1. What a nominal code is

A nominal code (general ledger code) is used to:

• Categorise transactions (sales, purchases, wages, rent, bank charges, etc.).
• Build your Profit & Loss and Balance Sheet reports.
• Group figures under the correct headings via account groups.

Adding a new nominal code lets you track a specific type of income, expense, asset, or liability separately.

Important: The choice of nominal code, its type (income, expense, asset, liability, equity), and its account group affects your accounts and tax reporting.
These details must be checked and confirmed with your accountant. BrightBooks support cannot advise which codes or groups are correct for your business.

2. Where you manage nominal codes

Nominal codes are managed in the Chart of Accounts area in BrightBooks. From there, you can:

• View existing nominal codes.
• Add new codes.
• Edit descriptions and settings (including account type and group).
• Control how codes appear in reports.

3. Before you add a new nominal code

Before creating a new code, consider:

• What is the code for?
  e.g. “Online Advertising”, “Card Processing Fees”, “Subscription Income”, “Grant Income”.
• Is there already a suitable code?
  You may be able to use an existing code instead of creating a new one.
• How should it be treated in the accounts?
  Is it income, expense, asset, liability, or equity?
  Should it appear under sales, cost of sales, overheads, other income, assets, liabilities, etc.?
• Confirm with your accountant
  They should confirm:
  • Whether a new code is needed.
  • What account type it should be.
  • Which account group it should belong to.
  • Any numbering convention they want you to follow.

4. Steps to add a new nominal code

After agreeing on the details with your accountant, follow these steps:

Step 1 – Open the Chart of Accounts

• Go to the Chart of Accounts / Nominal Codes section in BrightBooks.
• Click Add New.

Step 2 – Choose the correct account group (with your accountant)

Before you click “Add”, decide and confirm:

• Which account group the new code should be in, for example:
  • Sales / Turnover
  • Cost of Sales
  • Administrative Expenses / Overheads
  • Bank Charges
  • Fixed Assets
  • Current Assets
  • Liabilities
  • Equity / Capital

This is the grouping that controls where the code appears in your reports and how it contributes to totals (gross profit, operating profit, net assets, etc.).

This choice should be agreed with your accountant first, as it is an accounting decision.

Step 3 – Add details

• Enter:
  • Code – e.g. 4600, 6105 (follow your existing numbering pattern).
  • Name/Description – e.g. “Online Advertising”, “Card Processing Fees”.

Step 4 – Set the account type

• Select whether the code is:
  • Income (Sales/Turnover, Other Income)
  • Expense (Overheads, Cost of Sales)
  • Asset (Fixed assets, current assets)
  • Liability (current or long‑term)
  • Equity (capital, reserves)

This determines whether it appears on the Profit & Loss or Balance Sheet and how it behaves.

Step 5 – Save the new nominal code

• Save the code.
• It will now be available to use on:
  • Invoices and credit notes
  • Journals
  • Receipts and payments
  • Other postings

5. Using the new nominal code

Once created:

• Select the new code when posting:
  • Sales invoices – to track specific income types.
  • Purchase invoices – to track specific expenses.
  • Journals – for adjustments and reclassifications.
  • Bank transactions – for charges, interest, etc.
• Transactions posted to this code will:
  • Accumulate in that nominal ledger.
  • Appear under the chosen account group in your Profit & Loss or Balance Sheet.

Check your reports to ensure the new code appears where you expect.

6. Why account groups and structure matter

Account groups determine:

• How figures are summarised on your main reports.
• Which totals they feed into (gross profit, operating profit, net assets, equity).

If a nominal code is placed in the wrong group, you could:

• Misstate your profit (e.g. treating income as a reduction of expenses).
• Misclassify assets or liabilities.
• Confuse your accountant or tax authority.

Examples:

• Putting a loan under an expense group instead of liabilities.
• Putting wages under assets instead of overheads.
• Putting sales income under “Other Income” when it should be “Turnover”.

Because of this, the grouping and classification of nominal codes must be agreed with your accountant before you add or change them.

7. Practical tips

• Keep the chart of accounts tidy
  Avoid creating lots of very similar codes unless your accountant recommends it; use clear, descriptive names.
• Follow a numbering pattern
  Many accountants use ranges (e.g. 1000–1999 assets, 2000–2999 liabilities, 3000–3999 equity, 4000–4999 income, 5000–7999 expenses). Ask your accountant what pattern they prefer.
• Review reports after changes
  After adding or editing codes, run your main reports to check that figures appear in the right sections.
• Document decisions
  Keep a note of why each new code was created, which account group it uses, and how it should be used. This helps at year‑end and when working with your accountant.

8. Final reminder

BrightBooks gives you the tools to:

• Add and manage nominal codes.
• Set account types and groups.
• Control how transactions appear in your reports.

However:

• The accounting treatment (income vs expense vs asset, etc.).

• The choice of account group.

  The overall structure of your chart of accounts are accounting decisions that must be made and confirmed by your accountant or professional adviser. BrightBooks support can show you how to add and manage codes, but cannot advise which codes or groups are correct for your specific business.