In this article, learn how to navigate & use your Chart of Accounts page. The second portion of this article explains each account type and how to use them.
You can navigate between account types using tabs at the top of the page. You’ll see a tab for Assets, Liabilities, Income, Expenses, and Equity accounts.
To add a new account, simply click Add an Account and enter the Account Type & Account Name (optional: enter the Account ID and Description). When you’ve finished, click Save.
The Account Name, ID, and Description can be edited at any time by clicking on the grey pencil icon to the right of the account you want to change.
Accounts can be archived by clicking the grey pencil icon to the right of the account and selecting the Archive Account option that appears in the new window that opens.
Once an account has been archived, you can still run reports for the account and retain any transactions that have been categorized into it, but it will not be possible to use the account for any new transactions unless it is un-archived (which can be done at any time by reversing the steps above). When an account is archived, you will see a new tag next to it in the Chart of Accounts page.
You can also completely archive an account - that is, remove it from reports and the transactions page - by deleting all of the transactions in it before following the above directions to archive it. If there are no transactions in it and then it is archived, it will not appear on reports, in transactions, and will not be an option for future transactions.
When you add a sales tax, Wave will create the appropriate account for you under the Liabilities tab. For more details on accounting for Sales Taxes in Wave, click here.
If you’re working with an accountant, or are moving to Wave from another accounting software, account IDs add a language layer to your Chart of Accounts that helps you or your account users reference information more quickly. This is an optional part of account creation.
To add an account ID to your chart of accounts, you can do so when creating a new account or by clicking the pencil icon to edit the account information.
Understanding Account Types
Every category in your chart of accounts falls into one of these five account types: asset, income, equity, liability, or expense.
Assets are things of value that your business owns. An asset can be something tangible like cash, a bank account, property, or a piece of equipment. Or it can be something intangible, like intellectual property or goodwill.
Examples of common asset accounts include bank accounts like checking or savings accounts, inventory, buildings or equipment, and accounts receivable, which is money your business is owed by customers for products or services you've provided.
Income is revenue that your business earns. This can be operating revenue from the goods or services that your business sells or passive revenue from things like investments.
Try using income accounts in Wave to track how different products or services perform with your customers. For example, if you sell wedding photography packages and family portrait packages, creating one income account for wedding photos and another for family photos means you'll be able to see if one package sells better than the other, or how each product performs across a year.
Expenses are outflows of funds from your business to pay for goods and services that your business uses.
Your Wave account will be set up with common business expense accounts, like Office Supplies, but you can always add more based on your specific business needs. Just like with income accounts, use expense accounts to track your different business costs and gain deeper insight into your business.
Liabilities are funds your business owes to other parties—in other words, debt. Credit card balances, business loans or lines of credit, and outstanding bills or sales tax due to the government are all examples of common business liabilities.
Equity represents the difference between your assets and liabilities and measures the net worth of your business. In other words, equity is what would be left over if you sold all your business assets and paid all your debt.
You add equity to your business when you or someone else invests money in the business. You draw equity from your business by taking money from it for personal use.