Understanding Your Chart of Accounts: Improving the Nominal Code Structure
Your “chart of accounts” is the definitive list of all the different account codes your business deals with on a daily basis. Accounting software uses this list to create financial statements, so the smarter your chart of accounts is, the better.
Any optimised chart of accounts needs to have specific features built-in to function seamlessly with cloud accounting software, and we’ve listed these important traits below. This will help you understand what a chart of accounts should look like and what they ought to include.
What should I look for in a chart of accounts?
Ultimately, there are three major traits every business owner must look for when selecting a chart of accounts.
The first is the ability of the chart of accounts to breakdown codes as parent accounts and sub accounts.
Secondly, it’s worth looking out for the capability to provide default categories. This allows for better reporting on income statements and balance sheets.
Lastly, a numbering system is essential for creating a chart of accounts. This ensures the approach remains orderly, organised and tidy.
What are the benefits of improving Nominal Code Structure?
Nominal Code Structure refers to how coded accounts are organised. Taking the necessary steps to improve this structure can benefit you in a wide variety of ways. For instance:
- You won’t run out of ranges when planning the chart of accounts to begin with
- You’ll have the ability to report at different levels to individual codes
- You can create your very own chart of accounts
- You’ll enjoy customisation options that allow you to change General Ledger codes as required
- You’ll have the option to block users from posting to specific codes when necessary
- You can take advantage of five levels of drilldown; enhancing the reporting of your accounting package
- You can set General Ledger codes as confidential. For example, keep dividends confidential
Chart of accounts with Liquid
Using an excellent accounting package like Liquid (and a smartly set-up Nominal Code Structure within it), you can expect your chart of accounts to address all of the above and ensure the best results for your business.
When you choose Liquid Accounts for your cloud accounting solutions, you’ll find your system can be configured with either Liquid, Sage 50, Pastel chart of accounts, or create your own completely bespoke chart – meaning you can get up and running quickly (without the need to get to grips with a new chart of accounts when you change provider).
Get in touch with our helpful team today on 0161 413 5050 or email@example.com. We’d be happy to tell you more about how our system can simplify your accounting procedures, freeing up precious time in your schedule for other important business tasks.