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Understand your balances after switching from QuickBooks Self-Employed or Sole Trader to QuickBooks Online

by Intuit•2• Updated 2 weeks ago

If you have switched from QuickBooks Self-Employed (QBSE) or QuickBooks Sole Trader (QBST) to QuickBooks Online, you may notice that your bank or cash balances look different than expected. This is a common part of the transition between two different types of accounting systems.

This article explains why your balances may not match your bank statement, what the "bank or cash balances" amount represents, and how to update your records moving forward. QuickBooks Self-Employed and Sole Trader use a single-entry system of record keeping. QuickBooks Online uses a double-entry system, which provides more robust record-keeping required for detailed financial reporting.


Why your Bank or Cash balance in QuickBooks Online may not match your bank statement after migration

In QuickBooks Self-Employed and Sole Trader, the system is a single-entry, income tax focused record keeping tool. It tracks "money in" and "money out" for your Self Assessment but does not formally separate assets, liabilities, and equity.

When you migrate to QuickBooks Online, the system recreates your single-entry transaction history in a double-entry system. The ‘cash’ balance you see now in your Balance Sheet is the net total of all business transactions you recorded in QBSE or QBST, rather than a real-time reflection of a specific bank account.

  • Personal transactions: You may have excluded personal spending in QBSE or QBST that actually occurred in your bank account.
  • Payment methods: Items paid via personal cards or physical cash may have been treated as "cash" in QBSE or all treated as the same bank account in QBST, even if they didn't flow through your business bank.
  • Recording gaps: The balance reflects what was recorded in QBSE or QBST — not necessarily what happened in one specific bank account.

The Bank or Cash balance account

bookkeeping, each transaction within these systems needs a balancing transaction in QuickBooks Online to create a proper structure for double-entry. To solve this, QuickBooks creates an account to hold this balance. 

  • The bridge: This account acts as a structural bridge between the two systems to ensure the accounting equation (Assets = Liabilities + Equity) balances correctly.
  • Adjustments: It represents a migration adjustment rather than a real-time reflection of a specific bank account.

Essential post-migration checks

To ensure your transition from QuickBooks Self-Employed or Sole Trader to QuickBooks Online is successful and your records migrated correctly, complete the following steps:

If you have a copy of your Profit and Loss Report from your previous system for all dates, you can compare this with the reports in QuickBooks Online to ensure your income and expense entries are accurate. 

Run a Profit and Loss report for "All Dates" in QuickBooks Online and compare this to the report from your previous system. They should agree. If they do not, check for duplicated or missing transactions.

We do not recommend reclassifying historical transactions. However, going forward, you should create separate accounts in your Chart of Accounts for:

  • Your business bank account
  • Business credit cards
  • Physical cash on hand

This account holds the migration adjustment rather than the true balance of one specific bank account. You should see the balance of this account somewhere on the Balance Sheet.

You may want to move this account’s total balance somewhere else on the Balance Sheet. We suggest you carry this out by creating a journal entry in QuickBooks Online. Moving the balance from the existing account to a newly created account elsewhere on the Balance Sheet.

We recommend you clearly label this account to indicate that it holds a balance at time of migration.


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QuickBooks Online EssentialsQuickBooks Online PlusQuickBooks Online Simple StartQuickBooks Self-Employed