Changing from Sole Prop to S-Corp - Best Inventory Setup

CurtisStevens · ‎January 06, 2022

I elected to be taxed as an S-corp on 1/1/21. Prior to that, I was a sole prop. I wanted things clean so I created a new QB Desktop file and am going back and deleting everything prior to 1/1/21. So all the data only pertains to the s-corp. If needed, I have the other QB file for all previous sales/data as a sole prop.

I'm trying to figure out how to get all of my inventory and its avg cost as of 12/31/20 into my new QB file so the current inventory (1/6/22) accounts for that starting point. I would think the avg cost for all of my inventory, that value, would be applied to my equity in the business.

RCV · ‎January 06, 2022

Thanks for checking in with us, CurtisStevens.

In QuickBooks Desktop we can export the inventory items from the old company file to the new one. The exported data contains the cost, price, Reorder Pt (Min), and all the columns shown on the Item List page. If you need this data, here's how to export and import them:

Go to the Lists menu, select Item List.
On the Excel dropdown, choose Export all Items.
In the Export window, choose whether to create a new worksheet or update an existing worksheet.
Select the Export button. QuickBooks opens MS Excel. You can edit the information as needed.

To import QuickBooks data with MS Excel files, just read this article for the detailed steps: Import or export MS Excel files. You'll want also to look for a third-party application that can help you import the Average cost to another QuickBooks company file. Just go to this link: https://desktop.apps.com/home and look for Import on the search bar.

Feel free to browse this link here if you need help with other tasks in QuickBooks. It'll route you to our general payroll topics with articles.

The Community always has your back, and I'm just a post away should you ever need anything. Just leave a comment below and I'll get back to you. Have a great day ahead.

Rainflurry · ‎January 07, 2022

It sounds like you're on the right track. Inventory that you own personally that is contributed to the S-corp will be recorded as a debit to inventory and a credit to owner's equity. As you mentioned, it's important to value the inventory properly as that amount is used for beginning (1-1-21) inventory on line 1 of Form 1125-A for figuring COGS for the year.

CurtisStevens · ‎January 07, 2022

Thanks for the replies, everyone. I just figured out I can do this, does it make sense to do it this way, seems way easy.

Use the adjust qty/value on hand and simply enter all of my inventory as of 12/31/20 and it's value, which would create it's avg cost on 1/1/21 and the adjustment account would be Owners Equity. Everything seems to be checking out perfectly as far as I can tell.

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Changing from Sole Prop to S-Corp - Best Inventory Setup