Setting up your chart of accounts in Pakistan: a practical guide for new businesses
Your chart of accounts is the foundation of your accounting system. Here is how to set it up correctly from the start for a Pakistani business.
What is a chart of accounts?
A chart of accounts (COA) is a structured list of every account in your accounting system. Every financial transaction is classified into one of these accounts. A well-structured COA makes your reports meaningful and your tax filing straightforward. A poorly structured COA makes everything harder.
The five fundamental account types
Every account belongs to one of five types: Assets (bank accounts, receivables, inventory, fixed assets), Liabilities (payables, loans, tax liabilities), Equity (owner's capital, retained earnings), Revenue (sales, service income), and Expenses (salaries, rent, utilities, cost of goods sold). These five types map directly to your balance sheet and income statement.
Numbering conventions
A standard numbering system makes your COA easy to navigate. A common structure: 1000-1999 = Assets, 2000-2999 = Liabilities, 3000-3999 = Equity, 4000-4999 = Revenue, 5000-5999 = Cost of Goods Sold, 6000-6999 = Operating Expenses. Leave gaps between account numbers so you can add new accounts without renumbering.
Pakistan-specific accounts to include
For a Pakistani business, include: Sales Tax Payable (FBR output tax collected), Input Tax Recoverable (VAT paid on purchases), EOBI Payable (employer contributions due), Withholding Tax Payable (tax deducted from vendor payments), and separate accounts for each bank account you operate.
FinanceOS Pakistan SME template
FinanceOS includes a pre-built chart of accounts template designed for Pakistani businesses. It includes all the FBR, EOBI, and standard SME accounts, numbered according to local practice. You can use it as-is or customise it to match your specific industry and structure.
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