How to Design a Chart of Accounts That Supports Better Business Decisions

Speaker A: Welcome, welcome. Um, I just want to say I so appreciate you joining us today. This is Lauren Fogelman with Business Success Solutions, showing accounting firm owners how to double their revenue working half the time. And the topic for today is how to design a chart of accounts that supports better business decisions. And that is going to be my conversation today with Christy Andrechek. And you are absolutely in the right place if you want to design a chart of accounts that delivers meaningful insights, not just the transactions. Identify the signs that a, uh, chart of accounts is creating confusion and not clarity. And also, um, using financial data to better support client conversations and more strategic guidance. I know Christy is going to generously share. We have a great conversation set up and you'll also know how to connect with her further. A little bit about Christy. She's a financial strategist and operations, um, leader with nearly 30 years experience helping organizations make smarter decisions within numbers. As CFO and COO of Texas, uh, CPA Houston, she works closely with accounting professionals across the region. And in 2026 she launched her own strategic advisory firm that provides fractional CFO and COO services to nonprofits and small businesses. She is actually effectually known as the unicorn of CPAs. And Christy combines financial expertise, uh, operational insight, and a talent for connecting people. Her mission is simple. Help leaders gain clarity, reduce stress and focus on what matters most in their business, as well as hurt their life. So Christy, is there a website or a best way for people to go ahead and connect with you?

Speaker B: Right now I think the best way will be through LinkedIn. So just tag me and um, I'll be looking at my messages more frequently than I used to. But yeah, right now I'm still in the growing phase of getting the website up and going along with that business. Shorter business email address. Because right now my um, business email address is very long. So just connect with me on LinkedIn. We'll start the conversation and see where we can go from there. But yes, thank you for that delightful bio. I always laugh when someone says almost 30 years. I'm like what it seems like just

Speaker A: yesterday and, and I'm really looking forward to our conversation because I think it is so much more important and critical but it can get out of control and so over complicated. So before we get into that, how did you get to be really connected with the TX CPA in Houston and moving this direction as far, uh, as strategic advisory?

Speaker B: So about eight years ago our controller left, um, I was a member of TXCPA Houston. The uh, chapter was on the board of directors so was really familiar with the organization. And at the time in April, I lost my other job and they're like, hey, can you come help us out? I'm like, yeah, sure, I'll do it for a few weeks. And so a few weeks has gone into eight years. But I found what I really love doing is helping people and helping the organization such as TXCPA Houston. I've had the opportunity to meet such awesome people and then also connect with awesome people to bring into the organization, whether it be like speakers such as yourself, whether it's sponsors and such. And then a few years ago I was having that little nagging voice in my head, like, there's so many organizations that can help you. I'm like, oh no, I'm good, I'm good. And then in December, I did a vision board. I sat down for about two weeks and really just meditated on it and been like, this is something that's been nagging at me for, honestly for a long time. And I did not want to really go with the big firms because I know I could have gotten a job that way. I really was driven to help small businesses, non profits and associations because one, they don't have the funding for even a full time bookkeeper or never mind a cfo, coo. So I'm like, if I can help them make better decisions to use their money, then I feel I'm serving my purpose and that's why I'm here.

Speaker A: And you are, uh, what I refer to as a servant leader because you're always giving back and it comes back either directly or indirectly to you.

Speaker B: It sure does. I mean, I am very fortunate to have the village that I have to support me. And I think each and every one of us, once we identify what our purpose is, it really just, the ebbs and flows are just so beautiful. And getting out of my own way was really what had to happen.

Speaker A: And going with that business, um, owners, they, some of them don't even know that they have a chart of accounts. Let's just go with that. But also if they are aware, they maybe think of their chart accounts as something that only the bookkeeper or that their accountant would, uh, care about. So why is it actually important for a business owner to pay attention to it as well?

