A sub account is a Chart of Accounts entry nested under a parent account, used to break broader spending or income down into more detail while it still rolls up into the parent's total on your reports. "Utilities" might be the parent, with "Electric," "Gas," and "Water" as sub accounts underneath it, each tracked separately but summing back up to one Utilities figure.
1. Go to your Chart of Accounts. In QuickBooks Online, that's Settings > Chart of accounts. In Desktop, it's Lists > Chart of Accounts.
2. Start a new account. In QBO, click New. In Desktop, right-click anywhere in the list and choose New.
3. Set the account type and detail type to match the parent. A sub account needs to share the same account type as the account it's nesting under; QuickBooks won't let you nest a sub account under a parent of a different type.
4. Check the sub-account box. In QBO, that's Is sub-account, then pick the parent from the dropdown. In Desktop, it's Subaccount of, with the same dropdown.
5. Name it and save. QuickBooks will typically display it as Parent:Sub Account in lists and reports, so it's clear at a glance where it sits in the hierarchy.
Sub accounts are genuinely useful for the thing they're built for, more detail in your chart of accounts without losing the roll-up total. Where it gets messy is when people reach for sub accounts to answer a question they're not built to answer: which job, which client, or which department a cost belongs to.
Nesting a sub account under every client or every job bloats your chart of accounts fast, and QuickBooks' own documentation and most accountants will tell you that's not what sub accounts are for. Classes, locations, or projects are the features built for that kind of cross-cutting detail, not account hierarchy.
Getting this distinction right up front saves a painful cleanup later: a chart of accounts with hundreds of sub accounts because someone used them as a substitute for job costing is a common, and genuinely difficult, thing to untangle after the fact.
Before a business leans further into sub accounts, classes, or locations, we map out what each one is actually tracking, so new accounts get created the way that scales instead of the way that seemed obvious at the time.
Transactions get routed to the correct sub account based on information from another system, a job, a vendor, a department, instead of a person deciding by eye every time something lands in the bank feed.
A sprawling list of sub accounts is usually a sign something else should be doing that job instead. Tell us what you're trying to track and we'll tell you the right way to structure it.
Whether it's sub accounts standing in for job costing, or categorization that still needs a person to decide every time, tell us what's happening and we'll tell you what's worth fixing. That applies well beyond the chart of accounts too, anything manual in how your business runs QuickBooks is fair game.
Let's talk →From your Chart of Accounts, create a new account, match its type to the parent account, check Is sub-account (QBO) or Subaccount of (Desktop), and select the parent from the dropdown.
QuickBooks Online supports up to five levels of sub account nesting under a parent. In practice, going more than one or two levels deep usually signals you need a different tracking method, like classes or projects, rather than a deeper hierarchy of accounts.
Yes, by default sub accounts appear as their own line, indented under the parent, with the parent showing the combined total. Most reports let you collapse sub accounts into just the parent total if you want the summary view instead.