How to Categorize Your Spending Like a CEO (Not a Bookkeeper)

You didn’t start your business to become a bookkeeper, but financial leadership is part of your job. And it’s one of the most overlooked tools in your CEO toolkit?

A chart of accounts that actually works for your business.

When you categorize your income and expenses in a way that makes sense to you (not just your accountant), everything becomes easier:

• You understand your true margins

• You know where your money is going

• You make faster and smarter decisions

Here’s how to set up your categories for clarity, not confusion.

Start With the End in Mind

Think about the decisions you need to make monthly:

• Are we hitting our revenue goals?

• Which services are most profitable?

• Where can we cut spending without hurting delivery?

Your categories should be built to answer those questions.

If your reports aren’t helping you lead, they’re not set up right.

Break Down Your Income

Don’t lump everything into “Sales.” Break revenue into meaningful categories. Some examples of how to break this down are:

• By service line

• By retainer vs. project

• By recurring vs. one-time income

This lets you see trends, double down on what’s working, and adjust where needed.

Clarify Cost of Goods Sold (COGS)

A cost of goods sold is anything that must happen every time you make a sale.

That includes:

• Freelancers or contractors tied to delivery

• Licensing or media buys on behalf of clients

• Print, materials, or pass-through software

Think: “If I didn’t make this sale, would this cost still exist?” If not, it’s a COGS.

Simplify Operational Expenses

Everything else falls under operational overhead:

• Salaries (for internal team)

• Marketing and advertising

• Office expenses

• Subscriptions

Here’s where you want to audit regularly. These should support your delivery, not drown your margins.

Use Buckets That Make Decisions Easier

I often recommend structuring reports around these three buckets:

• What we made (Revenue)

• What it cost to deliver (COGS)

• What it takes to operate (Overhead)

From there, you can easily calculate:

• Gross profit

• Net profit

• Capacity for growth

Final Thought: Your Categories Should Serve You

QuickBooks shouldn’t just be something you hand off once a year.

It should be one of your most important leadership tools.

If your numbers aren’t telling you a clear story, it might be time to reorganize your categories and rewrite the story of your business.