When running a business, you likely have a lot of different financial accounts to keep track of. QuickBooks is designed to make it easier to track all your accounts—but it can still get complicated.
We’re here to break down each QuickBooks account type for you. We’ll explain their meaning and how they can improve your business’s accounting.
Common Account Types
Here are the most common types of accounts business owners use in QuickBooks.
Assets
The asset section of QuickBooks account types is for anything you purchase for your business. This can be split into three categories: current assets, fixed assets, and other assets.
Current Assets
Current assets are things your business owns that can be liquidated to cash quickly.
Cash and Cash Equivalents
These categories encompass all money that is already accessible for your business, including:
- Cash on hand
- Checking accounts
- Money market accounts
- Rents held in trust
- Saving accounts
- Trust accounts
- Undeposited funds
Loans
While loans are usually seen as a liability, when they are under current assets, they are loans your business gave out to others. This means you can demand payment for them when you need to. Typically, asset loans include:
- Employee cash advances: This is when you give an employee wages earlier than usual.
- Loan to officers: If your business is a corporation, this is a loan to officers of your business.
- Loans to shareholders: This is when your business loans money to its shareholders.
- Other loans: This category is for any loans you give out that don’t fit into the other categories.
Inventory
Your business’s inventory is considered a current asset due to the ability to sell the stock if needed.
Fixed Assets
Fixed assets are for long-term or intangible assets of your business, such as:
- Buildings
- Equipment
- Computers
- Furniture
- Machinery
- Office equipment
- Phones
- Software
- Tools
- Intangible Assets
- Copyrights
- Customer lists
- Goodwill
- Licenses
- Patents
- Trademarks
- Land
- Leasehold improvements
- Vehicles
Other Assets
This QuickBooks account type is for any other asset your business owns that doesn’t fit into the current or fixed category:
- Allowance for bad debts
- Bonds
- Investments
- Lease buyout
- Prepaid expenses
- Security deposits
- Stocks
- Tax-exempt securities
Liabilities
This type of QuickBooks account is for money you owe to other parties. It can be split into two categories: current liabilities and long-term liabilities.
Current Liabilities
Current liabilities are money you owe that needs to be paid in a short amount of time, usually within a year. These types of liabilities include:
- Accounts payable
- Credit card debt
- Insurance
- Payroll taxes
- Sales tax
- Security deposits
- Short-term loans
- Trust accounts
Long-Term Liabilities
These types of liabilities are exactly what they sound like—money owed over a long period. They include:
- Bonds payable
- Long-term loans
- Shareholder notes payable
Equity
Equity is the net worth of your business, which is the difference between your assets and liabilities. Equity comes in several forms:
- Ordinary shares
- Owner’s equity
- Paid-in capital
- Partner contribution
- Partner’s equity
- Prepaid taxes
- Personal income
- Retained earnings
- Share capital
- Treasury shares
Income
This type of QuickBooks account is for transactions and payments within your business.
Sales and Revenue
Sales and revenue come in many forms, including:
- Discounts
- Refunds
- Sales revenue
- Service fees
Other Income
This category is for income that doesn’t necessarily fit into your business operations, but your business still benefits from:
- Dividend income
- Investment income
- Rental income
- Interest income
Expenses
Expenses are the money your business spends while performing business operations. There are three categories of expenses: cost of goods sold, operating expenses, and other expenses.
Cost of Goods Sold (COGS)
The cost of goods sold is the cost of anything needed to create and sell your business’s products, such as:
- Labor
- Materials
- Shipping costs
- Transportation
Operating Expenses
With a focus on the cost of operating your business, these expenses include:
- Auto expenses
- Bad debts
- Equipment rental
- Insurance
- Interest paid
- Legal or professional fees
- Meals/entertainment
- Office supplies
- Rent
- Salaries
- Travel expenses
- Taxes paid
- Unapplied bill payments
- Utilities
Other Expenses
All the expenses that don’t fit in the cost of goods sold or operating expenses categories go under other expenses:
- Advertising
- Amortization
- Depreciation
- Home office expenses
- Marketing
- Penalties
- Settlements
Specialized Account Types
QuickBooks also has specialized accounts available to use. These accounts often cross over many QuickBooks account types.
Accounts Receivable and Accounts Payable
Accounts receivable is a report of all the customers that have yet to pay you. With QuickBooks, you can create invoices for anyone within the list.
Accounts payable is a report of the bills your business needs to pay. You can set up to pay the other party from QuickBooks if they’re within this account.
Inventory Accounts
This type of QuickBooks account allows you to track and update your business’s inventory. This account will update to reflect real-time stock as you process transactions like sales and returns.
Payroll Accounts
QuickBooks payroll accounts encompass payroll, taxes, and benefits. This is crucial for businesses since it streamlines payroll operations and reduces the chances of mistakes.
Tax Accounts
Every business needs something to make handling taxes easier—which is why QuickBooks has a specialized tax account. Within this one account, you can track and pay sales, federal, and state taxes.
Loan and Interest Accounts
If your business has multiple loans, keeping them organized and up to date can take time and effort. QuickBooks understands that and offers a loan and interest account. From here, you can track and pay off loans and interest expenses.
Depreciation and Amortization Accounts
Amortization and depreciation must be tracked over long periods, which makes it easy for them to fall through the accounting cracks. QuickBooks helps you track depreciation and amortization through this specific type of QuickBooks account.
Receive the Best Accounting Guidance from Fourlane
Accounting is complicated, but when you partner with Fourlane, you get access to QuickBooks experts who can guide you through all the accounting tools at your fingertips. We’ll show you how to use QuickBooks to its full potential for your business.
Contact us today to learn about our QuickBooks consulting services.
