Depending on how our company is set up, we must ensure we have the appropriate accounts. For the Invoicing side of things, we must have the appropriate Accounts Receivable (AR) and Income accounts set up. For the Purchaser Order/Inventory side of things, we must have the appropriate Accounts Payable (AP) and expense accounts set up. Also, if you want to track the difference between receiving items from a PO vs. receiving the Invoice, you will need an accrual account.

One of the first questions to ask yourself as you are deciding how to set up your Chart of Accounts is “how will I want this to look on a report later?” Will you want everything lumped together into a single account? Or, will you need to have an account broken out by customer, vendor, or location?

Some typical accounts that are needed are:

•Accounts Receivable (who owes you money)

•Clearing Account (A/P) if tracking the difference between ordering parts and receiving parts.

•Accounts Payable (if ordering items)

•Sales Tax Account(s)

•Income Account(s)

•Cost of Sale(s) / Expense Account(s)

For example, your Accounts Receivable account. This account will typically need to be reported by Customer so the account will need to have the Customer Sub-Table attached.