Speaker B: Well, I think one of the other things that business owners do is they just take whatever the accounting platform says to do. But you do need to have a, uh, usable chart of accounts because this is the skeleton of your entire financial story. So I am an avid reader, so if you think of the chart of accounts as your table of contents. That's where you see the overview and that's the chart of accounts and that feeds into your financial reports. So if you have a chart of accounts that is messy and way too many accounts, every report that you get from your accountant or you run yourself is going to be messy also. So when you have a usable chart of accounts, you are going to be as, uh, the business owner, decision maker. Look at that, uh, profit and loss statement, AKA income statement, and immediately understand where is the money coming from, where is it going? And you will be able to see that in real time because you won't have to flip through 6, 7 pages of profit and loss. So when you have that usable chart of accounts, that clarity is what helps turn bookkeeping into a compliance chore, into a decision making chore. I don't know how many people I talk to and they're like, um, I just do my books at tax time. I'm like, oh, why? And it's like, oh, it's just too much. Well then how are you making decisions? So that's where the strategy comes into. So when leadership can actually read those financials, act on them in a timely manner, not just at tax time, you can make some great decisions and really grow then.

Speaker A: From what I'm hearing is that the chart of accounts is really the foundation, the skeleton of uh, uh, the financial health of a business. And when it's something that is actually readable and understandable, they're going to be more likely to actually use it and, and refer to it when they're looking at financial decisions regarding their own businesses. And as a result of that, they might end up being more profitable, avoiding costly mistakes and also feeling like they are more financially savvy about their business than when they're just making those decisions based on gut or what everybody else is doing.

Speaker B: Oh, for sure. I mean, if, you know, just like when you're reading a book, if it's well organized, you keep reading it, you find the information you need. Think about the encyclopedias that we always use. They were very well organized. That's what your chart of accounts should be.

Speaker A: And talking about organization. So regarding the chart of accounts, a lot of times it's referred to as a coa. Also, if somebody's not familiar with that term, then what are some of the most common issues that you see when maybe you're first looking at someone's uh, financials?

Speaker B: The biggest one I see is creating an account for every transaction type or unique situation. So let's think about office supplies. You got Staples, Amazon, Office Depot. You don't need an account for each one of them. It's creating clutter. So it's also allowing the chart of accounts to grow without purpose. Every time something looks slightly different or you had an audit or someone asked a question, oh, let's just add another account so we can track that now. And then five years later, someone comes in and goes, why do we have this? I'm m like, well, I don't know. M. So you really need to be careful on when you are adding accounts. What. What's that purpose? Making sure it's intentional. And you want to say one thing is the chart of accounts is not to collect data. That's the other thing, people. Oh, let's just put it all in there. No, no, no. It's to organize information so that you can make relevant decisions.

Speaker A: Then what I'm hearing is instead of every single individual having, uh, its own account, you want to maybe look at groupings. Is that how you would suggest?

Speaker B: Oh, very much.

Speaker A: Okay.

Speaker B: Group like items. You know, there are some best practices and, you know, just sitting down and being thoughtful when you do it, then, um, maybe.

Speaker A: So that's coming up for me for some, for business owner that wants to have a cleaner chart of accounts, but they're not really that financially savvy, uh, and still doing their own books. Are there maybe some basic categories that they ought to consider to help start to simplify things?

Speaker B: So where I start, especially with small businesses and nonprofits, um, is I go to the tax return, looking at the schedule C, looking at the 990, because you have to report on those accounts. So there's your chart of accounts, so you don't really have to put a lot of thought into it, but then also stepping back and saying, okay, is there other things that I know will help make better decisions? So there's different ways of capturing accounting transactions in all the accounting programs. So it's just understanding what those type of classifications departments are, but then using the chart of accounts as just really the foundation. Um, because, yes, I love detail. I am. I love my detail. But it has its place. And the term is not that place. So if you are beginning and you're like, what do I do? Schedule c of the 1040 is the one I always refer to because I'm going to have to have those accounts when I do a tax return. And then 990 for the non profits.

Speaker A: Then anybody that's just starting out, just, Christie gave you some real shortcuts. To keep things simple, instead of having it go complicated, go to your tax returns and look at what it is that you need information for. And also just think about it from a strategic business point of view. What are things that will help you make better decisions moving forward with, moving with growing your business? And those are the things that you want to start setting up categories for now, when you also, uh, just taking this a little bit further, that simpler is better, then I'd like to hear a little bit more about what you mean by that. Is there something in addition that comes into mind when we talk about simpler is better with a coa?

