COA Restructure
This document defines the official restructuring strategy for the eXpress badging® Chart of Accounts (COA) within QuickBooks Online (QBO). The primary objective is to simplify and standardize Income and Cost of Goods Sold (COGS) reporting to accurately measure Gross Profit (GP) by operational revenue channel.
COA Restructure & GP Channel Alignment eXpress badging® – QuickBooks Online Knowledge Base Article
PURPOSE
This document defines the official restructuring strategy for the eXpress badging® Chart of Accounts (COA) within QuickBooks Online (QBO).
The primary objective is to simplify and standardize Income and Cost of Goods Sold (COGS) reporting to accurately measure Gross Profit (GP) by operational revenue channel, all the way down through Expenses.
This restructuring supports:
- Cleaner management reporting
- GP visibility by business segment
- Improved operational accountability
- Future Class-based expense allocation
- Scalability of the Veonics® ecosystem
- Better long-term accounting consistency
PRIMARY GP CHANNELS
The business is being organized into four primary operational GP channels, and two callout channels:
| Channel | Purpose |
|---|---|
| VEONICS | SaaS, portal, development, software operations |
| SYSTEMS | Hardware, software resale, RFID, support |
| PRODUCTION | Badge production operations |
| FACTORY | Manufacturing operations |
| SHIPPING | Freight and logistics (Non-Production) |
| OTHER | Miscellaneous/accounting normalization |
ACCOUNTING PHILOSOPHY Management Reporting First
The new COA is designed primarily for operational management visibility while still supporting formal accounting and tax reporting.
Preserve Historical Integrity
The restructuring strategy avoids destructive merges whenever possible.
Preferred methods:
- Rename
- Renumber
- Re-parent
- Inactivate
Avoid:
- irreversible QBO account merges
Parent Accounts Must Be Locked
All Parent/Header accounts will be configured as non-posting (locked) unless the account has no child accounts.
Posting activity should occur only within child accounts to maintain reporting consistency and prevent accidental coding.
All parent/header accounts should:
- be non-posting UNLESS it has no children
- remain locked from transactional posting
- serve reporting hierarchy purposes only
Item Mapping Is Critical
Items in QBO drive:
- Income assignment
- COGS assignment
- Class assignment
- GP reporting accuracy
The COA alone will not maintain reporting integrity without proper Item maintenance.
QUICKBOOKS ONLINE EXECUTION STRATEGY DO NOT USE MASS ACCOUNT MERGING
Instead:
- Renumber existing transactional accounts
- Free root account numbers
- Create new parent/header accounts
- Reassign subaccounts cleanly
This preserves:
- historical traceability
- prior-year reporting integrity
- CPA audit comfort
- rollback understanding
REQUIRED PRE-MIGRATION BACKUPS
Before implementation:
Export:
- Full Profit & Loss (current year)
- Prior-year Profit & Loss
- Trial Balance
- General Ledger
- Current COA
- Item List
- Class List
Save all exports as PDF and Excel.
IMPLEMENTATION PHASES
| Phase | Purpose |
|---|---|
| Phase 1 | Income & COGS restructuring |
| Phase 2 | Item/Class cleanup |
| Phase 3 | Expense alignment review |
| Phase 4 | Reporting validation |
QUICKBOOKS CLASS STRATEGY
Classes will eventually support:
- shared overhead allocation
- operational channel attribution
- freight allocation
- cross-functional labor tracking
Classes should align primarily to operational channels and product groupings within:
- VEONICS
- SYSTEMS
- PRODUCTION
- FACTORY
SHIPPING RESTRUCTURE STRATEGY
Purpose, Rationale, and Operational Philosophy
OVERVIEW
After evaluating separate Production Shipping and General Shipping models, leadership determined that all shipping-related revenue and expenses will be consolidated into centralized Shipping accounts.
Revenue
- 429 SHIPPING
COGS
- 529 SHIPPING
- 5291 FREIGHT-IN
- 5292 FREIGHT-OUT
Inactivated Accounts
- 4267 PROD-SHIPPING
- 5267 PROD-SHIPPING
- 52671 FREIGHT-IN
- 52672 FREIGHT-OUT
Rationale
Shipping is operationally similar across Production, Systems, and Factory activities. Maintaining separate shipping accounts created unnecessary complexity, increased item maintenance requirements, and duplicated reporting capabilities now provided through QuickBooks Classes.
