Chart of Accounts for Your Next Project

Accounting for commercials is a complex and difficult subject that comes with its own vocabulary. One term – chart of accounts – is essential to understanding accounting on a corporate level.

But what is a chart of accounts and why create one? 

To help get you up to speed, we’ve put together a primer on not only what a chart of accounts is, but how Wrapbook integrates it into our services for commercial production companies.

What is a chart of accounts?

V Gordon, Director of Business Development at Wrapbook, says a commercial chart of accounts is,

“... A tool used to specifically budget out and actualize against costs so you know what your profit and loss on a project is.”

More specifically, a chart of accounts is a complete listing of all the individual accounts used by an organization to record its financial transactions. It serves as the backbone of the accounting system and provides a detailed way to organize and categorize financial activities.

Each expense account on the chart can be broken down into more specifics. For example, under assets, you might have accounts like cash, accounts receivable, and inventory. Under expenses, there could be accounts for utilities, salaries, and supplies.

Gordon also notes that a commercial chart of accounts is not the same as “project charts.” 

Project charts dive into even more granular detail on a project-by-project basis. These are key tools to make sure your company properly tracks spending against the budget for any given project.

For instance, a chart of accounts might have a category for “production expenses” but a project chart would break down supplies by department for an individual shoot.

As an example, check out the Association of Independent Commercial Producers’ version of a project chart of accounts, also known as a Bid Form. 

We’ve even published a post to help you fill it out!

How do I use charts of accounts for my commercial production company?

Now that we know what a chart of accounts is, we have put this knowledge into practice. It’s important to start utilizing a commercial chart of accounts as soon as you can. 

But why create a chart of accounts?

Let’s say you’ve just completed your first few commercials and are beginning to bid on larger projects. V explains that it’s not enough to present clients with a bid – say, $50,000 – and expect the client to trust the money will be spent properly. 

Al project chart of accounts for commercial shoots helps you detail to agencies where the money goes once you receive it. 

Even if you are just starting out, a commercial chart of accounts ensures consistency and standardization in financial reporting. It allows accountants to record and classify transactions accurately, making it easier to generate financial statements and understand the financial health of your organization.

Plus, a commercial chart of accounts will help your commercial production company take the next steps towards becoming a sustainable and reliable creative powerhouse.

How do I create a chart of accounts?

Before you open your program of choice, it’s important to start by understanding the kinds of accounts your business requires. Nearly all businesses will make use of asset accounts, liability accounts, equity accounts, revenue accounts, and expense accounts. Beyond that, it’s up to you what categories to include in a commercial chart of accounts. 

Once you have this information gathered and organized, you will be able to enter it into your accounting software. Keep in mind that all programs will have their own unique way of entering and formatting a commercial chart of accounts.

If your commercial production company already uses Wrapbook, you may be familiar with how simple and intuitive our workflow is. 

In the ever-evolving world of commercial production, the need for tailored financial tracking is paramount. 

Here at Wrapbook, our team built a customizable chart of accounts to empower production companies with unprecedented flexibility and accuracy in managing their finances.

You can create and manage one or multiple project-specific chart of accounts templates tailored to your company's unique needs. 

You have the freedom to build your template from scratch or customize Wrapbook's AICP template.

The level of customization extends to editing or adding new line numbers and sections, enabling precise financial tracking that aligns with your project’s specific requirements.

Wrapbook's intuitive interface simplifies the process of enabling a chart of accounts template for use on a project. Plus, there's the ability to override line and section descriptions on your template for individual projects, ensuring that each production's financial reporting is as accurate and relevant as possible.

In essence, Wrapbook's Custom Project of Accounts feature doesn't just streamline financial management in commercial production; it revolutionizes it, offering bespoke solutions that cater to the unique financial intricacies of each project.

If you’re already a Wrapbook customer, reach out to us anytime, or see a step-by-step process for how to create a chart of accounts in Wrapbook here. 

Wrapping up

While it may seem daunting at first, learning the answer to “What is a chart of accounts?” is an essential step to your commercial company’s growth. Once armed with that knowledge, Wrapbook’s powerful, intuitive software makes it easy to create and maintain a chart of accounts no matter how big your company gets in the future.

For more information on mastering your business’ payroll, check out Wrapbook’s suite of financial reporting tools, or our article on expensive payroll mistakes to avoid in 2024.