Opening Balance Equity Account Issue

HRB16 · ‎January 11, 2022

Hi, I am trying to file my corporate taxes for the first time and when I sent my balance sheet to the account he said I should clear my Opening Balance Equity account.

I see some Decrease transactions from my credit card when I created that account and put opening balance in it also i added few inventory items and added opening value for those at the time of creating .

Just to be clear I created this new file for my cooperation and cary forward the inventory and credit cards from my old self employed business.

Please help me clear this account . Thanks

ReymondO · ‎January 11, 2022

Let me join in this conversation and provide you with further assistance, @HRB16.

Once you create a bank account and enter an opening balance, QuickBooks will automatically post it in the Opening Balance Equity. That is the reason why it shows an entry in your account.

If you want to clear your balance, you can create a clearing account and transfer the money on it. This account is also called a Barter or Wash Account that has a balance of $0.00. Also, you won’t have to reconcile this account as this doesn’t hold any funds.

You can seek your accountant's guidance in setting up this account. That way, we can ensure that everything is correct. For more details, check out this article: How to add accounts from your chart of accounts in QuickBooks Desktop.

Once done, create a journal entry to move the amount and zero out your Opening Balance Equity account's balance. Here's how:

Go to the Company menu and select Make General Journal Entries.
Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
Click Save or Save & Close.

Moreover, you can check out our Year-End Guide for QuickBooks Desktop. This will provide you with some info on what you'll need to do when closing your books and preparing for the new one.

Please know that I'm just a post away should you need anything else or if you have any QuickBooks concerns. I'm always here to help and ensure that your questions are addressed accordingly. Wishing you a wonderful week ahead.

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MichelleBh · ‎January 11, 2022

I'll help you free up your opening balance in your QuickBooks Desktop account, @HRB16.

I'll make sure your equity balance gets cleaned up in no time. This way, you can send your Balance Sheet report again to him. So he can process and submit your corporate taxes without a moment's delay.

The Opening Balance Equity account should have a $0.00 balance. For the balance to be zero, ensure that everything has been put in place correctly. It seems that something was likely posted to it that shouldn't have been, or there was a missed entry. With this, I'd recommend double-checking your transactions by running the Balance Sheet report. Make sure you have your bank statement ready to compare to your QuickBooks data.

To get familiar with handling opening balance, check out this link: Enter opening balances for accounts in QuickBooks.

If you've checked everything over and can't pinpoint an error, I'd recommend reaching out to an accountant. They can clear out accounts and ensure your opening balance is entered correctly.

Further, visit these articles below on how to reconcile accounts and prepare year-end tax returns in QuickBooks:

I always check my notifications to keep track of responses. That said, please feel free to tag my name in the comments area if you have a follow-up question. Happy to help you again. Take care, HRB16.

HRB16 · ‎January 11, 2022

Hi, I created a credit card account with opening balance of $1000. This 1000 is showing in the Opening Balance Equity Account. How do I adjust this entry? I talked to my accountant and unfortunately he doesn’t have any idea .

HRB16 · ‎January 11, 2022

@MichelleBhwhen I opened a credit card account with $1000 balance that balance is showing in the opening balance equity account . I asked my accountant and he doesn’t have any idea . How do I balance that entry in Opening Balance Equity account

ReymondO · ‎January 11, 2022

Let me join in this conversation and provide you with further assistance, @HRB16.

Once you create a bank account and enter an opening balance, QuickBooks will automatically post it in the Opening Balance Equity. That is the reason why it shows an entry in your account.

If you want to clear your balance, you can create a clearing account and transfer the money on it. This account is also called a Barter or Wash Account that has a balance of $0.00. Also, you won’t have to reconcile this account as this doesn’t hold any funds.

You can seek your accountant's guidance in setting up this account. That way, we can ensure that everything is correct. For more details, check out this article: How to add accounts from your chart of accounts in QuickBooks Desktop.

Once done, create a journal entry to move the amount and zero out your Opening Balance Equity account's balance. Here's how:

Go to the Company menu and select Make General Journal Entries.
Fill out the fields to create your journal entry. Make sure your debits equal your credits when you’re done.
Click Save or Save & Close.

Moreover, you can check out our Year-End Guide for QuickBooks Desktop. This will provide you with some info on what you'll need to do when closing your books and preparing for the new one.

Please know that I'm just a post away should you need anything else or if you have any QuickBooks concerns. I'm always here to help and ensure that your questions are addressed accordingly. Wishing you a wonderful week ahead.

HRB16 · ‎January 12, 2022

Thank you ill try that.

HRB16 · ‎January 12, 2022

thank you ill try that

Fathun1955 · ‎November 23, 2022

Hi

I am a beginner for QB. I just want to know whether is it possible to daily transaction for a company qb file without zero out opening equity account. We have been in business for while now i am using QB. We have opening figures for last fiscal year end at 31 dec 2021. We are planning to start Qb at 1 October 2022 but there are few problems as it takes days to update pending 9 months to come up with an opening figure for petty cash we had. What will happen if enter opening balance of last year and enter daily transaction from October 2022 without zero opening equity first. Is that possible? Or if enter last year closing balances and zero it and start entering transactions. I am worrying if it won't balance what i will do the difference. I am using QuickBooks Accountant Desktop 2022. Please advise the best way among this options . Thank you

TirzahC · ‎November 24, 2022

Hello, Fathun.

When starting fresh with QuickBooks in creating accounts, I suggest we'll have to reconcile the transactions first to accurately manage your books. We'll need your bank statement to make sure they match your bank and credit card statements.

The beginning balance amount should match what's on your bank statement for the same start day. That being said, we can fix the opening balance by entering it of your real-life bank account.

Also, closing books ensures your financial data stays the way you want it to. It also prevents any accidental changes that could affect your financial reports. This locks your books so no one can edit your accounting data prior to the closing date. It will not zero out your beginning balance. Instead, it closes out your Income and Expense accounts and rolls up your net profit or loss as your Retained Earnings.

Also, I recommend seeking expert advice from an accountant. This way, we'll be able to ensure that the process is adequate, and your books are error-free.

I'll leave some articles to help you further with the process:

I'll add these articles that tackle year-end guide and closing books in QBDT for more information:

If there's anything else that I can help you with, please let me know in the comments below. I'll be here to lend a hand.

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Opening Balance Equity Account Issue