In QuickBooks, recording the opening balance is an essential step in establishing accurate financial records for your business. The opening balance represents the financial status of your company at the start of a new accounting period or when you first set up your QuickBooks account. QuickBooks Opening Balance Equity is an automatically generated account to Record Opening Balance in QuickBooks. It helps you maintain and track the balance of your accounts from day one such that your accounts reflect the true values of your assets, liabilities, equity, income, and expenses. So, go through this blog to record the starting balance in QuickBooks for different account types.
Worried about your financial data falling out of balance? Then, take guidance from the experts to learn the ways to record QuickBooks opening balance in the right way. Call us at the toll-free number +1-(855)-955-1942 right away.
Learn Why It Is Important To Record Opening Balances
Before you learn how to record beginning bank balance in QuickBooks, you should also have an idea of why it is important to do so. Basically, your accounts in QB need to match with the real-life bank and credit card accounts that you want to track in QB. For this, when you create a new account in QuickBooks Desktop, you are required to choose a day to start tracking the transactions. Further, you also need to enter the balance of your real-life bank account for whatever day you have chosen. This amount and the start date set your QuickBooks account’s opening balance.
So, it’s always a better idea to choose an easy date to start your opening balance. For example, if you have just opened a new account in your bank, then enter that date. However, if you already have an account, you can start your opening balance on the same day when your next bank statement begins. You just need to get the account balance from your bank statement for whatever day you choose.
Here’s How To Record Opening Balance In QuickBooks
To record opening balances in QuickBooks for a bank, credit card, and other types of accounts, you can proceed with the below-given steps.
Step 1: Enter an opening balance
The steps to record opening balance in QuickBooks depend upon the type of account you are recording the opening balance for. So, go through the below-given steps carefully.
- Bank or credit card accounts
- Asset, liability, and other types of accounts
- Income and expense accounts
Note: If you connect your bank and credit card accounts in QuickBooks, it automatically downloads your transaction history up to a certain date. Additionally, it totals them up and also enters an opening balance and date for you. So, you don’t need to enter anything after that. However, if you do not connect them, then you need to enter the opening balance manually.
Recommended To Read – How to Add New Company to QuickBooks Online & Desktop Easily
For Bank or credit card & Asset, liability, and other types of accounts
Be sure of what to enter for an opening balance before you proceed to create a new account on your QuickBooks Chart of Accounts. For instance, you can record opening balance in QuickBooks for a real-life bank account that you created recently, or for the one you’ve had for a while.
- Make sure to get your bank statements or sign in to your bank’s website.
- Open the QuickBooks Desktop application go to the Company menu, and select Chart of Accounts.
- Right-click anywhere on your Chart of Accounts and select New> Bank or Credit Card or Fixed Asset, Loan, or Equity, depending on the account type> Continue.
- Now, name your account.
Note: Make sure to give unique names if you have multiple accounts of the same type or at the same bank.
- Then, fill out the rest of the data fields and select Enter Opening Balance.
- If you want to edit your opening balance due to any reason, select the Change Opening Balance option.
What you enter as the opening balance depends on how you want to handle your past transactions:
- If you don’t want to enter older transactions: Make sure to enter the ending balance and ending date from your most recent bank statement and click OK. It will conclude all your past transactions, and thus, you’ll be able to track new transactions going forward.
- If you want to enter your past transactions: To do so, you have to decide how far back you want to go. Thus, select a date that’s older than the oldest transaction you want to track in QuickBooks. Your opening balance will conclude everything before the date you pick. Make sure to enter the date you picked in the Ending date field as well. In the Ending balance field, enter the balance of your real-life account for that date and click OK.
- Lastly, click on Save & Close to record the opening balance.
For Income and Expense Accounts
It’s not required for one to record opening balance in QuickBooks for income or expense accounts, as these accounts simply track your earnings and spending.
For Customer or Vendor Balances in Accounts Payable and Accounts Receivable
If any of your customers or vendors have an outstanding balance before your opening balance date, then you need to enter the individual unpaid invoices or bills in QuickBooks. This will automatically create open balances that would collectively result in your Accounts Payable and Accounts Receivable opening balances.
Step 2: Check the opening balance entry
Once you have successfully recorded the opening balance in QuickBooks, go to your account register and ensure that it’s accurate. Along with that, make sure there is no remaining balance in the Opening Balance Equity account.
- Go to the Lists menu and select Chart of Accounts.
- Search and open the Opening Balance Equity account.
- Further, make sure to check the account balance, as it should be 0.00.
However, if the balance isn’t 0.00, then note down the remaining balance. Once done, you have to run a Balance Sheet Report for last year.
- Firstly, go to Reports and click on the Company & Financial option.
- Then, select the Balance Sheet Standard followed by Last Fiscal Year from the Dates dropdown.
- Make sure to check the Retained Earnings balance from the Equity section.
- Finally, compare last year’s Retained Earnings balance with the remaining balance in the Opening Balance Equity account.
It’s great if they match, as it signifies that everything is balanced. However, if it didn’t, try to reach out to your accountant; They will help you get your accounts back in balance.
How To Edit QuickBooks Opening Balance
In case you want to add transactions that are older than the opening balance, then you need to edit the start date and balance. It will set a new starting point and prevent QuickBooks from counting any transaction twice.
- For this, go to the Settings option and then select Chart of Accounts.
- After this, locate the account and select the Account History option.
- Now, find the opening balance entry. You can sort the date column to get the oldest entries first.
- Then, choose the opening balance entry.
- Next, select Edit to edit the date and the amount.
- Select Save.
This way, you will be able to edit the opening balance in QuickBooks without any issues.
Find An Expert!
Hopefully, the above-listed steps will help you the Record Opening Balance in QuickBooks without much trouble. However, if you come across any issue while doing it and need an expert’s help, then we would suggest you to contact QuickBooks Data Service Solutions Helpline Number +1-(855)-955-1942 and reach out to our support team.
Frequently Asked Questions:
Ans: Opening Balance Equity account helps QB track the opening balance for all your accounts. This makes it easy and convenient for you to go back and look at what you entered later on.
Ans: If you have any pending transactions in your bank account, then you need to adjust your opening balance entry in QuickBooks after they clear the bank. You can do this with the following steps:
1. First, get your bank statement from the bank website.
2. Then, in QuickBooks, go to the Company menu, followed by Chart of Accounts.
3. After this, find and right-click the account and hit Edit.
4. Now, select the Change Opening Balance option.
5. Then, edit the amount and adjust the date.
6. When you’re ready, click on Record and save your changes.
Ans: If you forgot to enter an opening balance in QBO when you created an account, you need to go back, create a journal entry to record it, and then mark the journal entry as reconciled. After this, you can return to your business with QuickBooks without interruptions.