Every business needs accurate books, but the bookkeeping needs of each business vary — the original site said that, and it was right. The place the variance shows first is the chart of accounts. A café, a builder and a clinic can share software and still need different bones.
This is a working chart for an Australian small company or sole trader who lodges BAS and pays someone to prepare a return. It is not a template to import blindly. It is the questions a Rosebery bookkeeper used to ask before they renamed a single line.
Start from the return, not from the software
Software vendors ship a list that looks complete and is not. “Sales”, “Cost of sales” and a forest of expenses will lodge a BAS. They will not tell you whether the job made money, whether the car is private, or whether the grant is income this year.
Sit with last year’s tax return and the last four activity statements. Circle every label that an agent or a bank manager already uses. Those labels become accounts. Everything else is a candidate for merger.
For a base-rate company the return cares about ordinary income, small-business concessions, Division 7A if money moved to a shareholder, and the franking account. For a sole trader it cares about the business schedule and the private-use adjustments. Your chart should make those adjustments a journal, not an excavation.
Income that matches how you invoice
If you raise invoices for labour, materials and variations, those are three income accounts — or two, if variations live with labour. If you take retainers, do not drop them into sales the day the cash hits. Unearned income is a liability until you have done the work.
GST-free supplies (many basic foods, some health, some education, exports) need their own income account if they are regular. So do input-taxed supplies such as residential rent. Mixing them into “Sales” with a tax rate you remember to change is how a Simpler BAS still goes wrong. See GST on mixed supplies.
Government grants, JobMaker-style leftovers, and insurance recoveries are not sales. Give them names. A not-for-profit that dumps grants into sales will mis-acquit and mislead a board. Our grant acquittals piece walks that file.
Cost of sales is a decision, not a default
Cost of sales should move with revenue. Materials you install, subcontractors on a job, merchant-funded inventory, and clinic consumables belong there. Your rent, your bookkeeper and your phone do not.
Tradies often code all materials to expenses and then wonder why the job-cost report is fiction. If you buy a $8,000 pack of panels for a house, that is a job cost or inventory, not “materials — general”. Read inventory, job costing and a lying P&L before you trust the project tab.
Wages, super and the payroll cluster
Keep these apart, always:
- wages and salaries (ordinary time)
- overtime and allowances that are not ordinary time earnings
- superannuation guarantee
- salary-sacrifice super
- workers compensation
- payroll tax (if you are in)
- PAYG withholding (a balance-sheet clearing account, not an expense)
If you collapse them into “Staff costs”, you cannot check payday super, you cannot explain a WorkCover premium, and you cannot answer a Fair Work query. The ordinary time earnings essay is the companion to this cluster.
GST, PAYG and super as clearing accounts
The balance sheet should show what you owe the ATO and the super fund, not a vibe. A GST control account is reconciled to the lodged BAS. PAYG withholding is reconciled to STP. Super payable is reconciled to the clearing house and, since payday super, to the pay run itself.
If those accounts wander, your BAS lodgement is theatre. The original firm’s promise of “validated numbers for a BAS return” lived in these three lines.
Private, related and awkward
Australian small files die on related-party mess. Drawings, owner loans, director fees, rent paid to a family trust, cars used at the weekend, and the home-office share all need names. Do not hide them in “motor vehicle” or “occupancy”.
A company that pays a shareholder’s credit card is not “expenses”. It is a loan or a deemed dividend until someone documents it. Put it on the balance sheet in language that makes a tax agent sit up.
How many accounts is too many
A chart with 400 lines is not control. It is a place to lose a coffee. If two accounts are never reviewed separately, merge them. If you have not looked at “Printing & stationery” as a decision in three years, it can live inside office costs.
Keep a short list of accounts you actually manage: cash, debtors, creditors, GST, super, wages, the two or three income streams that pay the rent, and the costs you can change this month. Everything else exists to support a return, not a dashboard.
Naming that survives a new bookkeeper
Use Australian English and ATO language. “Accounts receivable”, not “AR”. “Superannuation”, not “401k”. “GST collected”, not “sales tax”. Date your clearing accounts to the BAS period if it helps (“GST — March 2026”).
Write a one-page legend: what belongs in each income account, what never goes to meals, what a “ask owner” code means. The next person — and there is always a next person — should not need a séance.
A chart is not a personality. It is a set of drawers. The Rosebery desk built drawers a tax agent could open without asking where the teaspoons lived. That is still the job. When the chart is honest, the month-end close takes a day, not a fortnight.
A worked example: one company, two locations
Imagine a single Pty Ltd that invoices from a Rosebery studio and a small Perth desk — the geography the old firm actually served. The temptation is to copy the software default twice. Resist it. Use tracking categories or a location field for the two desks, and keep one chart. Duplicate charts are how “GST — Sydney” and “GST — Perth” stop agreeing with a single activity statement.
Income stays named by what you sell, not by postcode. If both desks sell the same labour, one income account plus a location tag is enough. If Perth only sells retainers and Rosebery only sells projects, then the accounts can split — because the work split, not because the ABN did.
Costs that are truly local (a lease, a cleaner, a specific car) can carry a location. Costs that are not (Xero, professional indemnity, the tax agent) should not be forced into a fake split. A bank manager who asks “what does Perth make?” wants contribution, not a novel.
This is the same discipline as industry files. A clinic that opens a second room does not need a second chart. A builder who takes a job in Wollongong does not need a second GST account. Grow the tags. Protect the bones.
If you inherit a file with three charts and a “suspense — old Xero”, stop adding accounts. Spend a month merging, with a map the owner signs. The map is part of the file a tax agent can use. Without it, every new login makes the forest denser.
