Creating a New Account

This page walks through the account creation form field by field. If you're new to nonprofit accounting and want the conceptual overview of what a chart of accounts is and how the five account types work, start with Chart of Accounts instead.

Every account you add becomes part of the structure that shapes your financial reports. A well-named account with the right type, natural class, and restriction classification will land on the right line of the right report automatically. An account set up incorrectly can cause expenses to disappear from Program Services, restricted revenue to show as unrestricted, or a liability to be booked as an asset. Taking thirty seconds to get the fields right at creation time saves hours of cleanup later.

• Decide what this account is for and which account type fits
• If it's an expense account, know the natural class (Salaries, Occupancy, Supplies, etc.)
• If it's a revenue or net-asset account, decide whether it should be classified as "with donor restrictions" or "without donor restrictions"

Opening the form

1. Go to Chart of Accounts (under Managing Books in the sidebar).
2. Click "New Account." The account creation form opens.

Quick-create templates (optional)

The top of the form shows a row of tiles for common account setups — Bank/Savings Account, Cash on Hand / Petty Cash, Credit Card, Loan/Payable, Donations Revenue, Earned Revenue, and Expense Account. Clicking a tile pre-fills the form with sensible defaults so you don't have to think about every field from scratch. The Expense Account tile includes a second step that lets you pick the natural class (Salaries, Professional Fees, Occupancy, and so on) before filling in the defaults.

If you dismiss the tiles, you can re-enable them later from Account Settings under "Helper banners."

Filling out the form

Name — A descriptive account name. Examples: "Checking Account," "Grant Revenue," "Youth Program Supplies." Keep it short but specific enough that anyone on the team can tell what it's for.

Account Type — Choose from Asset, Liability, Net Asset, Revenue, Expense, Contra Asset, or Contra Revenue. This is the single most important field, because it determines which financial statement the account appears on and how its balance is interpreted.

• Asset — What your organization owns (bank accounts, receivables, equipment)
• Liability — What your organization owes (accounts payable, loans, deferred revenue)
• Net Asset — The difference between assets and liabilities; typically only a handful of these in total
• Revenue — Money coming in (contributions, grants, program service fees)
• Expense — Money going out (salaries, rent, supplies)
• Contra Asset / Contra Revenue — Accounts that offset another category (for example, Accumulated Depreciation or Refunds)

GL Code — An optional numeric code, typically four digits (e.g., 1110 for a checking account). Codes are organization-specific — you choose your own numbering scheme. NP Ledger will suggest the next available code for the selected account type so you don't have to pick one from scratch.

Account Group — An optional hierarchical grouping that helps organize the Chart of Accounts into sections. Useful for larger charts.

Balance Sheet — A checkbox. Turn it on for asset, liability, and net asset accounts (items that appear on the Statement of Financial Position). Leave it off for revenue and expense accounts (which appear on the Statement of Activities).

Net Asset Class — "Without Donor Restrictions" or "With Donor Restrictions." Determines which column the account's balance appears in on the Statement of Activities. This field is required for revenue and net-asset accounts. For expenses, the field is ignored — expenses inherit their restriction class from the funds they're charged to.

Natural Class — An expense sub-classification that maps to Form 990 Part IX. The options are Salaries and Wages, Employee Benefits, Professional Fees, Occupancy, Travel, Depreciation and Amortization, Supplies, Insurance, and Other Expenses. This field only matters for expense accounts. It drives the rows on the Statement of Functional Expenses.

Default Functional Class — Optional. When set, transaction lines posted to this account will pre-fill the Functional Class (Program Services, Management and General, or Fundraising) on entry forms. This is the GAAP functional-expense classification — distinct from Natural Class (which describes what kind of expense) and from Net Asset Class (which describes restriction status). For accounts that are intrinsically tied to one purpose ("Fundraising Salaries" → Fundraising; "Annual Audit" → Management and General), setting a default saves a click on every transaction. Leave blank for balance-sheet accounts and for revenue/expense accounts whose lines could legitimately span multiple purposes — the user can still pick a value at entry time.

Sort Order — Optional numeric value controlling display order within the Chart of Accounts list.

Description — An internal note about what the account is for. Optional, but useful for a bookkeeper who inherits your books later.

Saving

Click Save. The account appears immediately in your Chart of Accounts. You can start posting transactions to it right away.

Bank accounts are a special case. To add a new checking account, savings account, PayPal balance, or similar:

1. First, create a ledger account of type Asset with the Balance Sheet checkbox enabled. Name it something recognizable like "Chase Checking."
2. Then, go to Bank & Cash and create a BankAccount record linked to that ledger account. The Bank & Cash page is where you store the account number, routing number, payment processor details, or credit card details (all encrypted) and where bank feeds and reconciliations attach.

This two-step flow exists because NP Ledger separates the abstract accounting concept (a GL account with a balance) from the concrete bank reference data (account number, routing number, bank feed credentials). Both pieces are needed for a fully functional bank account, but they live in different places.

For a new grant with donor restrictions:

1. Create a Revenue account with Net Asset Class set to "With Donor Restrictions." Name it something specific like "ABC Foundation Grant Revenue."
2. Create a restricted Fund to track the restricted dollars separately. This ensures the grant appears in the correct column on the Statement of Activities and can be traced through the Fund Transactions report.
3. Optionally create a Project under the relevant Program to track spending against the grant's budget.

• The account type is correct. A Liability account created as an Asset will make your balance sheet wrong until you fix it. Double-check before saving.
• Net Asset Class is set on any revenue or net-asset account you create. If left blank, the account may default to unrestricted and distort your restriction reporting.
• Natural Class is set on any expense account that will flow into the Statement of Functional Expenses (which is all of them, for a 501(c)(3) filer).

• Creating duplicate accounts. NP Ledger runs a real-time duplicate check when you type a name and will show a warning if a similar account already exists. Dismiss the warning only if you're genuinely creating a distinct account — otherwise use the existing one or merge after the fact.
• Using the wrong account type for a prepayment or deposit. A grant received in advance of the grant period is deferred revenue (a liability), not revenue yet. A security deposit paid to a landlord is an asset, not an expense. If you're not sure, think about whether the dollars have been earned or consumed yet — if not, it's probably a liability or asset, not revenue or expense.
• Creating a bank "account" without the BankAccount record. A ledger-only asset account will show up on reports but won't have reconciliation, feeds, or payment routing. Always pair the GL account with a Bank & Cash entry.
• Leaving Net Asset Class blank on a restricted-grant revenue account. The grant will end up in the wrong column on the Statement of Activities and will need to be reclassified later.

Accountant note: The Net Asset Class field on revenue accounts encodes ASC 958's two-class presentation (with donor restrictions vs. without). Expenses don't carry a net-asset class of their own — they inherit from the fund they're charged to, because under GAAP, an expense can only reduce a given net asset class if the fund it relates to is in that class. This is why the form ignores Net Asset Class for expense accounts.