Setting Up Odoo Accounting: Chart of Accounts, Tax Configuration & Bank Reconciliation

Odoo Accounting is a full-featured, double-entry accounting system that replaces standalone tools like QuickBooks, Xero, or Sage for businesses already running Odoo. Setting it up correctly from the start prevents costly rework down the line. This guide covers the essential configuration steps: chart of accounts, tax setup, bank reconciliation, and financial reporting.

What Is Odoo Accounting?

Odoo Accounting is Odoo's built-in financial management module supporting double-entry bookkeeping, multi-currency transactions, automated bank reconciliation, and country-specific fiscal localization. It integrates directly with Odoo Sales, Purchase, Inventory, and Payroll, eliminating the need for manual journal entries from operational transactions.

Odoo Accounting is available in Odoo Enterprise Edition (full functionality) and as a limited invoicing module in Community Edition.

Step 1: Install and Configure the Accounting Module

After enabling the Accounting module, your first setup involves:

1. Company information: Verify your legal name, tax ID, address, and fiscal year start date under Settings > General Settings > Companies.
2. Fiscal localization: Select your country's fiscal localization package. Odoo provides pre-configured packages for 70+ countries, including chart of accounts templates, tax structures, and legal report formats.
3. Currency: Set your main operating currency. Enable multi-currency if you transact in foreign currencies.

Important: Choose the correct fiscal localization package before creating any transactions. Changing it later requires resetting the chart of accounts.

Step 2: Configure the Chart of Accounts

The chart of accounts (COA) is the backbone of your accounting system. Odoo loads a default COA based on your localization package, but you should customize it to match your business.

Chart of accounts structure in Odoo:

| Account Type | Code Range | Examples | |---|---|---| | Assets | 1000-1999 | Cash, Accounts Receivable, Inventory, Fixed Assets | | Liabilities | 2000-2999 | Accounts Payable, Tax Payable, Loans | | Equity | 3000-3999 | Share Capital, Retained Earnings | | Revenue | 4000-4999 | Sales Revenue, Service Income | | Cost of Revenue | 5000-5999 | COGS, Direct Labor | | Expenses | 6000-6999 | Rent, Salaries, Marketing |

Best practices for COA setup:

• Keep it lean. Start with 50-100 accounts. You can add accounts later, but removing unused accounts clutters reports.
• Use consistent numbering. Leave gaps in account codes (e.g., 4100, 4200, 4300) so you can insert new accounts between existing ones.
• Map to your reporting needs. Every account should appear on a financial statement. If you cannot explain why an account exists, merge it with a broader category.
• Set default accounts. Configure default receivable, payable, income, and expense accounts so Odoo auto-fills journal entries from sales and purchase transactions.

Navigate to Accounting > Configuration > Chart of Accounts to view, edit, and add accounts. Each account must have a unique code, name, and account type.

Step 3: Tax Configuration

Taxes in Odoo are highly configurable and support VAT, GST, sales tax, withholding tax, and other structures used globally.

Setting up taxes:

1. Go to Accounting > Configuration > Taxes.
2. Review the pre-loaded taxes from your localization package.
3. Create or modify taxes based on your requirements:
   • Tax name: Descriptive (e.g., "VAT 17% Sales" or "GST 10% Purchase")
   • Tax type: Sales, Purchase, or None
   • Tax computation: Percentage of price, fixed amount, or group of taxes
   • Tax scope: Goods, Services, or both
   • Included in price: Enable for tax-inclusive pricing

Advanced tax scenarios:

• Tax groups: Combine multiple tax components (e.g., CGST 9% + SGST 9% = GST 18% in India).
• Fiscal positions: Automatically swap taxes based on customer location. For example, apply 0% VAT for EU B2B transactions with a valid VAT number.
• Withholding tax: Configure negative tax entries that deduct tax at source.
• Tax exemptions: Create zero-rate taxes with specific tax grid mappings for proper reporting.

Fiscal positions are especially powerful for businesses selling across borders. Assign them to customers or let Odoo detect them automatically based on the shipping address.

Step 4: Bank Account Integration

Connecting your bank accounts to Odoo automates transaction import and dramatically speeds up reconciliation.

Three methods for bank integration:

1. Bank feeds (automatic sync): Odoo connects directly to your bank via Plaid, Yodlee, or country-specific aggregators. Transactions import automatically daily.
2. OFX/QIF/CSV import: Download transaction files from your bank's website and import them into Odoo manually.
3. SEPA/CAMT import: For European banks, import CAMT.053 or CAMT.054 files for statement processing.

