Understanding Your Chart of Accounts

Add accounts in Twin Owls, pick account codes that match your reports, and use subaccounts without breaking your books.

Published March 15, 2026 · Updated April 10, 2026

Your chart of accounts is the list of categories every transaction is sorted into. This guide explains how to add accounts in the app, how to choose an account code so your profit and loss report stays sensible, and how subaccounts work.

For types and default numbering, start with Setting up your chart of accounts.

Where to add an account

Open Accounts in the sidebar (or open the Accounts page directly).
Select the entity you want if you manage more than one.
Click Add Account to open the form.

If you have permission to add accounts, press n on the Accounts page to open Add Account quickly.

The Add Account dialog showing fields for account code, account name, account type, subaccount checkbox, description, and starting balance. — The Add Account form — fill in the code, name, and type to create a new account.

What you fill in

Field	What it means
Account type	Asset, Liability, Equity, Income, or Expense — must match what you’re tracking.
Account code	Short label to find the account (often numeric). Must be unique within that business.
Account name	Human-readable name (e.g. “HOA Fees”).
Subaccount	Optional. Nests this row under a parent of the same type (see Subaccounts).
Description	Optional notes.
Starting balance	Opening balance when you begin using this account in Twin Owls.

Twin Owls does not force a specific code format, but reports use numeric codes to group lines on the profit and loss statement. Letters-only codes fall back to simple P&L grouping — five-digit numbers are strongly recommended.

Choosing an account code

Match the first digit to the account type

First digit	Account type	Examples
1	Asset	Cash, bank, receivables
2	Liability	Payables, payroll owed, cards
3	Equity	Owner equity, retained earnings
4	Income	Sales, other income
5	Expense (COGS)	Direct cost of goods sold
6–7	Expense (operating & other)	Rent, software, interest, etc.

How code ranges appear on the P&L

For income and expense accounts, the profit and loss report groups rows using these bands:

Code range	P&L section
40000–40999	Revenue (main business income)
41000–49999	Other income
50000–59999	Cost of goods sold
60000–73999	Operating expenses
74000–79999	Other expenses (e.g. interest in that range)

Diagram showing five account code ranges on the left mapping to their corresponding sections on a Profit and Loss report on the right. — The first digits of your account code determine where each line appears on the P&L.

Practical tips

Put new operating expenses in 60000–73999 so they stay with other day-to-day costs.
Use 74000–79999 for lines you want below that block on the P&L (such as interest), if your accountant agrees.
Use 41000–49999 for income that isn’t your main “revenue” line if you want it under Other income on the report.

Common mistakes

Wrong first digit for the type — e.g. code starting with 6 but type Income: the account may appear in the wrong report section.
Duplicate codes — the app rejects a second account with the same code.
Very high or odd numbers — still allowed, but may land in an "Other" section on the P&L instead of a specific group.

Subaccounts

A subaccount is a more specific line that rolls up under a parent account of the same account type.

Create at least one top-level account of that type first (or use one from the default chart).
Open Add Account again, enter code and name, and choose the same account type as the parent.
Turn on Make this a subaccount and choose the parent from the list.

Subaccounts appear nested under the parent on the Accounts page. You cannot pick a parent with a different type than the child.

Accounts table showing a Utilities parent account with three indented subaccounts — Electricity, Water, and Trash — whose balances roll up to the parent. — Electricity, Water, and Trash roll up into the Utilities parent account.

Note: If an account already has transactions, you may not be able to change its type or parent — add a new account and migrate activity with your accountant if needed.

Setting up your chart of accounts — account types and default numbering
Accounting basics — how double-entry fits together

Try it in Twin Owls

See this in action in the app. Open in app