Graphic Design Business Accounting: COA Template & Account Hierarchy

Posted In | Finance | Accounting Software | Chart of Accounts

Graphic design businesses provide creative services such as branding, logo design, and advertising material creation for their clients. Effective financial management is essential for the success of any graphic design business, and a key component of this process is the Chart of Accounts (COA). In this article, we will discuss the importance of a COA for graphic design businesses, provide an example template, and outline the account hierarchy.
 

 

What is a Chart of Accounts (COA)?

A Chart of Accounts (COA) is an organized list of all financial accounts used by a business to record and report its financial transactions. The COA serves as the foundation for the company's accounting system, enabling accurate tracking and reporting of financial activities. For graphic design businesses, a well-structured COA can provide insights into profitability, cost management, and areas for improvement.

 

Example COA Template for Graphic Design Businesses

The following is an example COA template designed specifically for graphic design businesses. Keep in mind that every business is unique, and your COA should be tailored to your specific needs and requirements.

 

1. Assets
 

1.1. Current Assets

1.1.1. Cash

1.1.2. Accounts Receivable

1.1.3. Prepaid Expenses
 

1.2. Non-Current Assets

1.2.1. Property, Plant, and Equipment

1.2.2. Intangible Assets

 

2. Liabilities
 

2.1. Current Liabilities

2.1.1. Accounts Payable

2.1.2. Accrued Expenses

2.1.3. Current Portion of Long-term Debt
 

2.2. Non-Current Liabilities

2.2.1. Long-term Debt

2.2.2. Deferred Tax Liabilities

 

3. Equity

3.1. Owner's Capital

3.2. Retained Earnings

 

4. Revenue

4.1. Design Service Revenue

4.2. Other Income

 

5. Expenses
 

5.1. Cost of Services

5.1.1. Freelancer and Contractor Fees

5.1.2. Software and Tools Subscriptions

5.1.3. Printing and Production Costs
 

5.2. Operating Expenses

5.2.1. Salaries and Wages

5.2.2. Rent and Utilities

5.2.3. Marketing and Advertising

5.2.4. Office Supplies

5.2.5. Insurance

5.2.6. Depreciation and Amortization
 

5.3. Interest Expense
 

5.4. Income Tax Expense

 

Account Hierarchy in Graphic Design Business Accounting

Account hierarchy is essential for maintaining consistency and accuracy in financial reporting. A typical account hierarchy for graphic design businesses consists of the following levels:
 

1. Category: The highest level in the hierarchy, representing the main divisions of the financial statement (assets, liabilities, equity, revenue, and expenses).
    

2. Subcategory: A more detailed level within the main categories, further segregating accounts based on their nature or function (e.g., current assets, non-current assets, operating expenses).
    

3. Account: The most detailed level, representing individual financial accounts used to record specific transactions (e.g., cash, accounts receivable, freelancer fees).

 

A well-organized Chart of Accounts is crucial for effective financial management in graphic design businesses. By creating a customized COA tailored to the specific needs of your graphic design business and establishing a clear account hierarchy, you will ensure accurate financial record-keeping, facilitate reporting, and provide valuable insights for decision-making. Graphic design businesses have unique accounting needs, such as tracking freelancer and contractor fees, managing software and tools subscriptions, and handling printing and production costs. It is essential to consider these specific requirements when developing your COA. You may also want to include accounts for staff training, website development and maintenance, and licenses or permits, as these are common financial events in the graphic design industry. As your graphic design business grows and evolves, it is essential to review and update your COA periodically to accommodate changes in your financial structure, new service offerings, or shifts in business strategy. This will help maintain a robust and effective accounting system that supports the ongoing success of your graphic design business.