Profitability by business channel will instead be measured through Class reporting.
INCOME ACCOUNT MAPPING STRUCTURE 4000 SERIES – INCOME
VEONICS
| Current Account | New Account | Action |
|---|---|---|
| 417 SALES - PORTAL |
417 VEONICSCLASS:
REPORTS: Product-level reporting is obtained through Item Sales Reports. |
Rename (PARENT) |
| 4171 SUBSCRIPTION FEES - PORTAL |
4171 SAAS REV |
RENAME Revenue Recognition Note: Future recurring revenue and fulfillment contracts will be reviewed under Project #2 (RAFF / Deferred Revenue implementation). |
| 4172 SUBSCRIPTION FEES - DEVELOPMENT |
4172 DEV & SETUP REV CLASS
DEV = TSL/Contractor Veonics work SETUP= EBS Veonics work |
RENAME |
| 4173 SETUP FEES |
4173 SETUP FEES REV CLASS
EBS Veonics work |
Make it a child of 4172 DEV & SETUP REV, then lock for future posting. |
| 4174 SETUP FEES - CONTRACTED |
4174 SETUP FEES - CONTRACTED |
Make a child of 4172 DEV & SETUP REV, then lock the account. |
SYSTEMS (Retain account number, make sub of merged account, only Change the Parent/Sub-Parent name)
| Current Account | New Account | Action |
|---|---|---|
| 418 SALES VerifyMYBADGE |
418 SYSTEMSCLASS:
REPORTS: Product-level reporting is obtained through Item Sales Reports. |
RENAME (PARENT) |
| 419 SALES HLDR/ACCS |
NA ACCS AND HOLDERS BECOME FACTORY ITEMS, AND REPORTS SEPARATE GENERIC FROM CUSTOM PRINTED |
REASSIGN AS A SUB TO 4272 ACCESSORIES REV IN FACTORY, THEN INACTIVATE
|
| 420 SALES HARDWARE | 4181 HARDWARE REV | RENUM/RENAME/REASSIGN 4181 HARDWARE REV to 418 SYSTEMS |
| 421 SALES SOFTWARE |
NA 4182 SOFTWARE Non-Veonics Software |
REASSIGN TO 4182 SUPPLIES REV THEN INACTIVATE |
| 422 SALES CARDS | NA |
REASSIGN TO 4182 SUPPLIES REV THEN INACTIVATE |
| 423 SALES RIB-OL | 4182 SUPPLIES REV | RENUM/RENAME/REASSIGN |
| 424 SALES INTS/TRNG |
NA REASSIGN ALL ITEMS TO 41852 |
REASSIGN TO 4183 TECH SUPPORT REV THEN INACTIVATE |
| 425 SALES ESA/ RPR | 4183 TECH SUPPORT REV |
RENUM/RENAME/REASSIGN Regarding annual support contracts, refer to RAFF / Deferred Revenue implementation. |
| 4251 ESA - CONTRACTED |
NA WAS 41851 SUPPORT MFR REV |
REASSIGN TO 4183 TECH SUPPORT REV THEN INACTIVATE |
| 4253 ESA - EBS |
NA WAS 41852 SUPPORT EBS REV |
REASSIGN TO 4183 TECH SUPPORT REV THEN INACTIVATE |
PRODUCTION
| Current Account | New Account | Action |
|---|---|---|
| 426 SALES PRODUCTION |
426 PRODUCTION CLASS:
REPORTS: Product-level reporting is obtained through Item Sales Reports. |
RENAME (PARENT) |
|
4261 PPB
|
4261 BAAS REV
|
RENAME We need to address INCOME Revenue Recognition issues over a 12-month period. RAFF / Deferred Revenue implementation We will need a new set of Item Codes for BAAS before enabling. |
| 4262 EBS | 4262 BATCH REV |
RENAME We currently use BATCH line items in BAAS proposals, and the two must be separated. We do have large BATCH jobs that pay a 50% deposit, which sit uninvoiced until the end of the job. Or if a period of time has elapsed, we invoice for services rendered. |
| 4263 QC | NA |
REASSIGN QUICK CARDS REV TO 4262 BATCH REV |
|
