A chart of accounts is the organised list of categories your money is sorted into. This guide explains how it is structured and why it drives your reports.
Published July 2026 · Updated July 2026
The chart of accounts is the filing system for your bookkeeping, the master list of every category (or 'account') you use to record money, such as Sales, Rent, Software, Bank and Loans.
Accounts are usually grouped into types: income, expenses, assets, liabilities and equity. Income and expense accounts feed your profit and loss; asset, liability and equity accounts feed your balance sheet.
Because every transaction is tagged to an account, the chart is what makes automatic reporting possible. Sort things well and your reports are instantly meaningful; sort them badly and the numbers mislead.
Most small businesses need only a couple of dozen accounts. Resist the urge to create a new category for everything, too much detail makes the accounts harder to read, not easier.
Yes, you can add, rename or merge accounts as your business changes. It is best to keep changes tidy so your historic reports stay comparable.
No. Accounting software provides a sensible default chart you can adjust to fit your business.
A short number attached to each account to keep them ordered and make bulk data entry quicker.
Source: Investopedia ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.