Odoo Chart of Accounts Setup — A Step-by-Step Guide for SMEs in Australia

The chart of accounts (COA) is the backbone of your financial reporting. Get it right, and everything else flows — profit & loss, balance sheets, tax reports, BAS statements. Get it wrong, and you'll spend hours untangling reports come tax time.

Odoo comes with a default Australian chart of accounts, but "default" rarely means "optimal" for your specific business. Here's how to set it up properly for Australian SMEs.

What is a chart of accounts?

In short, it's the list of all the accounts your business uses to record financial transactions. In Odoo, these are organised into:

• Assets — What you own (bank accounts, equipment, accounts receivable)
• Liabilities — What you owe (loans, accounts payable, credit cards)
• Equity — What's left over (owner's equity, retained earnings)
• Revenue — Income from sales and services
• Cost of Goods Sold — Direct costs of producing what you sell
• Expenses — Operating costs (rent, utilities, wages)

Step 1: Install the Australian accounting module

Before touching the chart of accounts, make sure you have the Australian localisation installed:

• Go to Apps in Odoo
• Search for "Accounting" or "Australian Accounting"
• Install the "Accounting" app (if not already installed)
• Install "Australian Accounting" to get the ATO-compliant setup

This will load the default Australian chart of accounts, tax rates, and reporting templates.

Step 2: Review the default chart of accounts

Odoo's default Australian COA is a reasonable starting point, but it's designed for the average case. Review each account and ask:

• Do I need this account? (If you have no fixtures, delete the fixtures account)
• Is this account detailed enough? (You might want to split "Sales" into product-specific categories)
• Are the account types correct? (Revenue vs. Other Income, for example)

Navigate to Accounting → Configuration → Chart of Accounts to review.

Step 3: Customise for your business type

Your industry and business model should drive your COA structure. Here are common customisations:

• Retail businesses — Split sales into product categories (clothing, accessories, gift cards). Add inventory accounts for different warehouse locations.
• Service businesses — Add "Work in Progress" or "Unbilled Revenue" accounts. Split revenue by service type.
• Manufacturing — Add accounts for raw materials, work-in-progress, finished goods. Include variance accounts for costing differences.
• Contractors/consultants — Add "Retainers Received" and "Deferred Revenue" for invoicing in advance.

Step 4: Configure account codes systematically

Use a logical coding system that makes sense for reporting:

• 1xxx — Assets
• 2xxx — Liabilities
• 3xxx — Equity
• 4xxx — Revenue
• 5xxx — Cost of Goods Sold
• 6xxx — Expenses

Leave gaps between codes (100, 110, 120 — not 100, 101, 102) so you can add new accounts later without renumbering everything.

Step 5: Set up Australian tax rates (GST)

Australian businesses need GST configured correctly. Odoo's Australian localisation includes the standard tax rates:

• GST 10% — Most goods and services
• GST Free — Basic food, health services, education, exports
• Input Tax Credits — GST paid on purchases
• Capital Works — For larger deductions (building, infrastructure)

Go to Accounting → Configuration → Taxes to review and adjust. Make sure:

• Your default purchase tax is set (usually "GST 10% on Purchases")
• Your default sales tax is set (usually "GST 10% on Sales")
• Tax-exempt supplies are correctly tagged

Step 6: Configure account types correctly

Each account needs a type that tells Odoo how to treat it in reports:

• Bank accounts — Type: "Bank and Cash"
• Accounts Receivable — Type: "Receivable"
• Accounts Payable — Type: "Payable"
• Credit Cards — Type: "Bank and Cash" (create a "Credit Card" journal for each)
• Fixed Assets — Type: "Non-current Assets" with depreciation settings
• Prepayments — Type: "Prepayments" or "Current Assets"

Incorrect account types are the #1 cause of broken balance sheets in Odoo.

Step 7: Set up journals

Journals are where transactions are recorded. Configure these core journals:

• General Journal — For manual journal entries
• Sales Journal — For customer invoices (auto-populated from sales)
• Purchase Journal — For vendor bills
• Cash Journal — For cash transactions
• Bank Journals — One for each bank account (and credit card)

Assign each journal to the appropriate default accounts (e.g., the bank journal uses your bank account as the default debit/credit account).

Step 8: Map tax codes for BAS reporting

Your tax configuration needs to feed into the BAS correctly. Check that:

• GST collected on sales maps to "G1" (GST on sales)
• GST paid on purchases maps to "G2" (GST on purchases)
• GST-free exports map to "G3" (GST-free supplies)
• Input taxed supplies map to "G4" (Input taxed supplies)

Odoo's Australian localisation should handle this, but verify with a test BAS before filing your first real BAS.

Step 9: Test with a few transactions

Before going live, run a few test transactions:

• Create a test invoice and verify GST is calculated correctly
• Record a vendor bill and check tax treatment
• Process a payment and reconcile it
• Run a bank reconciliation to confirm accounts match
• Generate a profit & loss and balance sheet

If anything looks wrong, fix it now — not after real transactions are in the system.

Step 10: Document your chart of accounts

Write down what each account is for, especially any custom accounts:

• Create a COA document for your finance team
• Include account codes, names, and purposes
• Note any business-specific usage rules
• Document who can access sensitive accounts (bank, petty cash)

This documentation helps new staff and makes tax time smoother.

Common mistakes to avoid

• Too many accounts — Only create accounts you'll actually use. Extra accounts create clutter.
• Wrong account types — This breaks balance sheets. Double-check each one.
• Ignoring GST — GST errors lead to BAS mistakes and ATO penalties.
• Not testing — Never go live without running test transactions.
• Copying another business's COA — What works for a manufacturer may not work for a consultancy.

Our take

The chart of accounts isn't the most exciting part of an Odoo implementation, but it's one of the most important. A well-thought-out COA makes reporting simple, tax time stress-free, and gives you real insight into how your business is performing.

Spend the time to get it right at the start. If you're unsure about any configuration, ask an Odoo partner who knows Australian accounting requirements — it's much easier to fix issues early than to restructure a messy chart of accounts after you have months of transactions.

Need help setting up your chart of accounts? Get in touch — we've configured dozens of Australian SMEs and can make sure your COA is built for both compliance and useful reporting.