Clean Up Your Chart of Accounts: The First Step to Financial Clarity

If your bookkeeping feels confusing, bloated, or like a black hole you’d rather not think about—your Chart of Accounts (COA) might be to blame.

Think of it like your business's closet. If there are no hangers, labels, or order, you're just piling things in. Sure, it's all technically there—but good luck finding what you actually need.

As someone who has helped dozens of entrepreneurs get a handle on their finances, I can tell you: a messy COA is one of the most common (and fixable) issues I see.

Why a Clean Chart of Accounts Matters

Your COA is the foundation of all your financial reporting. If it's disorganized, duplicated, or filled with vague categories like "Miscellaneous," then:

• Your reports won't make sense

• Your tax filings will be harder (and potentially wrong)

• You'll struggle to see where you're actually making (or losing) money

On the flip side:

• A clean COA = clear, accurate reports

• You can see your margins by category (which means better pricing decisions)

• Tax season and audits become way less stressful

Signs Your Chart of Accounts Needs a Cleanup

• You have over 200 accounts (I’m exaggerating but you get what I mean), most of which you don't use

• You're not sure what some of the categories mean

• There are duplicate accounts for the same thing (e.g. "Office Supplies" and "Supplies - Office")

• Everything gets dumped into "Miscellaneous"

If any of these ring true—it’s time to clean house.

Where to Start Here are three actions you can take right now to get your COA back under control:

1. Delete unused or duplicate accounts If you haven’t used a category in the last year, it’s probably safe to delete or merge it.

2. Rename vague accounts "Miscellaneous" tells you nothing. Change it to something meaningful or break it out into separate categories.

3. Match your COA to your real operations Your accounts should reflect how you actually run your business. For example, if you run a service-based business, you probably don’t need a "Cost of Goods Sold" category meant for retail.

Final Thoughts

Your Chart of Accounts should help you understand your business—not confuse you.

Cleaning it up is one of the easiest ways to get a clearer financial picture, streamline your reports, and make better decisions with your money.

And if you’re not sure where to start? That’s literally what I do. (But even if you DIY it, you’re already on the right track.)