Your Chart of Accounts (COA) is Crucial
When we started Graphite, we realized most startups were using what we called the “QuickBooks Default” chart of accounts, or COA for short. Essentially, expenses outlined in Alphabetical order. This would look something like below:
Advertising, Bank Fees, Benefits, Commissions, Marketing, Contractors, Office Expenses, Payroll Taxes, Salaries, Software, Travel
…Not a big deal and easy enough when you have little going on. But when you start hiring a team, investing in tech, and investing in growth (aka you’re a venture backed startup) – this “Quickbooks Default” chart of accounts doesn’t tell you much.
It’s crucial (and expected by investors) that founders be able to analyze the economics of their startup. For example, things like salaries…Product/Tech vs Sales vs Operations.
That’s why we developed an industry specific startup chart of accounts example & template!
Download our Template Chart of Accounts
Simply fill out the form below to download our free chart of accounts example & template
Breakdown: Our Chart of Accounts Example Template
A chart of accounts helps founders separate and analyze expenditures, revenue, assets, and liabilities, so a business can have a clear understanding and view of their overall financial health. It also helps meet the needs of management reporting while also complying with all financial reporting standards. Below are some important features of our chart of accounts example & template:
Your #1 Expense: People
Let’s start with the number one expense (and asset – but not from an accounting sense) – PEOPLE.
The QBO standard COA doesn’t tell you how much your salaries are for Product/Tech vs Sales vs Operations related roles.
It also doesn’t apply benefits near each other, so it’s hard to see your total people costs in one place.
We suggest three department / sections of the P&L.
Within each, People and NOT People.
What’s in a numbering scheme?
Numbering is for more than making a COA look fancy and neat.
One cool trick is using the numbers to help you derive insights easily. For example, we use numbers to differentiate between People/Team expenses and Everything Else.
So not only do you see each department, but you can easily run a report of “hey during this month, I burned X…. how much was related to people, and how much was related to everything else related to running the business”.
Sales Efficiency and other KPI’s
One benefit of breaking out departments is to easily call out your ROI on Sales/Marketing relative to revenue. This is only a first pass and we recommend deeper looking cohort analysis work, but at a high level, a good P&L should easily call out total sales & marketing for a period / both people (salaries, commissions, benefits, etc) as well as marketing (advertising, events, lead gen) to then be able to compare those numbers to MRR or ARR growth.
Need help with your accounting?
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Born out of a VC fund, Graphite fully understands the strategic and financial needs of high growth companies. If you need accounting support or simply have a question about accounting at your company, feel free to connect with us!