One reason that a lot of accounting reports are hard to understand for business owners is the chart of accounts is too detailed.

There might be a number of accounts used that only contain a few transactions a year, and keeping these transactions separate doesn’t add any value to the report user’s decision-making process. This results in long, convoluted statements that aren’t useful for the business owner.

A good rule to follow when building your chart of accounts is to ask yourself if adding this new account will actually make a difference in how you make decisions. For example, does having separate accounts for “office expenses” and “dues and subscriptions” make decisions easier for you?