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I just found out that I need to close the books at the end of the year by transferring profits to a Retained Earnings account. I keep reading that when a new company is created, Quickbooks will automatically create the Retained Earnings account and will automatically move profits to the account at the end of the year. However, I do not see any Retained Earnings account in the chart of accounts. I've also tried looking at the balance sheet for previous years and there is no Retained Earnings entry. I wasn't sure if I should just make one manually or if there is someway to enable the feature. If it's relevant, the company is taxed as an SCorp and I'm using Quickbooks Desktop 2014. Thanks.
Hi there, @bradstreet14.
I hope you're having a great week, let me give you some additional information about a Retained Earnings account.
When a new fiscal year starts, QuickBooks Online automatically adds the net income from the previous fiscal year to your Balance Sheet as Retained Earnings.
To view your Retained Earnings in the Balance Sheet:
You can distribute the amounts in the Retained Earnings account at the end of your fiscal year using a journal entry. The Debit column will decrease while the Credit will increase your Retained Earnings account.
Remember that you must offset every debit with an equal credit.
Let me know if this helps, thanks for reaching out to the Community!
If you are not seeing an account called Retained Earnings it may have been renamed to Owners Equity
The only automatic account I have is Members Equity. Is that equivalent to retained earnings? The only other equity accounts I have are:
Members Equity doesn't show up in my chart of accounts but does show up in the balance sheet. Should I use the Members Equity account as the Retained Earnings account or should I create a new account called Retained Earnings? Thanks.
The Retained Earnings account will show once you'll close the books, bradstreet14.
Once closed, that's the time the program will automatically move your profits to a Retained Earnings account.
Afterwards, you can view all your retained earnings in the Balance Sheet report. You can follow the steps shared by Joshua R for the steps top do it.
You can also browse these articles on how to close the books:
I'm just around if you still need my help!
I went to the preferences and set a closing date of 12/31/2019. However, Retained Earnings still did not show up in the balance sheet or in the chart of account. Should I just create the account manually or will that mess something else up? Thanks.
One other thing that I'm not sure is important. When I was originally setting up the file, the SCorp designation hadn't gone through yet so I think I had to do taxes for the first year as a sole proprietor. For the next year, I changed the designation in Quickbooks to SCorp. Would that have anything to do with the problem with retained earnings? I didn't start a new company file I just changed the tax designation in the company settings.
Thanks for getting back to me and adding additional information, bradstreet14.
The designation won't affect why the Retained Earnings account has disappeared. Since you've started entering transactions with the year 2014, let's perform the verify and rebuild steps. This helps us to identify any data issues causes the account to disappear.
If you receive Your data has lost integrity error, it indicates that the program detects an issue. We'll need to rebuild your data to fix it. Here's how:
You can check this article for more information about the process: Verify and Rebuild Data.
Afterwards, let's check to see if the Retained Earnings account has appear.
On the other hand, there's no need for us to manually add another Retained Earnings account. Your profits will only be transferred to the account created by the system.
Feel free to run the Balance Sheet report to show all your retained earnings. You can do this by clicking the Reports menu, and then selecting Company & Financial. Then, selecting Balance Sheet Standard.
I'm always around if there's anything that I can help!
I ran the verify data utility and it said Quickbooks detected no problems with your data. I've also included a screen shot of the balance sheet. Currently the Shareholder Distribution is a running total of all distributions for the life of the company. I'd like to move those to Retained Earnings so the account gets zeroed out at the end of each year. Thanks.
Hello @bradstreet14,
Retained Earnings account is created from the net income amounts of your Profit and Loss for the previous fiscal year. Let's pull up and customize your report to identify your retained earnings account.
Here's an article you can read to understand more about your financial accounts: Understanding the Equity Accounts on Your Financial Statements.
You can always visit our Reports and Accounting articles in case you need some related reference in managing your accounts and transactions.
Reach out to me if you need anything else. Thanks!
Should I see retained earnings on the profit and loss statement? I did what you mentioned and I still don't see any retained earnings account. I've seen examples where I'm supposed to move the profits for the year to Retained Earnings but I can't make that journal entry without the Retained Earnings account. I would expect to see Retained Earnings in the chart of accounts. I'm willing to start a new company file and transfer the data if that would fix it. Thanks.