Speaker B: So we love to overcomplicate life, right? But in this instance, when you have more accounts, you may be thinking, well, I'll be more concise in my reporting. But the thing that happens is that adds to the pages that you. And then your eyes glaze over and you fall asleep and you start drooling on the reports and you honestly don't know what these numbers are talking about. So while a long chart of accounts give you this illusion of precision and it actually makes financials harder to read. So go back and look and say, okay, as the leader of this organization, of this company, what are some things that I need to know? You need to know, are you making any money? Where are you spending the money? Where are you getting the money? And then what needs attention?

Speaker A: Mhm.

Speaker B: And that is what your chart of accounts which leads into your profit and loss statement will tell you. But if you have 50 expense accounts, how are you going to know where, what's really driving profitability? What needs attention? Um, it shouldn't feel like a phone book. For those of you who remember the big thick phone books, it should really be a dashboard. And these accounting platforms do have dashboards for you that you can customize and such. Step back, keep it simple. I'm always on keep it simple because if you complicate it, you're not going to do it or you're going to procrastinate on doing it.

Speaker A: Then part of what I'm, um, getting and want to make sure I got the four categories or thoughts correct from a strategic point of view is you want to think about when you're leading your company, what's going to help you make money, where you might be spending money, where money is coming to you from, as well as what needs your attention.

Speaker B: Yes. Yeah. So it's understanding that at a quick glance, because there's a way of getting into those details to make some other decisions. But at a quick glance what, what's that income statement telling you?

Speaker A: And, and, and one of the things that's also coming up for me is that some people are very, very detailed oriented or they're perfectionists. They really want it to be accurate, clean, sparkling, um, the best in their class. So they might wor having it simplified is going to be losing some valuable information from their chart of accounts. So let's talk about what are the ways that maybe they are able to get the insights that they need even though they don't have dozens and dozens of accounts set up.

Speaker B: And this is what I love about the accounting platforms out there. First I always say try, try different ones out and see what works for you. Each one of them has a way of handling this detailed information outside the chart of accounts. So you have classes, location, departments, projects, tags, and also customer and vendor records. So instead of creating the 15 to 20 separate accounts to track spending across the locations, you have one account, let's say marketing. And then you can use the location or class feature to slice it into. Maybe you have New York and Houston and Los Angeles. So you can still get that detail, but your chart of accounts isn't too much. It stays lean and the software does the heavy lifting. You're paying that money to the software. Let it be the great employee it can be.

Speaker A: Mhm. Okay then this is all about maybe being able to be a perfectionist. But we're shifting the strategy and the thinking a little bit about what tools has what purpose. So when you're thinking about your platform that you're using, you want to think about the features. And the features are what's going to give you the details, whether it's the classes, the locations, the tags, the customers, vendor records, whatever that might be, you want to use those features. And that way it keeps the chart of accounts from getting too cluttered and

Speaker B: keeps your financial statements from getting cluttered. You're going to have to use these financials for, you know, giving to your tax person, giving to the bank. You don't want them to be so long that they honestly dive into the details and ask questions. You're like, well, type of thing. And I'm a perfectionist. Um, I love detail. But the thing is that also costs money because it costs you your time and attention and energy that could be doing something else that's moving the needle on the business. So as you're thinking about, even with the classes and locations, those don't need to be, you know, keep those lean too. It uh, always comes back to when I create this account, this class, this location, what is my intent on decision making purposes? How is that going to help me move the needle on the strategic plan? How is that going to help leadership know where we're going and how we're doing and uh, compare it to the past or compare it to the budget.

Speaker A: And for people now that have cleaned up their chart of accounts and they want to make better information that's informed h how does this maybe change the way that they're using that financial information?

Speaker B: Because they're going to be able to see patterns and trends very quickly. They're going to be able to look at month over month, quarter over quarter and see something be like, oh wait, that, that looks a little wonky. Keeping it consistent over time, which means don't be adding new accounts. Don't you know, try to be detailed, keeping it intentional by having those accounts clearly defined. The transactions are coded the same way every time. You're looking at data that's reliable and you can make great decisions from it because it's readable also.

Speaker A: Mhm.

Speaker B: You don't have to go through all these lines of detail. So this is where it comes into play. One of the things is when you look at that account, I say one page. I, I um, want on one page. Yeah, I don't want to be flipping because I will lose my place or something. What is it telling me? Am I able to say how, how we're making money on the main products? What are your profit drivers, you know, and then where are the expenses? Kind of looking wonky and you know, dial them in before it gets to be December and you're like, we have a loss for the year. You have to make decisions right throughout the year. So making sure that you know, you have that clean chart of accounts, it's going to make this visible and so you can make better decisions.

