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How to fix Negative Retained Earnings in new Business

Hi, I started using Quickbooks for a new LLC last year and I have entered everything and can reconcile except that my Retained Earnings is negative. I know what makes up the negative amount. I think it has something to do with the start date vs the transaction dates in the register.

Before we opened a checking account, we paid all of the expenses out of pocket. But when I started entering the Bills and Paying Bills, I decided to use the real date of the transaction without having any money in the bank. Therefore, all those expenses are all accounted for in the Register prior to the first deposit we got from a customer as negative. The sum of those expense transactions tie to the negative Retained Earnings I show on 12/31/13. How do I fix this?

I went to search this problem all over the web and it said to change the date of the Opening Balance Equity, but there is no balance in that account. Is there supposed to be?

I appreciate the help as Im new to this.

Thanks,

A

Solved
Best answer 12-10-2018

Accepted Solutions
Established Community Backer ***

amelia if you entered transactions in the bank account be...

amelia

if you entered transactions in the bank account before you actually had a bank account, that is the problem, it shows as a negative balance

what should have happened is you create bank type account called cash, and use that to post out of pocket expenses, then you make a deposit in the cash account equal to the amount spent and use owner equity investment as the source of the deposit (assumes you are not a corp)

to fix this, create the cash type bank account, open the real bank register and double click each "check" and when it comes up change the account to the cash bank account.  Then make a deposit back dated using equity as the source

2 Comments
Established Community Backer ***

amelia if you entered transactions in the bank account be...

amelia

if you entered transactions in the bank account before you actually had a bank account, that is the problem, it shows as a negative balance

what should have happened is you create bank type account called cash, and use that to post out of pocket expenses, then you make a deposit in the cash account equal to the amount spent and use owner equity investment as the source of the deposit (assumes you are not a corp)

to fix this, create the cash type bank account, open the real bank register and double click each "check" and when it comes up change the account to the cash bank account.  Then make a deposit back dated using equity as the source

Established Community Backer ***

I wouldn't expect any amount reported in retained earning...

I wouldn't expect any amount reported in retained earnings until the second year.