AP & AR

Hi pwstill,

You'll want to enter the previous owner as a customer, so you can create invoices for them. 

The roadmap is you'll transfer all A/P balances out of those bills to the A/R under the owner's customer profile. This can be done through a barter transaction. Basically, the balances are transferred from A/P to a barter account, then to A/R because we can't directly transfer balances from A/P to A/R. 

Before we start:

• Be sure to back up your company file to preserve the original record.
• Take note of the balances of each vendor because you'll transfer them vendor by vendor

You can check out the detailed steps in this article: Record a barter transaction.

If you have other questions in mind, feel free to go back to this thread.

Not sure if this posted before. When I set up the item for which to bill the previous owner what G/L account is that linked to?

Hello, @pwstill.

I appreciate you following my colleague's suggestions. I'll be happy to add some information about the account for the previous owner.

To know the account to use in setting up the item to bill the previous owner, I recommend consulting an accountant to avoid messing with your book. If you don't have an accountant, you can click this link to find one: Find an accountant.

As advised by my colleague above, you can check this article to know more about recording a barter transaction: Record a barter transaction.

Feel welcome to send a reply if you have any additional questions about barter in QuickBooks Online. Have a great day!

Not quite there...

We have paid some of the bills that are a liability of the previous owner. We have other bills that are still outstanding that we will also pay. The previous owner owes us $X. We have a beginning bank balance (we took over temporarily) the existing bank account. We owe the previous owner bank balance less the outstanding and/or paid bills.

I'm having a really difficult time trying to get everything posted properly. If I post the bills to the prior owner account rather than to the normal expense account and enter a bill to the owner for that amount. they're offsetting each other. I'm apparently missing a step somewhere.

The bills can't be "paid" from the barter account because they're being paid from our bank account.

Bottom line - we owe each other with the net being a small balance due to the previous owner. 

Clear as mud?. 

Hello pwstill!

You can set up the previous owner as a customer so we can track how much they are liable for. Let me explain.

When you create a bill, you can make it billable to a customer. This means that you'll pass the charges to a customer. We can use this to track the previous owner's liability to the business.

Let's set up a customer profile first for the previous owner. Follow these steps:

1. Select Customer Center from the Customers menu.
2. Click the New Customer & Job drop-down and select New Customer.
3. Enter the previous owner's details. Tap OK to save it.

Once done, proceed to these steps:

1. Open an existing bill or create a new one.
2. Check the Billable column and make sure to select the previous owner on the Customer:Job column.
3. Tap Save & Close.

Then, create an invoice for the previous owner. When you select their name, you'll see a pop-up to let you know that there's a billable bill/expense and will allow you to add it to the invoice. Simply follow the on-screen steps. You can also record the payment from the previous owner in QuickBooks Desktop.

You can pull up the Customer Balance Detail report to see how much the previous owner owes. From the Reports menu, go to the Customers & Receivables, then select the said report.

I added this link if you need help in customizing reports: Customize reports in QuickBooks Desktop.

Post again here if you have more questions like this. Take care!

Let me see if I can muddy the water even more.  Correct me if I'm not understanding the situation. 

It sounds like the previous owner should be expensing the bills on their income statement, therefore, you want to assign the opening bank account balance to a "Due to previous owner" liability account.  The bills should be assigned to that same account (On the Expenses tab).  After all bills are paid, there will be a balance left in the "Due to previous owner" liability account and that's what the current owner owes the previous owner and it should match the bank account balance.

If the current owner is expensing the bills on their income statement, then the opening bank account balance should be assigned to income.  Then, bills can be entered as an expense (offsetting the income).  When all bills have been paid, the bank account balance is what’s owed to the previous owner and you would write a check out of the same income account that you assigned to opening balance to.

I assume you’re somewhere in the middle of all this, so I’m not sure if my response is helpful or not