Start with reporting, not a long nominal list
A chart of accounts should support annual accounts, VAT, corporation tax work and management decisions. More codes do not automatically mean better records. Use reporting tags or projects where a dimension cuts across several income and cost accounts.
| Group | Typical accounts | UK notes |
|---|---|---|
| Assets | Bank, debtors, prepayments, stock, fixed assets, accumulated depreciation | Keep bank and control accounts separate; use a fixed asset register for detail. |
| Liabilities | Creditors, accruals, PAYE/NIC, VAT control, loans, director's loan | Reconcile payroll, VAT and director balances regularly. |
| Equity | Share capital, retained earnings, dividends | Do not code drawings through expenses in a limited company. |
| Income | Sales by meaningful stream, other operating income, interest | Separate zero-rated, exempt or outside-scope activity only where reporting needs it. |
| Cost of sales | Direct labour, materials, subcontractors, carriage | Use only costs that vary directly with delivery. |
| Overheads | Wages, rent, software, marketing, travel, professional fees | Avoid one account per supplier; suppliers already provide that analysis. |
Configure account types carefully
Zoho account type controls where balances appear and which workflows use the account. Confirm the type before importing history. Protect system and control accounts from routine manual journals.
VAT belongs on transactions
Do not create separate income accounts merely to force VAT treatment. Configure UK tax rates and apply the correct treatment to invoices, bills and bank transactions, with a distinct VAT control account reconciled to returns.
Use tags for dimensions
Departments, channels and locations often belong in reporting tags or branches rather than duplicated account ranges. Test profit and loss, balance sheet and transaction detail before rolling the design out.