Speaker A: I, I also feel that there's some business owners that no matter how simple you make their reports, even if it's just one page, looking at all the data and the numbers is overwhelming for them. But if we're cleaning up their coa and then they're getting a cleaning report, you can also then create a uh, graph, uh, whether it's a pie chart or a bar graph and then they can look at it visually. And so even the clients you have that are overwhelmed by the numbers, a visual report in is something that they can now use for better business decisions.

Speaker B: This is what's wonderful about AI is we are getting these tools within the accounting platforms to customize it and so you get to have those strategic discussions with your clients of what uh, matters to you to make a decision. And how can we use this simplified chart of accounts, this income statement to help you see that? Or a balance sheet because, you know, ar, aging ap. It is important that you know this stuff as a business owner. And so how do you want that presented so that you, you don't dread the meeting? Because if we think about a lot of them, they, they just keep pushing it off because they don't want to face the fact that maybe the numbers aren't that good. But if you're on top of it every month in an easy to see format, then it's not, it's a good meeting and you can make better decisions so that it's not at tax time, you're like oh no type of thing.

Speaker A: And I also want to say, if you're a busy bus, a uh, a busy business owner, and you're finding that you're pushing off all of your bookkeeping until the very end, you might actually benefit from hiring a bookkeeper to do the financials for you and then to you that information and maybe even meet with you to discuss what's going on so that you can apply it. And it would be uh, an investment that pays off because now someone is paying attention to your numbers and as a result of that you're making better strategic decisions regarding your business moving forward.

Speaker B: Exactly. And that's, ah, you know, sometimes business owners are very, you know, because they're very conscientious of the dollars going out. But what is your time worth, especially if you're not paying yourself, that's even scarier. So if you're staying up on a Friday night until midnight, try and get your books in order. Is that uh, really what you want your business to be like? And are you able to make the decisions to grow forward?

Speaker A: And, and, and so if somebody's been knows, let me back up how. What are some warning signs or some red flags that maybe your chart of account needs some housekeeping and some cleaning up. And if they recognize any of those warning signs, what would be the best way to get started? So, two questions that are kind of interconnected.

Speaker B: They are, um, some of the warning signs is the financial reports are way too long. They keep growing. Uh, another one is procrastinating. Even looking at the reports because you just, your eyes glaze over because there's just too much new, uh, accounts are constantly being added and no one really has a reason why. Um, for that one, I, my solution to that one Real quick is making sure that there's really a decision maker pro. There's a standard operating procedure SOP of, uh, these are the counts that can be added. This is a decision tree. Yes, this is worth it being added. Um, reports require extensive explanation. Every month it's, you know, oh, we have to go through all this detail. You know, management exports everything to Excel to understand what happened. Putting in a pivot table or doing lookups or doing something like that. The accounting platform is there to save you time, energy, attention, and money. So use it. But to do that, you need to simplify your chart of accounts. Um, you can't identify trends. You. There's just too many moving pieces that you can't really identify what's happening. And so what I think is when people are seeing these warning signs, you're like, oh, my goodness, what do I do? The thing is, you have history built on it, so you got to be careful if you want to clean up your chart of accounts. So a couple of things is getting someone to come in and help you, as my first piece of advice, because you're going to be merging, you're going to be renaming, but we don't want to lose that historical data. Um, so when you're starting out, I always say, like, lean, intentional. But when you are doing some cleanup work, that's when you have to just kind of, as a leadership team, come together, get your accountant, CPA involved and be like, okay, what's the best practice of doing this? Some people start on the first day of their fiscal year, calendar year, and say, okay, going moving forward, this is what we're going to do. And here's the mapping from the old accounts so you can do the historical look. Um, I do not recommend just throwing it all out the window and starting new, please, because, and trust me, I've heard that story too. I'm like, no, we can fix this. Um, first step to this, though, is so you have those warning signs and then you go to the financials and can I read this in under one minute? Because that's going to be your goal at the end of the day, cleanup of the chart of accounts. You can read the profit and loss statement in one minute and know what's happening. Um, look at the accounts are barely used. Can they be grouped with something else? And, uh, the one thing I want you always, always to do with everything, especially when it's dealing with financials, is document, um, document how you're changing the chart of accounts, making sure that you understand what you want your financials to answer. And then how does the old structure, how can that be grouped together? And then you know, start doing the merging, the renaming so that it is useful information but it's the end goal is needs to be short enough to read at a glance and then using the software to do the detailed sorting underneath being the classes, the departments and locations.

