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When it comes to developing a chart of accounts, I like to start with a blank canvas, work out the essentials, and allow the chart to organically grow with the business. Adding new accounts as you’re developing the business is easy — so don’t feel compelled to do it all now!

Speak with your accountant and ask if she has a preferred chart of accounts. I encourage all my clients to speak with their own tax accountant before developing a customised chart of accounts with them.

In this section, I share a few simple methods I use when I work with customers on developing a useful chart of accounts. Note: If your business is relatively straightforward, the insight you need about different income streams and the direct costs associated with these may be generated by simply using Xero’s Tracking features. (See Chapter 12 for more on Tracking in Xero.)