How to set up a chart of accounts for a Nigerian small business

A chart of accounts (COA) is the master list of every account your business uses to record money. Get it right at the start and every report — profit and loss, balance sheet, tax filing — falls out cleanly. Get it wrong and you spend years reclassifying transactions. This guide shows you how to build one for a Nigerian small business, with a sample you can copy.

Chart of accounts at a glance

The number ranges are a convention, not a law — but following them makes your books instantly readable to any accountant, auditor, or lender.

1. What a chart of accounts actually is

Think of the COA as the filing cabinet for your money. Every transaction you record gets filed into one or more accounts. When you want to know "how much did we spend on rent this year?" or "how much VAT do we owe?", you look at that account.

Each account has three things: a number (for sorting and reference), a name (plain description), and a type (one of the five sections above). The type is what tells your accounting system whether the account belongs on the profit and loss statement (revenue and expenses) or the balance sheet (assets, liabilities, equity).

2. The numbering system

A simple four-digit system scales well for an SME:

• First digit = section (1 = asset, 2 = liability, and so on).
• Remaining digits = the specific account, left with gaps so you can insert new accounts later without renumbering.

Leave gaps. If your first bank account is 1010, make the next 1020, not 1011 — that way you can slot a 1015 in between later. Renumbering a live chart of accounts is painful; spacing prevents it.

3. A sample chart of accounts for a Nigerian SME

Copy this as a starting point and delete what you don't need:

4. The statutory accounts you must not skip

A Nigerian business collects and holds money that isn't its own — tax and pension deductions it must pass on. Give each its own liability account so the balance is always visible and ready to remit:

• PAYE payable (2100) — income tax deducted from staff salaries, owed to the relevant State Internal Revenue Service.
• Pension payable (2110) — employee + employer pension contributions, owed to the Pension Fund Administrators via PenCom rules.
• VAT payable (2080) and VAT receivable (1060) — output VAT you charged customers (7.5%) and input VAT you paid suppliers. The net is what you remit to the Nigeria Revenue Service.
• WHT payable (2070) — withholding tax you deducted from vendor and director payments (commonly 5% or 10%), owed to the tax authority.
• NHF / NSITF / ITF payable (2120) — other statutory contributions where applicable.

Keeping these separate means that at month-end you can see exactly what is due, to whom, and by when — instead of discovering a liability only when the tax authority sends a demand.

5. Start lean, then grow

The temptation is to build a 200-line chart of accounts on day one. Resist it. A sprawling COA makes daily bookkeeping slower and reports noisier. Start with the essentials above, and add an account only when you have a real, recurring reason to track something separately (for example, splitting "Transport & fuel" into "Fuel" and "Vehicle maintenance" once those costs grow large enough to manage individually).

A good rule: if you can't say what decision an account will inform, you don't need it yet.

AnooreHR ships with a Nigeria-ready chart of accounts out of the box — statutory accounts for PAYE, pension, VAT, and WHT already wired to the right postings, so payroll and tax entries land in the correct account automatically. You can customise it to match your business without breaking the double-entry logic underneath. Book a demo or sign up free to see the default chart and adapt it to your company.

Frequently asked questions

Related: Bookkeeping basics for Nigerian SMEs · Month-end close checklist for a Nigerian SME · See pricing