Speaker A: So to me it sounds like a project.

Speaker B: It is.

Speaker A: It's not just a simple cleanup or anything like that. This is something that's going to take time and a uh, business owner might benefit from investing in someone who knows exactly how to get it organized so that then it's set up correctly moving forward. And the other thing is that if your chart of accounts is over complicated then there's probably other things that aren't actually accurate in your financials, uh, affecting your cash flow, affecting your profit margins that could benefit from it, from some attention also. So I'm just going to say if the chart of accounts is overwhelming, then it's a hint that other things in your financials could use some attention also to because you're either not collecting money or you're overpaying for something or there's redundancy and it needs being paid attention to. So I'm going to add that to your red flags and warnings.

Speaker B: I love it. Yeah. And I think one of the things is every account on your chart of accounts should be answering a management question. And that's why each chart of accounts while you can go to Chapiti t and Claude and say what is a good chart of accounts for such and such business? That's great. But I don't think AI is your decision maker. Mhm. So what is going to help you answer those questions for growth? To con consolidate expenses? To know if a product line is really profitable. Because sometimes we love this certain product and you're like oh yeah, yeah, it's profitable until we actually like simplify where the costs are, the revenue stream and then we put into a class or a project and like oh, that's not making money. So it's stepping back and being really like does this account help me make decisions? And what decision am I answering? What question am I answering with that account?

Speaker A: Then stick with the one minute rule. You need to be able to read the P and L in under one minute which means that it needs to be under two pages in order for you to be able to do that. And it needs to be able to help you answer those critical decisions of uh, where your money is coming from, where you ought to be putting money more into your business in order to be able to be more profitable and make it grow and make a difference for your customers and the people that you're helping, so.

Speaker B: Exactly.

Speaker A: Christy, anything else as far as, uh, something that we want missed or that you want to just make sure that somebody is aware of if they're ready to move forward with this?

Speaker B: I think the biggest thing is the chart of accounts. To be the unicorn in your story, your financial story is designing it intentionally so that the financial statements, what you're looking at, become clearer. And then your conversations are going to be more strategic and better decisions are going to be made by internal leadership, external leadership. And then it's just going to be, it's not going to be a chore. You know, some people are going to be going, you'll be able to look at it and be like, I can make this decision and move forward versus six months later being like, uh, we're still him hauling over because we don't know if it's a good decision. So designing intentionally so you can make better decisions and keeping that goal in mind, I mean you're business will thank you over and over.

Speaker A: Absolutely. You made some great points today. Excellent information. Every single time we have a conversation, I'm always learning from you, so thank you for that. Some of the things that we covered is why a well designed chart of accounts creates clarity and supports better business decisions. How to recognize when your coa is creating confusion and making financials less useful and ways to simplify the data so that you get the insights you need and you're able to have those stronger crying conversations. Christy, if somebody wanted to connect with you once again, what's the best way to do it? I know you mentioned LinkedIn, so I

Speaker B: just, yeah, LinkedIn will be the best way to, um, start the conversation and then I'll give you the long email address to my, um, business, uh, through LinkedIn. So, but yeah, I think, you know, if you're interested, let's hop on a call, connect, um, with me on LinkedIn. We'll hop on a call and we'll, I'll see how I can help you out.

Speaker A: And if anybody connecting with us is in the Houston area, you can always go ahead and connect with her through it through the TXCPA in Houston. That is a show up at a meeting. That's a great way.

Speaker B: Yeah, we have and morning buzzes, um, conferences twice a year. So it's a lot of fun. Um, and just have some conversations. We have some opportunities to learn from one another.

Speaker A: Excellent, Christy. Thank you so much.

Speaker B: Thank you. I appreciate this time.

Speaker A: I appreciate everybody joining us. Uh, today. You come into the conversation with me today. Christy. This is Lauren Fogelman with Business Success Solutions showing accounting, ah, firm owners how to be able to double their revenue working half the time.