@Jennifer Pinder,
Thanks for the details. Glad this thread is moving and pretty engaging, many businesses face this dilemma. Since you are moving reporting platforms à QuickBooks to à NetSuite and planning departmental structure, this is a great if not the best time to revisit and clean up the COA.
@David Belnap makes a great point about numbering conventions, and I'd add that aligning your COA structure with NetSuite's native reporting capabilities can bypass future headaches. Few items:
Departmental Structure & Segmentation
Since you're introducing departments, you can play around with segment-type account coding (locations, functions…) rather than just relying on account numbers strictly. This is what we did in both Intacct and QB. NetSuite also has dimensions.
What are you going to do for shared costs? Allocate it amongst depts.? That may impact your COA design.
Cost of Services vs. Operating Expenses
As @David Belnap pointed out, defining COGS / COS in a professional services firm can be tricky. Primary cost driver is salaries, you would have to separate direct labor VS. overhead? (billable / nonbillable)
What do you intend to do w contractor expenses?
Revenue Recognition & Project Accounting
Since you earn revenue monthly at least you don't have to deal w deferred revenue, focus will be ensuring a clean revenue breakout by service line (Thi8s would be interesting, but you need to have intimate knowledge of your internal operations to answer this: Departments that I want to set up are Accounting/Finance, HR, IT, Marketing, Overhead).
If NetSuite SuiteProjects handles sub-service categorization, your COA may not need extreme granularity on revenue accounts, but clarity on mappings will be key.
Scalability & Future Growth
To David's point in case of company's expansion, ensure the COA structure allows for adding new departments, services, or locations? Otherwise can be a HUGE hassle later.
Can we help you a bit further? We can always review/chime in what you have got set up in the sandbox.
Your fellow teammate/volunteer,
Ilya i.
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Ilya Ilienko, dual MBA, CPA, CMA
Board Member / Director
East Coast - United States
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Original Message:
Sent: 03-17-2025 02:27 PM
From: Jennifer Pinder
Subject: Chart of accounts revamp
Thanks for the reply, @Ilya Ilienko! Here is some additional insight.
We are moving from QB Professional Services to NetSuite SuiteSuccess.
It is a privately owned company with just under 100 employees and approximately $20M in revenue.
We have 1 bank (3 accounts) and 2 credit card providers (1 for field people and 1 for Ops), no debt.
We have 2 main lines of service (Project Management and Recruiting). Any more granular sub-service lines are captured in our other software, NetSuite SuiteProjects Pro, which is where we collect time and expense data and generate invoices. This data then flows into the accounting software.
We use the class feature in QB to break out our East coast and West coast locations.
Departments that I want to set up are Accounting/Finance, HR, IT, Marketing, Overhead (rent, insurance, etc). I want to be sure not to miss anything here.
Most of our contracts are long term, but we earn revenue monthly and record revenue as earned. No deferred revenue.
I have been making improvements to the COA since I started, however I need to take this to the next level now that we are moving into a new software.
Does this help clarify? Thanks again!
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Jennifer Pinder, MBA, CMA
Controller
Watchdog USA, LLC
Philadelphia, PA
United States
Original Message:
Sent: 03-17-2025 09:52 AM
From: Ilya Ilienko
Subject: Chart of accounts revamp
I would pitch in and weigh in, but revamping the chart of accounts (COA) for a rapidly growing professional services company requires a comprehensive understanding of various organizational and financial factors. I would want to know things such as company size, departmental structure, service lines, corporate status (public or private), accounting methods, number of operating banks, and the complexity of financial instruments, including:
Management Reporting Requirements
Regulatory and Compliance Obligations
Existing Financial Systems
Detailed Expense Categorization, classes, subclasses
Revenue Recognition Policies
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Ilya Ilienko, dual MBA, CPA, CMA
Board Member / Director
East Coast - United States
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