I recently opened our new business and while we have a negative net income, since our business is new we should not have a negative retained earnings. For some reason however my retained earnings is negative and I am not sure why this is the case. When I go to the chart of accounts and view retained earnings account it does not show me anything. How do I fix this negative retained earnings ?
Congratulations on your newly opened business, @pratibhamd. I'm here to make sure you're able to fix your negative Retained Earnings account and manage your transactions accordingly.
Your Retained Earnings account shows the total of your company's income and expenses from previous periods and years. You can run a Profit and Loss report to see what makes up your Retained Earnings and view details for the Net Income (Loss) amount. Then, shows all of the transactions that make up the net profit or loss that QBO automatically switched to your Retained Earnings account. To do this, here's how:
Go to the Reports menu.
Search and select the Profit and Loss report.
From the Report period drop-down list, select All Dates.
Select Run report.
Choose the Net Income amount to open the Profit and Loss Detail report for All Dates.
I've attached a screenshot below that shows the last three steps.
Additionally, you'll have to make sure there are no Journal Entries (JE) posted. This is because QBO automatically and electronically swaps funds into the account and doesn't record any visible transactions for it. In case there are JEs created, I encourage you to reach out to your accountant to correct them appropriately. This way, you can keep your financial data and/or books accurate.