Card, not Other Current Liability. The wrong type can break bank feeds and misplace balances on reports.
• Too many subaccounts. QBO supports up to five levels, but deep trees slow users down and make reports unreadable. Prefer Classes/Locations for cross-cut comparisons.
• Merging too quickly. A merge is permanent. Export your COA and save reconciliation reports before merging, then merge in phases.
• Editing opening balances casually. Changing an opening balance can throw off reconciliations. If you must correct it, document the change with a memo and date it carefully.
• Deleting instead of inactivating. Archive accounts you no longer use; that keeps history intact and avoids report discrepancies.
• Trying to remove system accounts. Leave Undeposited Funds, Retained Earnings, and inventory control accounts alone; fix the underlying workflow instead.

Best practices & ongoing governance

• Write a one-page COA policy. Include naming conventions, numbering ranges, who can add/merge/inactivate accounts, and when to use subaccounts vs. classes.
• Batch hygiene quarterly. Export the COA and mark candidates to merge or inactivate. Align names and numbers, and archive dormant accounts.
• Use “✎ Batch edit.” Quickly apply numbers or rename groups of accounts to keep things consistent.
• Reclassify at scale (for accountants). If you or your advisor has access to QBO Accountant, the Reclassify Transactions tool can move many transactions at once across accounts, classes, and locations.
• Train your team. Provide a short “which account do I use?” cheat sheet for AP/AR staff. Most miscodings disappear with simple guidance and numbered accounts.

Tax & compliance considerations

• Tax mapping depends on your COA. Use correct account types so lines roll up properly into tax preparation tools and year-end reports (e.g., Schedule C or entity forms via your accountant).
• Retained Earnings is automatic. At fiscal year-end, QBO rolls prior-year profit/loss into Retained Earnings. Avoid posting to it manually unless your accountant instructs you to record a formal closing entry.
• Audit trail & documentation. Keep an exported COA and reconciliation reports whenever you reorganize. Add memos on merges, renames, or opening balance corrections.
• Industry nuance. If you receive restricted funds or operate multiple locations, consider using Locations for legal entities and Classes for departments or programs, then keep your COA lean for clarity.

FAQ

How do I quickly add account numbers to all accounts?

Turn on Enable account numbers in Account and settings → Advanced. Then open the COA and use ✎ Batch edit to fill the Number column for many accounts at once.

Can I merge two accounts with different types?

No. The accounts must have the same Account type and Detail type. If they’re subaccounts, their parent structure must match too. Rename the duplicate to exactly match the account you’re keeping and confirm the merge.

What happens to reconciliation history if I merge accounts?

The transactions remain reconciled, but the eliminated account’s separate reconciliation reports won’t be available. Save or print those reports before merging.

Should I delete accounts I no longer use?

Use Make inactive. This preserves historical transactions and prevents gaps in reports. You can include inactive accounts in the list and reactivate them later if needed.

Why can’t I remove Undeposited Funds or Retained Earnings?

They’re system accounts QBO uses for core workflows and year-end roll-overs. Keep them; fix the underlying transactions instead of attempting to delete these accounts.

Is there a limit to subaccount depth?

Yes—QBO supports up to five levels. Shallower hierarchies are easier to read and manage.

Can I import a premade chart of accounts?

Yes. Go to Settings → Import data → Chart of accounts. Map columns (Name, Type, Detail Type, Number, Description), preview, and import.

How should I handle opening balances?

Enter the bank’s statement ending balance for the “as of” date you’re adopting, or ask your accountant to post a clean journal entry. Any change to opening balances can affect reconciliations, so document what you do.

What’s the safest way to clean up a messy COA?

Export your COA, enable numbers, define naming/numbering rules, and clean by category. Merge duplicates in small batches after saving reconciliation reports. Use the Reclassify Transactions tool (via QBO Accountant) when you need bulk fixes.