Start with the End in Mind
The best COAs are designed with the final output—financial reporting and analysis—in mind. Growing companies should reverse-engineer their COA based on what they want their internal and external financial statements to communicate. This means starting with modeled income statements and balance sheets, using public company comparables or investor reporting standards as a template. These samples guide the structure and granularity needed, ensuring the COA supports strategic visibility rather than reactive bookkeeping.

Leverage Existing Accounts and Templates
Rather than starting from scratch, companies can analyze their current COA and map it against industry-standard templates. This benchmarking process identifies redundancies, gaps, and over-categorization. The result is a cleaned-up, more intuitive framework tailored to the company’s actual operations. Merging like accounts and creating logical groupings (e.g., grouping all software subscriptions into a single account) helps simplify and rationalize the structure.

Maintain Simplicity Without Losing Flexibility
One of the biggest mistakes growing companies make is over-complicating their COA. Complexity reduces usability and leads to inconsistencies. Instead, companies should prioritize a clean structure with space for flexibility. A five-digit account number system with built-in spacing (e.g., using increments of 10 or 100 between accounts) enables easy expansion without frequent renumbering. Supplementary detail can be tracked with class or department tags, project codes, or dimensions in modern accounting systems.

Align with External Reporting and Audit Needs
As companies scale, they’ll face more scrutiny from outside parties—investors, lenders, auditors, and regulators. Aligning the COA with reporting and audit requirements ensures that disclosures are transparent, complete, and traceable. A best practice is to structure sub-accounts to tie directly into financial statement footnotes and audit schedules, streamlining the reporting process and avoiding last-minute rework.

Harness Technology to Enforce Discipline
Modern accounting platforms like QuickBooks Online, NetSuite, or Sage Intacct (and many others!) provide tools to help enforce COA discipline. Features like role-based access, default templates, and automated transaction coding reduce user error and keep data clean. Integration with FP&A tools also enables faster monthly closes and more dynamic forecasting, both of which depend on a stable and well-organized COA.