Creating Account Types

Creating Account Types

Account Types are the top-level categories in your Chart of Accounts that group related accounts together. While EquiBillBook comes with standard account types (Assets, Liabilities, Income, Expenses, Equity), you may need to create custom account types for specialized accounting needs. This guide shows you how to create and manage account types.

Understanding Account Types

Account Types serve as the primary classification for all accounts in your Chart of Accounts. They help:

• Organize accounts into logical groups
• Generate proper financial reports
• Maintain accounting standards
• Structure your Chart of Accounts hierarchy

Standard Account Types in EquiBillBook

EquiBillBook includes these standard account types by default:

• Assets - What your business owns
• Liabilities - What your business owes
• Income - Revenue your business earns
• Expenses - Costs your business incurs
• Equity - Owner's stake in the business

In most cases, these standard types are sufficient and you won't need to create additional account types.

When to Create Custom Account Types

You might need custom account types for:

• Specialized industry requirements
• Regulatory compliance needs
• Custom reporting requirements
• Multi-entity accounting
• Departmental or divisional accounting

Accessing Account Types

To view and create account types:

1. Navigate to Accounts module from the main menu
2. Click on Chart of Accounts or Accounts
3. Go to Account Types or Account Settings
4. You'll see a list of existing account types

Creating a New Account Type

Step 1: Access Account Types Management

Navigate to the Account Types section in the Accounts module.

Step 2: Click "Create Account Type" or "Add New"

Look for the button to add a new account type (usually at the top of the account types list).

Step 3: Enter Account Type Details

Fill in the following information:

Account Type Name

• Enter a clear, descriptive name (e.g., "Fixed Assets", "Current Liabilities")
• Use standard accounting terminology when possible
• Keep names concise but descriptive

Account Type Code

• Enter a unique code or number for this account type
• Common numbering: 1000-1999 for Assets, 2000-2999 for Liabilities
• Ensure the code doesn't conflict with existing types
• Use a consistent numbering system

Description (Optional)

• Add a description explaining the purpose of this account type
• Helpful for team members to understand the account type
• Can include examples of accounts that belong to this type

Nature/Classification

• Specify if this is a Balance Sheet item (Assets, Liabilities, Equity) or Profit & Loss item (Income, Expenses)
• This determines where accounts appear in financial reports
• Balance Sheet items show assets, liabilities, and equity
• Profit & Loss items show income and expenses

Affects

• Specify how accounts in this type affect the accounting equation
• Assets: Increase with Debit
• Liabilities: Increase with Credit
• Income: Increase with Credit
• Expenses: Increase with Debit
• Equity: Increase with Credit

Step 4: Configure Display Options

Set display preferences:

• Display Order: Position of this type in lists and reports
• Show in Reports: Whether to include in financial reports
• Active Status: Enable or disable the account type

Step 5: Save the Account Type

Click "Save" or "Create" to create the account type.

Editing Account Types

To modify an existing account type:

1. Find the account type in the list
2. Click on it or click the "Edit" button
3. Modify the details as needed
4. Note: Be careful when editing standard account types - it may affect existing accounts
5. Save your changes

Deleting Account Types

Important considerations before deleting:

• Cannot delete if accounts exist: Remove or reassign all accounts first
• Cannot delete standard types: Default EquiBillBook account types are protected
• Historical data: Deletion may affect historical reports
• Backup: Consider exporting data before deletion

To delete a custom account type:

1. Ensure no accounts are assigned to this type
2. Click on the account type
3. Click "Delete" or "Remove"
4. Confirm the deletion

Activating/Deactivating Account Types

Instead of deleting, you can deactivate account types:

• Deactivate: Hide from new account creation but keep existing accounts
• Activate: Make available for use again
• Deactivated types don't appear in dropdowns but existing accounts remain functional

To activate/deactivate:

1. Open the account type
2. Toggle the "Active" status
3. Save changes

Best Practices for Account Types

1. Use Standard Types When Possible

• Stick to standard accounting classifications
• Only create custom types when absolutely necessary
• Standard types ensure compatibility with accounting standards

2. Maintain Consistency

• Use consistent naming conventions
• Follow a logical numbering system
• Keep descriptions clear and standardized

3. Plan Your Structure

• Think about your reporting needs before creating types
• Consider future expansion requirements
• Ensure the structure supports your business model

4. Document Custom Types

• Add clear descriptions explaining custom types
• Document why custom types were created
• Keep notes on usage and conventions

5. Review Regularly

• Periodically review account types
• Consolidate similar types if needed
• Remove unused custom types

Account Type Numbering Convention

Common numbering conventions:

• 1000-1999: Assets
• 2000-2999: Liabilities
• 3000-3999: Equity
• 4000-4999: Income
• 5000-5999: Expenses

Leave gaps in numbering for future additions (e.g., use 1100, 1200 instead of consecutive numbers).

Account Types and Financial Reports

Account types determine how accounts appear in reports:

• Balance Sheet: Shows Assets, Liabilities, and Equity types
• Profit & Loss: Shows Income and Expense types
• Trial Balance: Groups accounts by type
• Account Type Summary: Shows totals by account type

Ensure account types are correctly classified for accurate reporting.

Common Account Type Examples

Assets Sub-types

• Current Assets (1000-1099)
• Fixed Assets (1100-1199)
• Investments (1200-1299)

Liabilities Sub-types

• Current Liabilities (2000-2099)
• Long-term Liabilities (2100-2199)

Expenses Sub-types

• Operating Expenses (5000-5099)
• Administrative Expenses (5100-5199)
• Financial Expenses (5200-5299)

Troubleshooting

Cannot Create Account Type

• Check if code already exists
• Verify you have permissions to create account types
• Ensure required fields are filled

Account Type Not Appearing in Reports

• Check if account type is active
• Verify classification (Balance Sheet vs Profit & Loss)
• Ensure accounts exist under this type

Cannot Delete Account Type

• Remove all accounts assigned to this type first
• Check if it's a standard protected type
• Consider deactivating instead of deleting

Related Features

• Creating Account Sub-types - Organize accounts within types
• Creating Individual Accounts - Add accounts to your types
• Account Hierarchy - Understand the complete structure

Need Help?

If you need assistance with account types:

• Review standard account types provided by EquiBillBook
• Consult accounting standards for proper classification
• Check with your accountant before creating custom types
• Contact support for help with complex account structures

While standard account types are usually sufficient, creating custom account types can help organize your Chart of Accounts for specialized business needs. Use them wisely to maintain clear and accurate accounting!