Basic Structure of a CoA

Your Chart of Accounts should cover:

• Balance sheet accounts (Assets, Liabilities, Equity)
• Income statement accounts (Revenue, Expenses)

Under each category, create sub-accounts relevant to your e-commerce business.

Suggested Accounts for a Shopify-Based Business

Customize these based on your business size, complexity, and local tax requirements.

Assets

• 1000 Cash – Bank Account
• 1010 Undeposited Funds (for Shopify payouts)
• 1100 Accounts Receivable (if you issue invoices)
• 1200 Inventory – On Hand
• 1300 Prepaid Expenses (e.g., prepaid shipping)

Liabilities

• 2000 Accounts Payable
• 2100 Sales Tax Payable
• 2200 Merchant Fees Payable (or Payment Processor Liability)
• 2300 Deferred Revenue (if you collect before delivery)

Equity

• 3000 Owner Capital
• 3100 Retained Earnings

Revenue (Income)

• 4000 Online Sales – Shopify
• 4050 Shipping Income
• 4100 Returns & Allowances (contra-revenue account)

Cost of Goods Sold (COGS)

• 5000 COGS – Product Cost
• 5050 COGS – Freight In (inventory shipping costs)

Expenses

• 6000 Advertising & Marketing
• 6100 Shipping Expense
• 6200 Payment Processor Fees
• 6300 Packaging Supplies
• 6400 Software & Subscriptions
• 6500 Office Supplies
• 6600 Rent & Utilities (if applicable)
• 6700 Wages & Salaries

Best Practices for Your CoA

• Use consistent naming and numbering (e.g., Assets 1000–1999, Liabilities 2000–2999) for easier reporting.
• Avoid creating too many ultra-specific accounts unless necessary; too many accounts can be harder to manage.
• Review your accounts at the end of the fiscal year to retire or merge unused accounts.
• Map your Shopify/QuickBooks integration so each transaction type (sale, refund, shipping, fee) posts to the correct account, ensuring accurate P&L and balance sheet reports.
• Align your tax setup in QuickBooks with local regulations (e.g., GST/VAT in Pakistan) to ensure compliance.