4264 EP STOCK eXpressPROX is a product brand, not a revenue channel. Generic ExpressPROX products fulfilled through direct shipment are classified under Systems – Supplies. Personalized proximity credentials produced by the Production department are classified according to the fulfillment model (BAAS or BATCH). Product-level detail is obtained through Item reporting rather than separate GL accounts. |
NA ALL 3MILL CARDS MUST BE SUPPLIES REV |
REASSIGN 4264 EXPRESSPROX REV TO 4184 SUPPLIES REV THEN INACTIVATE FUTURE PROD PROX ASSIGNED TO BAAS OR BATCH |
| 4265 SETUPS | 4263 SETUPS REV |
RENAME/RENUMBER |
| 4266 ADD SERVICES |
|
INACTIVATE WE MOVE THEM ALL INTO BATCH, THEN WE START WITH REVREC BASED ON A GOLIVE MONTH, AND THIS PROTECTS LEGACY ORDERS FROM REVREC. We need to create two sets of Add Service item codes to address the RAFF / Deferred Revenue implementation |
| 4267 PROD-SHIPPING | NA |
INACTIVATE and REASSIGN all item codes to point to 429 SHIPPING, and update all transactions backward for at least two years. |
FACTORY
| Current Account | New Account | Action |
|---|---|---|
| 427 SALES OFFSET-PVC | 4271 PRESSCARDS REV |
RENUM/RENAME/REASSIGN to 427 below 4271 BECOMES PRESSCARDS REV |
| NEW |
427 FACTORYCLASS:
REPORTS: Product-level reporting is obtained through Item Sales Reports. |
(PARENT)
Factory product detail is obtained through Item Sales Reports rather than separate GL accounts. |
| 428 |
NA 4272 TESLIN REV |
REASSIGN to 4271 THEN INACTIVATED |
| NEW | 4272 ACCESSORIES REV | CREATE |
SHIPPING
| Current Account | New Account | Action |
|---|---|---|
| 429 SALES SHIPPING & HANDLING |
429 SHIPPING REV |
RENAME (PARENT UNLOCKED) |
All shipping-related revenue allocations should report here.
OTHER
| Current Account | New Account | Action |
|---|---|---|
| 440 OTHER INCOME | 4401 MISC REV | RENUM/RENAME/REASSIGN to 440 below |
| 440 NEW |
440 OTHERPlease review this OTHER INCOME and COGS Account structure. I am not sure if it is needed, and if it is, is it correct/ FLAGGED FOR CFO HUB REVIEW. |
CREATE (PARENT) |
| 499 OUT OF STATE SALES TAX | 4402 OOS TAXES REV | RENUM/RENAME/REASSIGN to 440 |
COG ACCOUNT MAPPING STRUCTURE 5000 SERIES – COG
VEONICS
| Current Account | New Account | Action |
|---|---|---|
| 517 PURCHASE PORTAL |
517 VEONICSCLASS:
REPORTS: Product-level reporting is obtained through Item Sales Reports. |
RENAME (PARENT) |
| 5171 CONTRACTED MAINTENANCE | 5171 DEVELOPMENT COG | RENAME |
| 5172 CONTRACTED DEVELOPMENT |
NA TSL/Contractor Veonics Work |
REASSIGNED TO 5171 DEV COG THEN INACTIVATE |
| 5173 PORTAL - SUBSCRIPTIONS DNU | 5173 SETUP FEES DELETED | INACTIVATE: COVERED UNDER LABOR |
| 5174 PORTAL - LABOR |
5172 LABOR COG EBS Veonics Work |
RENUM/RENAME |
| 5176 OPERATIONAL ITEMS |
5173 OPERATION COG (AWS, Certs, Google, Jira…) |
RENUM/RENAME |
SYSTEMS
| Current Account | New Account | Action |
|---|---|---|
| 518 PURCHASES VerifyMYBADGE |
518 SYSTEMS |
RENAME (PARRENT) |
| 519 PURCHASES HLDR/ACCS |
NA ACCS AND HOLDERS BECOME FACTORY ITEMS, AND REPORTS SEPARATE GENERIC FROM CUSTOM PRINTED |
REASSIGN TO 5182 SUPPLIES THEN INACTIVATE |
