Account Sub-Types and How They're Used

Why sub-types exist

The five account types (Asset, Liability, Equity, Income, Expense) are too coarse to organize a Balance Sheet or P&L cleanly. A "Cash on Hand" and a "Vehicle" are both Assets, but they belong in different sections of the Balance Sheet (Current Assets vs Fixed Assets).

Sub-types are the next layer of organization. Each account belongs to one type AND one sub-type.

The full sub-type list

Asset sub-types

• WALLETS. Bank accounts, Bitcoin wallets. Anything that holds money you can spend now.
• OTHER_CURRENT_ASSETS. Accounts Receivable, Inventory, Prepaid Expenses. Convertible to cash within a year.
• FIXED_ASSETS. Office Equipment, Vehicles, Property. Long-term things you use, not sell.
• OTHER_ASSETS. Deposits, Intangibles, Goodwill. Doesn't fit the above.

Liability sub-types

• CURRENT_LIABILITIES. Accounts Payable, Credit Cards, Sales Tax Payable. Due within a year.
• LONG_TERM_LIABILITIES. Mortgages, Equipment Loans (over 1 year). Due more than a year out.

Equity sub-types

• OWNERS_EQUITY. Owner's Capital, Common Stock. The original investment.
• RETAINED_EARNINGS. Accumulated profit kept in the business.
• DIVIDENDS_PAID. Dividends paid out to owners.

Income sub-types

• SALES. Your main revenue. The bread-and-butter income from operations.
• OTHER_INCOME. Interest income, refunds, gains on sales of assets, anything outside core operations.

Expense sub-types

• COST_OF_SALES. Direct costs of producing what you sold (raw materials, freight in, direct labor in production).
• SALES_AND_MARKETING. Marketing campaigns, sales commissions, advertising.
• LABOR. Salaries, payroll taxes, benefits.
• GENERAL_AND_ADMINISTRATIVE. Rent, utilities, software subscriptions, office supplies. The "running the business" expenses.
• OTHER_EXPENSES. One-off expenses that don't fit elsewhere.

Other

• SUSPENSE. A temporary holding account for transactions you're not sure how to categorize. Should be empty most of the time.

How sub-types affect reports

The Balance Sheet groups Assets in this order: Current Assets first (wallets and OTHER_CURRENT_ASSETS), then Fixed Assets, then Other Assets. Within each group, accounts appear in the order they're listed in your Chart of Accounts.

The P&L groups Income at the top (Sales then Other Income), then Cost of Sales, then operating expenses sorted by sub-type (Sales & Marketing, Labor, G&A, Other), with Net Profit at the bottom.

If you put an account in the wrong sub-type, it shows up in the wrong section. The numbers still add correctly, but the report looks weird.

Common sub-type confusions

Sales vs Other Income

Use Sales for the revenue your business is built on. If you run a coffee shop, coffee sales is Sales. If you also occasionally rent out a meeting room, rental income is Other Income (it's not your main business).

For a Bitcoin business, all your normal Bitcoin-related revenue (Lightning sales, on-chain sales, mining rewards from your normal operation) is Sales. Realized FX gains on Bitcoin held as treasury are Other Income (they're not what you do for a living).

Cost of Sales vs G&A

Cost of Sales is the cost that scales with sales. If you sell more coffee, you buy more beans. If you do more freelance work, you have more direct labor cost.

G&A is the cost of running the business that doesn't scale tightly with sales. Rent, software, office supplies, the bookkeeper's salary.

Roughly: Cost of Sales is "what it cost to produce the thing I sold." G&A is "what it cost to keep the lights on."

Sales & Marketing vs G&A

Sales commissions, paid ad spend, marketing software (HubSpot, etc.) are Sales & Marketing. The CEO's salary is Labor, not Sales & Marketing, even if the CEO does some sales.

When in doubt, ask "is this directly trying to win customers?" If yes, S&M. If it's general overhead, G&A.

Labor vs G&A

Labor is for compensation (salaries, payroll taxes, benefits). G&A is for non-compensation overhead.

Some accountants put bookkeeping/admin staff salaries under G&A instead of Labor (since they're not "operational labor"). Either is acceptable; pick one and stick with it.

Picking the right sub-type at creation

When you create a new account in Admin → Chart of Accounts, the form asks for type AND sub-type. Picking the type first restricts the available sub-types.

For a Bitcoin business setting up a custom account, common picks:

When unsure, check what the existing default accounts use as a pattern.

Changing a sub-type after the fact

You can change an account's sub-type from the Admin → Chart of Accounts page, click the account, edit. The change applies to all future reports immediately. Past reports if re-rendered will also update (so a re-rendered January P&L would show the account in its new sub-type group).

This is fine for cosmetic moves. Don't change between Income and Expense (that's a type change, not a sub-type change, and it changes the meaning of the numbers).

What "SUSPENSE" is for

A SUSPENSE account is a temporary holding account. Use it when you have a transaction you can't categorize on the spot, post it to SUSPENSE so the entry is balanced, and come back to recategorize.

Example: a wire showed up in your bank account but you don't know who from. Post it to SUSPENSE while you investigate. Once you know, reverse and re-post to the correct account.

A healthy SUSPENSE balance at month-end is zero. If it's not zero, you have unresolved entries to investigate before closing.

Where to go next

• Account Types Explained for the parent concept
• Creating Custom Accounts for the how-to walkthrough
• Account Codes and Numbering for the optional numbering convention
• Profit & Loss Report to see how sub-types group on the P&L
• Balance Sheet to see how Asset and Liability sub-types group