A chart of accounts sounds like something only your CA should care about, and that is exactly why so many studios end up with a mess, because the owner hands it off, the accountant sets up something generic built for a trading company, and two years later nobody can answer a simple question like "how much did we actually earn from design fees versus from supplying furniture". The chart of accounts is just the filing system for all your money, the set of labelled drawers every rupee gets sorted into, and if the drawers match how a design studio actually works, your numbers tell you the truth at a glance. If they do not, you spend every month wrestling meaning out of a spreadsheet. Let me show you how to set it up so it works for you.
What a chart of accounts actually is
Strip away the accounting language and a chart of accounts is a list of categories your money can belong to, organised into five big families: income, expenses, assets, liabilities, and equity. Every transaction in your studio lands in one of these, and the quality of your financial picture depends entirely on whether the categories underneath them are shaped like your business.
For a design studio, the five families break down like this in plain terms. Income is what you earn, split by how you earn it. Expenses are what you spend, split into project costs and overheads. Assets are what you own, like your bank balance and money clients owe you. Liabilities are what you owe, like supplier bills and GST payable. Equity is the owner's stake. You do not need to be fluent in all five to run a good studio, but you do need income and expenses set up well, because those two are your profit picture.
Split income the way a studio actually earns
The single most valuable thing you can do in your chart of accounts is separate your design income from your supply income, because they are completely different businesses wearing one coat. Design fees are high-margin knowledge work. Supplying furniture and materials is lower-margin trading. Blend them into one "sales" account and you can never tell which part of your studio is actually profitable, which cripples your ability to price future work to protect your margin.
| Account | Family | What lands here |
|---|---|---|
| Design and consultancy fees | Income | Your drawings, concepts, supervision |
| Supply of furniture and materials | Income | Goods you sourced and billed |
| Materials and finishes cost | Expense (direct) | What supplied goods cost you |
| Site labour and contractors | Expense (direct) | Execution on the ground |
| Rent and utilities | Expense (overhead) | Studio premises |
| Salaries and wages | Expense (overhead) | Your core team |
| Software and subscriptions | Expense (overhead) | Your tools |
| GST payable | Liability | Tax collected, owed to government |
| Trade receivables | Asset | Money clients still owe you |
That is a starter chart that already tells you more than most studios can see today, and you can grow it, but resist the urge to grow it too far, because a chart with two hundred accounts is as useless as one with five.
Separate direct costs from overheads, always
Inside your expenses, the most important line you can draw is between direct costs, the money spent on specific projects, and overheads, the money spent to keep the studio running regardless. This one distinction is what makes your gross margin visible, because gross margin is income minus direct costs, and you cannot see it if project costs and rent are jumbled in the same drawer.
Keeping this split clean in your chart of accounts is what makes reading budget against actuals and closing your books each month genuinely fast rather than a monthly archaeology dig. It also feeds straight into a proper month-end close for the studio, because when every transaction was already sorted into the right drawer as it happened, closing is a review rather than a rebuild.
Keep it simple, then let it grow
The most common chart-of-accounts mistake is over-engineering it on day one, inventing a separate account for every conceivable expense until nobody knows where to put anything. A tired designer at 11pm will not agonise over whether a spend goes in "site consumables" or "minor materials", they will guess, and your beautiful structure fills up with noise. Start with a tight chart, maybe fifteen to twenty accounts, and only add one when you genuinely need to see that number separately.
The test for adding an account is simple: would you ever make a decision based on this number on its own? If yes, it deserves its own account. If no, it belongs inside a broader one. A studio's chart of accounts should be a little smaller than feels comfortable, because clarity beats completeness every time.
Setting up a studio chart of accounts, step by step
- Split income into design fees and supply, never blend them
- Separate direct project costs from studio overheads
- Add a clear GST payable account for collected tax
- Track trade receivables so you see what clients owe
- Keep the total tight, fifteen to twenty accounts to start
- Only add an account when you would act on that number alone
- Mirror the structure your accountant uses in Tally or Zoho Books
Make it speak your accountant's language and GST's
Your chart of accounts does not live in isolation, it has to line up with how your accountant works in Tally or Zoho Books and with what GST demands of you. When your studio's accounts mirror the structure your CA uses, the sync between your studio system and their books is clean, and month-end stops being a translation exercise. When they do not match, every month is a manual reconciliation, which is exactly the tax that a disconnected setup imposes.
GST adds its own requirement, because you need to see output tax collected and input tax paid clearly enough to file accurately, which you can cross-check against the official GST portal and the rate references on CBIC-GST. A GST payable account that is actually kept clean is what lets you raise compliant invoices and file returns without a scramble, and you can confirm the treatment of any supplied item against an HSN and SAC lookup so it lands in the right place.
Set it up once, benefit every month
A well-built chart of accounts is a one-time job that pays you back every single month, because it decides how clearly you can see your studio for years. Get the income split right, keep direct costs and overheads apart, stay tight, and match your accountant, and your numbers will answer real questions instead of raising new ones. If you are choosing the system this all sits inside, my guide to the best software for Indian interior designers walks through what to look for, because the tool should make good structure easy rather than fighting you.
Frequently asked questions
What is a chart of accounts in simple terms?
It is the labelled set of categories every rupee in your studio gets sorted into, grouped into income, expenses, assets, liabilities and equity. A good one is shaped like your actual business, so your numbers answer real questions at a glance.
Why should design income and supply income be separate accounts?
Because they are very different businesses. Design fees are high-margin knowledge work and supplying goods is lower-margin trading, so blending them hides which part of your studio is actually profitable and cripples your pricing decisions.
How many accounts should a small studio have?
Start tight, around fifteen to twenty. Over-engineering the chart leads to guessing and noise, so only add a new account when you would genuinely make a decision based on that number on its own.
Should my chart of accounts match my accountant's Tally or Zoho setup?
Yes. When your studio's account structure mirrors what your CA uses, the sync between your system and their books stays clean and month-end becomes a review rather than a manual reconciliation.
A chart of accounts is unglamorous plumbing, but it is the plumbing that decides whether you can ever really see your studio, and an afternoon spent setting it up well saves you years of squinting at confusing reports. If you want to see a studio-shaped chart of accounts feeding clean numbers as work happens, click through the demo, and when you are ready to run the whole studio on one flat founding price billed in rupees with unlimited free client logins, the offer page has the details.