| 520 PURCHASES HARDWARE | 5181 HARDWARE COG | RENUM/RENAME |
| 521 PURCHASES SOFTWARE | NA | REASSIGN TO 5182 SUPPLIES, THEN INACTIVATE |
| 522 PURCHASES CARDS | NA | REASSIGN TO 5182 SUPPLIES, THEN INACTIVATE |
| 523 PURCHASES RIB-OL | 5182 SUPPLIES COG | RENAME TO 5182 SUPPLIES COG |
| 524 PURCHASES INTS/TRNG | NA |
REASSIGN TO TECH SUPPORT THEN INACTIVATE |
| 525 PURCHASES WTY/ RPR | 5183 TECH SUPPORT COG | RENUM/RENAME |
| 5252 CONTRACTED WARRANTIES | NA | REASSIGN TO TECH SUPPORT THEN INACTIVATE |
| 5253 SUPPORT EBS | NA | REASSIGN TO TECH SUPPORT THEN INACTIVATE |
PRODUCTION
| Current Account | New Account | Action |
|---|---|---|
| 526 PURCHASES PRODUCTION |
526 PRODUCTION |
RENAME (PARENT) |
| 5261 PRODUCTION - LABOR | 5261 PROD LABOR COG | RENAME |
| 5263 PRODUCTION SUPPLIES | 5262 PROD SUPPLIES COG | RENUM/RENAME |
| 5264 EP STOCK | 5264 EXPRESSPROX | REASSIGN TO 5262 PROD SUP |
| 5267 PROD-SHIPPING |
WE HAVE DECIDED TO KILL PROD-SHIPPING AND ASSIGN ALL ITEM CODES AND MOVE ALL TRANSACTIONS, AT LEAST TWO YEARS BACKWARD THROUGH 2025 TO 429 SHIPPING (NEVER USED) |
INACTIVATE (PARENT; would have been) |
| NEW |
KILLED 52671 FREIGHT-IN |
Assign all inbound and dropped shipped non-PROD COGS |
| NEW |
KILLED 52672 FREIGHT-OUT |
Assign all Pirate Ship and Stamps.com charges here. and any direct outbound PROD UPS/FedEx charges SAME AS ABOVE |
FACTORY
| Current Account | New Account | Action |
|---|---|---|
| 527 PURCHASES OFFSET-PVC | 5271 PRESSCARDS COG | RENUM/RENAME/REASSIGN TO FACTORY |
| NEW |
527 FACTORY |
(PARENT) |
| 528 SALES OFFSET-TESLIN | NA | REASSIGN TO 5271 PRESSCARDS COG THEN INACTIVATE |
| NEW | 5272 CUSTOM HOLDERS | ASSIGN TO FACTORY |
SHIPPING
| Current Account | New Account | Action |
|---|---|---|
| 529 SALES SHIPPING & HANDLING | 5291 FREIGHT-IN COG |
RENUM/RENAME/REASSIGN TO 529 SHIPPING Assign all NON-PROD inbound shipping COG |
| NEW |
529 SHIPPING |
(PARENT) |
| NEW | 5292 FREIGHT-OUT COG |
ASSIGN TO Assign all NON-PROD outbound shipping COG |
OTHER
| Current Account | New Account | Action |
|---|---|---|
| 540 SHIPPING |
540 OTHER |
RENAME (PARENT) |
| 561 Tarriff's | 5401 TARRIFFS | RENUM/RENAME |
| 499 OUT OF STATE SALES TAX | 5402 OOS TAXES | RENUM/RENAME |
ITEM MANAGEMENT RULES Every Item Must Have:
- Correct Income account
- Correct COGS account
- Correct default Class
- Consistent naming structure
ITEM AUDIT REQUIREMENTS
After restructuring:
- Review all active items
- Confirm account mappings
- Confirm Class defaults
- Eliminate legacy mappings
- Verify GP reporting by channel
POST-MIGRATION VALIDATION Validate:
- P&L totals unchanged
- Net income unchanged
- GP by channel accurate
- Parent accounts non-posting
- No orphaned accounts
- No unmapped Items
- Shipping allocations reasonable
FUTURE PHASE – EXPENSE ALIGNMENT
A second review phase will evaluate:
- operational expense alignment
- Class-based allocation
- shared overhead distribution
- freight allocation strategy
- labor allocation strategy
This phase should occur AFTER:
- Income
- COGS
- Items
- Classes
…have stabilized.
