Chart of Accounts, Part 2: Why Account Numbers Matter (and What GAAP Has to Say About It)
- Melton Liggett
- Aug 4
- 4 min read
My apologies up front, as this will be another longer post. I just could not fit this important info in without more detail. PLEASE be sure to leave a comment. Let me know if this was helpful, if there were any errors, or if you have a different opinion.
If you haven’t read my previous post, “Understanding the Chart of Accounts (Without Needing a CPA),” I recommend starting there. This post builds on that foundation — we’re going one level deeper (and yes, there will be numbers involved).
Why Talk About Account Numbers in QuickBooks Online?
QuickBooks Online (QBO) lets you decide whether or not to use account numbers in your Chart of Accounts. Technically, you can run a business without them — just like you can eat soup with a fork.
But here’s the thing: if you care about consistency, cleaner reports, audit readiness, or working with other professionals (like accountants, auditors, or me, your bookkeeper), then account numbers make your Chart of Accounts functionally smarter. Let’s talk about why.
What Are Account Numbers in QBO?
Account numbers are optional identifiers you can assign to every account in your Chart of Accounts. They don’t show up on your financial reports by default, but they help:
Keep accounts organized in a logical, consistent order
Prevent duplicate or mislabeled accounts
Align your books with Generally Accepted Accounting Principles (GAAP)
Make categorizing transactions faster and more foolproof
You can turn account numbers on by going to:
Gear Icon > Account and Settings > Advanced > Chart of Accounts > Enable account numbers
The GAAP Standard for Numbering Accounts
GAAP (Generally Accepted Accounting Principles) doesn’t require a specific numbering system, but it does encourage structure and clarity — and there’s a widely accepted convention used by accountants, auditors, and most ERP systems. Using this structure will greatly help your Accountant and auditors if needed.
Here’s a basic numbering structure:
Analogy time: If your Chart of Accounts is a library, account numbers are the Dewey Decimal system. Sure, you could shelve books by color or vibe... but good luck finding anything twice.
Sub-Accounts: How and When to Use Them
Sub-accounts in QBO help organize related activity under a parent category. For example:
6100 - Office Expenses
6110 - Office Supplies
6120 - Software Subscriptions
6130 - Printing & Postage
This lets you keep detail where you want it, and summary where you need it — especially when running reports. But here's the catch: sub-accounts should inherit the number range of their parent account to maintain order and consistency.
Pro Tip: Avoid going more than one level deep with sub-accounts. QBO can technically handle it, but your reports (and brain) will thank you for keeping it simple.
Let’s Talk About “Due To” and “Due From” Accounts (9000+)
These accounts help track money moving between entities, funds, departments, or accounts — a must-have for:
Churches that move money between general and designated funds
Nonprofits allocating between programs or grants
Businesses with multiple locations or internal transfers
Think of them like IOUs between buckets.
Example: Due To/From
You move $1,000 from your General Fund to your Youth Ministry Fund.
From General Fund:
Debit: Due To: Youth Ministry (9305)
Credit: Bank Account (1000)
Into Youth Ministry Fund:
Debit: Bank Account (1001)
Credit: Due From: General Fund (9205)
These two entries mirror each other, keeping both sides balanced. If they don’t match, your balance sheet won’t make sense — and neither will your fund balances.
Best Practices for Due To/From Accounts
Always use clearly labeled names (e.g., “Due To: Building Fund”)
Use matching account numbers (e.g., 9305 and 9305) to keep pairs aligned
Reconcile balances regularly to make sure inter-entity loans or transfers are accurate
If you’re managing multiple QBO files, record matching entries in each system
Why 9000s?
Using the 9000 range for internal accounts keeps them grouped together and out of your main operating income/expense sections. It’s cleaner, easier to spot on reports, and prevents confusion with external assets or liabilities.
Why Displaying Account Numbers Is a Smart Move
Let’s circle back to the original question: should you show account numbers in QBO? Short answer: Yes — and here’s why:
Cleaner Reports: You can sort accounts logically, not alphabetically (which leads to chaos)
Error Prevention: Avoid duplicate or misnamed accounts (e.g., “Utilities” vs. “Utilities Expense”)
Better Collaboration: Accountants, auditors, and consultants expect to see account numbers — it helps us help you faster
Faster Categorization: Especially for those entering transactions — numbers keep things predictable
Visual: Numbering + Sub-Account Example
6000 – Expenses
6100 – Office Expenses
6110 – Supplies
6120 – Subscriptions
6200 – Marketing
6210 – Advertising
6220 – Social Media
How I Help My Clients With This
As your bookkeeper, I set up and maintain your Chart of Accounts with structure in mind. But if you're taking over an existing QBO file — or trying to work with multiple funds, projects, or programs — account numbers make a huge difference.
I recommend enabling them even if you don’t “use” them daily. They’ll help your reports stay consistent, prevent future headaches, and make life easier for anyone reviewing your books (including you).
Ready to Clean Up Your Chart of Accounts?
If your Chart of Accounts looks like it was built on alphabet soup — or you’re not sure if your Due To/From entries are balancing — let’s fix it.
Contact me here to schedule a consultation.
TL;DR (Too Long; Didn’t Reconcile):
Account numbers in QBO are optional — but highly recommended
Use GAAP-style numbering: 1000s = Assets, 2000s = Liabilities, etc.
Keep sub-accounts within the same number range
“Due To/From” accounts track internal fund or entity transfers — and must stay in sync
Showing numbers improves reports, reduces errors, and helps everyone work smarter
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