A clean Chart of Accounts (COA) is one of the biggest differences between bookkeeping that is easy to maintain and bookkeeping that becomes chaotic over time. Most small corporations overcomplicate things because they assume more accounts equals more accuracy. In reality, clarity comes from fewer, well-structured accounts with clear purpose.

A COA should reflect how the business actually operates, not every possible scenario that might happen someday.

The goals of a clean COA

• Simple to navigate
• Easy to categorize income and expenses
• No duplicate or overlapping accounts
• Tax-ready without extra cleanup
• Designed for clarity, not volume

What your COA should contain at a minimum

Assets

• Operating bank account
• Savings or tax reserve account (if applicable)
• Accounts Receivable (only if used)
• Equipment or tools (capital assets)
• GST/HST receivable (if GST applies)

Liabilities

• Credit card or line of credit (if applicable)
• GST/HST payable (if collecting)
• Payroll liabilities (only if doing payroll)

Equity

• Shareholder equity / shareholder loan
• Retained earnings

Revenue (keep it simple)

You do not need 10 income accounts.
One or two is usually enough.

Examples:

• Service Revenue
• Product Revenue (only if separate income stream exists)

Expenses (broad categories > micro-tracking)

Instead of:

• 6 different fuel accounts
• 4 different advertising accounts
• 3 different supplies accounts

Use broader, cleaner categories:

• Advertising & Marketing
• Fuel / Vehicle Expense
• Office & Admin
• Professional Fees
• Supplies

CRA does not require hyper-detailed breakdowns.
Over-segmentation just makes bookkeeping harder.

The biggest COA mistakes

• Creating accounts for one-off purchases
• Naming accounts after vendors (Home Depot, Costco, etc.)
• Duplicating similar categories
• Trying to “budget” through the COA
• Adding accounts instead of using classes or tags

A clean COA should outlive changes in tools, vendors, or strategy.

Where complexity actually belongs

If a business grows and needs more detailed reporting, it should be done using:

• Classes
• Locations
• Projects
• Tags

Not dozens of income or expense accounts.

The COA should remain stable.
The reporting can become more detailed without rewriting the foundation.

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