An Opening Balance is the amount of money or funds you have for an account during initial setup or at the start of your Fiscal Year. This article details the steps in entering or editing opening balance in QuickBooks Desktop.
- It is best to consult your accounting professional before entering an opening balance . You can also press F1 key or select the Should I enter an opening balance? link while setting up an account, customers, or vendors in QuickBooks to help you decide and get more information about opening balances.
- If you did not have a balance before your QuickBooks start date1, you should not enter an opening balance. Instead, you can create a transaction (such as Deposit for bank or funds transfer for equity accounts) to add money to the account. If you're not sure which type of transaction to use or how to proceed, consult your accountant.
- When you start a new company file with a start date later than the actual company, you can enter Opening Balances using one or more GJE that you create from the Balance Sheet for the previous fiscal year. If you use journal entries to record opening balances, be mindful of the following:
- Consider using the Opening Balance Equity2 account as the offset account to keep the journal entries in balance.
- If you are entering balances for the start of the year it may be enough to enter a balance for last year's retained earnings3 rather than for each income, expense and cost of goods sold (COGS) account.
- You can enter only one accounts receivable or accounts payable transaction per journal entry, so you need to make multiple journal entries to load the balances for these accounts.
- Remember to include a vendor or customer name in the Name column of journal entries to accounts payable, accounts receivable, and sales tax payable.
- Instead of entering the Inventory Asset balance through a journal entry, you may wish to use the Inventory Adjustment screen to adjust both inventory value and quantity.
1 The date you entered when you setup your company file to indicate when you would begin tracking your financial transactions in QuickBooks.2 Created by QuickBooks the first time you enter an opening balance for a balance sheet account. As you enter the opening balances, QuickBooks records the amounts in Opening Bal Equity. This ensures that you get a correct balance sheet for your company, even before you've entered all your company's assets and liabilities.3 Profits from earlier accounting periods that have not been distributed to the company’s owners. At the end of your fiscal year, QuickBooks computes your profit (or loss) into an equity account named Retained Earnings.