VEONICS USAGE REVENUE ATTRIBUTION STRATEGY
Purpose
The purpose of this strategy is to provide accurate Gross Profit visibility between the VEONICS and PRODUCTION business segments by properly attributing a portion of Production revenue to the Veonics® Portal services consumed during badge issuance and identity management activities.
Business Issue
Under the current pricing model, Veonics® Portal costs are incorporated into Production pricing calculations during the item pricing process. While this allows recovery of portal-related costs, it does not provide a mechanism within the accounting structure to attribute revenue to VEONICS for services consumed by Production.
As a result:
- Production revenue is overstated relative to the services actually delivered by Production.
- VEONICS revenue is understated relative to the value provided by the Veonics® Portal.
- Management reporting does not accurately reflect the economic contribution of VEONICS to Production operations.
- Gross Profit reporting by business segment becomes distorted.
The current model requires management to perform informal calculations and assumptions to estimate the true contribution of VEONICS to Production profitability.
Proposed Solution
To improve management reporting visibility, an internal-only QuickBooks Online item code named VEONICS USAGE will be created.
The VEONICS USAGE item will not represent a customer-facing charge. Instead, it will function as an internal revenue attribution mechanism used to transfer a defined portion of Production revenue into the VEONICS business segment.
Examples of services provided by VEONICS include:
- Badge issuance processing
- Identity database management
- Photo management
- User administration
- Credential storage
- Portal access
- Reporting functionality
- Operational support infrastructure
The VEONICS USAGE item will be automatically included within applicable Production item structures and will direct revenue into the appropriate VEONICS income account.
Accounting Treatment
The VEONICS USAGE item will:
- Post Income to the designated VEONICS revenue account.
- Reduce the amount of revenue remaining within the associated Production revenue account.
- Remain invisible to customers whenever practical.
- Function as an internal transfer-pricing mechanism between VEONICS and PRODUCTION.
Example:
A Production item priced at $5.00 may contain:
- Production Revenue = $4.30
- VEONICS USAGE Revenue = $0.70
The total customer price remains unchanged.
However, management reporting now properly reflects the economic contribution of both business segments.
Cost Treatment
No separate labor reallocation is currently contemplated.
VEONICS labor and operating costs will remain within their natural VEONICS Cost of Goods Sold accounts, including but not limited to:
- 5174 VEONICS LABOR
- 5176 OPERATION
The VEONICS USAGE transfer price is intended to recover:
- VEONICS labor
- Operational infrastructure
- Hosting and software costs
- Administrative burden
- Management overhead
- Desired gross profit margin
As a result, additional monthly reallocations of VEONICS labor into PRODUCTION are not presently required.
Rate Review
Management may periodically review and adjust the VEONICS USAGE transfer rate to ensure appropriate recovery of:
- Labor costs
- Infrastructure costs
- Operational support costs
- Strategic margin objectives
Any changes to transfer pricing should be evaluated for consistency with management reporting objectives and approved accounting policies.
Revenue Recognition Considerations
Certain Production offerings, including BAAS contracts and other recurring-service arrangements, may require revenue recognition over time rather than immediate recognition.
Question:
-
Can VEONICS USAGE, SLOTPUNCH, MAGENCODE ... item codes be used for both straight line recognition and revenue recognition?
-
Or will two Item codes be required: VEONICS USAGE and VEONICS USAGE REVEC
- If two are required, we will almost double the amount of PRODUCTION finishing item codes. It would NOT apply to setup and development service-related item codes, such as PROOFING and TESTING.
- SLOTTING
- MAGENCODE
- READ/POST
- SHIPPING CODES
The implementation methodology for the various item codes applied to Revenue Recognition orders and workflows will be reviewed separately with CFO Hub to ensure compliance with:
- GAAP revenue recognition requirements
- QuickBooks Online capabilities
- Operational practicality
- Contract-specific billing structures
Strategic Objective
The objective of the VEONICS USAGE strategy is to create meaningful visibility into the value provided by VEONICS while preserving customer pricing simplicity, maintaining accounting consistency, and improving Gross Profit reporting across all business segments.
FINAL STRATEGIC OBJECTIVE
The end goal is to transform the eXpress badging® accounting structure from:
- legacy transactional accounting
into:
- operational channel-based management accounting
…while preserving:
- CPA compatibility
- tax reporting continuity
- historical integrity
- scalability for future Veonics® ecosystem growth.