Your chart of accounts (COA) is the list of buckets every dollar in and out of the shop lands in. It exists to make your P&L useful: the report that tells you what you actually earned.
It should serve you (and your CPA/tax pro). There's no one correct version. Expect to adjust it once you've looked at your own numbers a few months running and find you're too deep in the weeds on some lines and want others teased apart. Take the structure, not the list.
Income
12 accountsSeparate income by service type, not one catch-all “income” line. Clean separation shows which services drive revenue and which underperform.
Parent account for all repair and service labor income. Optional: Use sub-accounts here if you want to drill down further.
Standard setups, action adjustments, intonation, etc.
Fret dresses, leveling, crowning, refrets. Higher ticket, so it's worth tracking separately.
Pickup installs, rewires, shielding, pickup winding, OBEL and custom wiring jobs.
Truss rod work, neck resets, headstock repairs, crack repairs, structural glue jobs.
Touch-ups, refinishes, binding repairs, cosmetic restoration. Often project-based pricing.
Parts billed to the customer: strings, tuners, nuts, pickups, fretwire, pots, etc. Separate from labor income. Ideally this runs higher than the corresponding Parts & Materials - Cost account, so you're making a margin on parts rather than passing them through at cost. The dealer pricing guide covers how that margin gets built.
Your commission only, not the full sale price. You never owned the instrument, so the owner's share isn't your revenue: it posts as a liability when the item sells and clears when you pay them. Booking the full amount as income inflates your revenue with money that was never yours.
Lessons, workshops, or repair instruction. Keep separate from repair income: different margin profile and potentially different tax treatment depending on your state.
We are in a vacation destination and kept getting calls about it, so we keep a few guitars on hand to rent. That income lands here. A good example of why the chart should follow your shop rather than a template. This line would make no sense for most shops and it earns its place in ours.
Some states let you keep a small percentage of the sales tax you collect as compensation for collecting and remitting it on their behalf. Florida allows this on returns filed and paid on time electronically. It also needs somewhere to go. If you collected $100 and only remit $98, Sales Tax Payable still has to clear by the full $100, so that $2 difference has to land in an account. It is income you earned for doing the collecting, so that is where I put it.
Interest earned on a business savings or money market account. Keep it out of your service income accounts. It has nothing to do with how the shop is performing.
In practice
Make your invoice data do the work for you. Map each product and service you sell to the income account it belongs to, and this breakdown happens on its own, with no second round of data entry.
Cost of goods sold (COGS)
1 accountDirect costs tied to delivering your services: the parts you buy and resell on a repair job. Some consumables that become part of the repaired property (fretboard oil, solder, finishing compounds) are technically resale-eligible per FL DOR GT-800067, but for COA purposes they still belong in operating expenses where they're visible as a cost of doing business, not buried in COGS with discrete parts.
Your cost for parts you purchase and resell as part of a repair job: strings, pickups, hardware, fretwire, nuts, saddles, pots. Matches against Parts & Materials - Sales.
In practice
Check your Parts & Materials Income and COGS accounts against each other. Income should come in above cost, or at worst even. If cost is running higher, either you're marking parts up less than you think or you bought stock you haven't sold yet. Bulk ordering throws the timing off, so compare across a few months rather than one.
Operating expenses
13 accountsMost of these are standard for any small business. The value is in keeping them separate rather than in the categories themselves. The starred one is the exception, and it's the account most repair shops don't have at all.
Polish, fretboard oil, string lubricant, finishing compounds, cleaning solvents, abrasives, tape, and anything else consumed in performing repairs that doesn't show up on a customer invoice. A real and recurring cost of service delivery that generic templates bury in a catch-all supplies account.
Files, nut slot gauges, small jigs, minor tooling, anything expensed immediately rather than capitalized. Separate from consumables. Tools last longer than a bottle of polish.
Larger tool purchases below your capitalization threshold, maintenance on major equipment, repair costs for bench tools. If you capitalize equipment it goes on the balance sheet. Check with your accountant.
Shop rent, storage rent, shared workspace fees. If you work from home keep a consistent home office allocation and document it.
Electric, internet, water for the shop. Allocate proportionally if working from home.
luthiOS, QuickBooks, Wave, scheduling software, cloud storage, and anything else billed monthly or annually for business operations.
Website hosting, paid ads, print, social media promotion. Separate from software subscriptions.
General liability, property, business owner's policy. Instruments in-shop coverage if applicable.
CPA, bookkeeper (Fret Not Financials), attorney fees. Keep separate from general software/subscriptions.
Stripe, Square, PayPal transaction fees. It has to land somewhere, and if you're using your accounting system as your POS it probably creates this account for you, so you'll want something to map it to anyway.
If you use a vehicle for business: pickups, deliveries, parts runs. Track carefully. Standard mileage vs. actual expense method: your CPA can advise which is better for your situation.
The charge for equipment you've capitalized rather than expensed: a spray booth, a CNC router, a Plek station. Generally used at year end, with the numbers prepared by your tax preparer. It's the P&L side of the Accumulated Depreciation line on your balance sheet. If you don't have any capitalized equipment, you don't need this account.
Interest on business loans, equipment financing, and any credit card balance you carry. Worth its own line because a loan payment isn't all expense. The principal portion reduces the liability on your balance sheet, and only the interest belongs here. Booking the whole payment as an expense overstates your costs and leaves the loan balance wrong.
Why consumables deserve their own account
Polish, fretboard oil, string lubricant, finishing compounds: a real, recurring cost of doing the work that never shows up on a customer invoice. Buried in a catch-all “supplies” account, you can't see it creeping up, and you can't tell whether your pricing actually covers your cost of delivery.
Visible costs get managed. Invisible ones just accumulate.
A few notes before you copy this
This is based on one shop's real books
My husband runs a solo guitar repair shop. This COA works for us. Your shop may have revenue streams or expense categories that don't fit neatly. Adjust accordingly. The point is the structure, not copying it verbatim.
Consignment has a liability component
When you take an instrument on consignment, the owner's share of the eventual sale sits as a liability on your balance sheet until you pay it out. It isn't revenue and it isn't a cost of sale. Only your commission hits the P&L. Same goes for any sales tax you collected on the sale: another liability.
Sales tax is not income or expense
Sales tax you collect flows through a liability account (Sales Tax Payable), and the payment you make clears that liability. Neither side belongs on your P&L. If the collection is sitting in income, or the remittance is sitting in expenses, your P&L is inflated on both ends and the math won't tie out. This is one of the most common errors I see in cleanup work.
This is a starting point, not tax advice
Setting up a COA is accounting structure, not a substitute for understanding your actual tax obligations. If you're unsure how your revenue should be classified or whether you're collecting sales tax correctly, that's a separate conversation, and one worth having before it becomes a problem.
Need help applying this to your shop?
I can help you set things up correctly, whether that's your chart of accounts, your sales tax compliance, or your bookkeeping workflow.