Configuration steps:

1. Go to Accounting > Configuration > Bank Accounts.
2. Add your bank account with the correct account number and BIC/SWIFT code.
3. Choose your synchronization method.
4. Create a dedicated journal for each bank account (Odoo may auto-create this).
5. Set the journal's default debit and credit accounts to your COA bank account.

For businesses with multiple bank accounts, create a separate journal for each. This keeps reconciliation clean and allows per-account cash flow reporting.

Step 5: Bank Reconciliation Workflow

Odoo's bank reconciliation matches imported bank transactions with existing journal entries. The process in Odoo 18 is streamlined with AI-powered matching suggestions.

Reconciliation process:

1. Navigate to Accounting > Bank > Bank Statements (or the reconciliation widget on the dashboard).
2. For each imported transaction, Odoo suggests matching entries based on amount, reference, and partner.
3. Review and confirm matches:
   • Perfect match: Amount and reference match an existing invoice or bill. One click to reconcile.
   • Partial match: Apply partial payment and keep the residual open.
   • No match: Create a new journal entry directly from the reconciliation screen (e.g., bank fees, interest income).
4. Reconciled items turn green. Unreconciled items remain for review.

Reconciliation tips:

• Reconcile daily or weekly, not monthly. Smaller batches are faster and easier to troubleshoot.
• Use the reconciliation model feature to create templates for recurring unmatched transactions (bank fees, payroll transfers, loan payments).
• Set up partner matching rules so Odoo recognizes customer payments by bank reference patterns.
• Enable automatic reconciliation for predictable transactions to reduce manual effort.

Need help connecting your banking infrastructure to Odoo? Our Odoo integration specialists handle bank feed setup, payment gateway connections, and custom reconciliation workflows.

Step 6: Multi-Currency Accounting

For businesses transacting in multiple currencies, Odoo handles exchange rate management automatically.

Setup requirements:

1. Enable multi-currency in Settings > Accounting.
2. Activate the currencies you use under Accounting > Configuration > Currencies.
3. Configure exchange rate sources: Odoo can auto-fetch rates from the European Central Bank, Federal Reserve, or custom providers.
4. Set the update frequency (daily recommended for active trading currencies).
5. Configure exchange gain/loss accounts for automatic rounding entries.

How it works in practice:

• Invoicing: Create invoices in the customer's currency. Odoo records the transaction at the invoice-date exchange rate.
• Payments: When payment arrives, Odoo calculates any exchange difference and posts it to the gain/loss account automatically.
• Reporting: Financial reports display in your company's base currency, with optional multi-currency detail.

Step 7: Financial Reporting

Odoo provides standard financial reports out of the box:

• Profit and Loss (Income Statement): Revenue, expenses, and net income for any date range
• Balance Sheet: Assets, liabilities, and equity at a point in time
• Cash Flow Statement: Operating, investing, and financing cash flows
• General Ledger: All journal entries by account
• Aged Receivable/Payable: Outstanding invoices and bills grouped by aging buckets
• Tax Report: Tax collected and paid, formatted for local tax authority requirements
• Trial Balance: Debit and credit totals for all accounts

Customizing reports:

• Use the comparison feature to view period-over-period changes (this month vs. last month, this year vs. last year).
• Apply analytic tags to track profitability by project, department, or cost center.
• Export any report to PDF or Excel for external stakeholders.

For specialized reporting needs beyond standard templates, Odoo customization services can build tailored financial dashboards and automated report distribution.

Frequently Asked Questions

Q: Can Odoo Accounting replace QuickBooks or Xero? Yes. Odoo Accounting handles everything QuickBooks and Xero offer, including invoicing, bank reconciliation, expense tracking, and financial reporting. The advantage is native integration with other Odoo modules, eliminating data silos between accounting and operations.

Q: Is Odoo Accounting compliant with local tax regulations? Odoo provides fiscal localization packages for 70+ countries, pre-configured with local chart of accounts, tax structures, and legal reporting formats. These packages are maintained by Odoo SA and local partners to stay current with regulatory changes.

Q: How do I handle the transition from my current accounting software? Start by exporting your chart of accounts, open invoices, open bills, and trial balance from your current system. Import these into Odoo as opening balances on your go-live date. Historical transaction detail can be imported for reference but is optional. Professional Odoo migration services ensure accurate data transfer and balanced opening entries.

Getting Started

Proper accounting setup pays dividends throughout the life of your Odoo instance. Take the time to configure your chart of accounts, taxes, and bank integrations correctly, and every downstream transaction will flow smoothly into accurate financial reports.

For hands-on guidance with your Odoo accounting configuration, book a consultation with our team. We help businesses across industries set up compliant, efficient accounting workflows in Odoo.