Hi there, @bradstreet14.
Thank you for keeping us updated. Let me share additional troubleshooting steps to find your Retained Earnings account and do that you can close your books. As suggested by kknigge4, let's check if the account has been renamed. Let me show you how.
First, let's check the closing date set up in the company file so we have a basis when we start to check your report.
Here's how:
After that, run the Balance Sheet Standard report. In this report, Retained Earnings is located above the Net Income in the Equity section.
Here's how:
Once done, let's go to the Chart of Accounts to verify if it contains the closing entries. In the Chart of Accounts list, double-click the account to view the posted transactions. If you find Closing Entry in the report, you just need to change the name to easily identify the account.
Here's how:
For more information, I've included some article which you can use to manage accounts, as well as some tips to close your books:
Stay in touch if you have any other questions. Have a great day ahead.
That doesn't seem to be the problem. The account above Net Income is Shareholders Distribution which is an account I setup. If I look at the transactions related to that account, I don't see any closing entries. I've also verified that my closing date is 12/31/2019. Thanks.
Hello @bradstreet14,
Let's check if the retained earnings account is inactive so we can mark it active and be able to view it on your report. Let me guide you how.
If you're still unable to view the account, I recommend contacting our Customer Care Support. This way, we can review your file and assist you further. Please follow these steps to reach us.
I'm also attaching these handy articles for your reference.
Understanding the Equity Accounts on Your Financial Statements.
I'll be around if you need help with anything else. Thanks and have a nice day ahead.
I already checked inactive accounts and it's not there. I'll try contacting customer support. Thanks.
For anyone else running into this problem. I think the issue was that I originally setup the business as a sole proprietor and then switched to an SCorp. I know it was mentioned above that this shouldn't be an issue but since then, I upgraded to the latest version of Quickbooks (2020). I imported my company file and Retained Earnings was still missing. I then started a new company as an SCorp and Retained Earnings was one of the automatically created accounts. Now I'm trying to figure out how to efficiently move all my transactions over to the new company file which doesn't seem to be easy. Thanks.
Let’s us try again to import your transactions, @bradstreet14.
Instead of starting from scratch, you can import and export your data to transfer information to and from QuickBooks if you need to convert or create a new company file. Before doing so, you'll need to identify the transaction type and file format to ensure that QuickBooks will be able to handle them.
To learn more about import/export in QuickBooks Desktop, you can check these articles for the detailed steps and information:
You may also check this article on how to delete transactions by batch using Batch Delete/Void Transactions.
Then, if the retained earnings are still not available, you can try the process provided by @Adrian_A to verify and rebuild.
When you are still not able to see the Retained Earnings, I suggest contacting Customer Care Team to perform screen sharing and verify the reason why it is still not reflecting.
Let me know if you have any questions in mind. I’m here to help you out. Take care.
This might've already been fixed, but in case anyone else searches this issue:
I created new books for an existing company and set them up as a sole proprietor in QB, and there wasn't a Retained Earnings account anywhere showing prior years' RE. Instead, QB called the account Member's Equity. Clicking on Members Equity showed the "retained earnings" closing entries I was looking for. I'm willing to bet your "retained earnings" account is the one called Shareholder Equity on that screenshot. They're all pretty much the same thing, just different names.
For sole p's, the single owner owns 100% of the company, so 100% of your P&L that flows into a "retained earnings" -type account IS the owner's equity. It's usually called Owners Equity or Members Equity (although Members Equity is more for partnerships), and you generally don't have a separate account called retained earnings because they're the same thing in this scenario. If you had a RE account for P&L activities, you'd distribute the entire balance to Owner Equity anyway, so it wouldn't serve any additional purpose. You could have additional accounts for Draws/Contributions, but those aren't tied to P&L activity.
This differs from, say, a corporation, where there are frequently multiple "owners" (the "equity holders", or "shareholders", since corporations don't have "owners"). For corporations, the P&L related account is called Retained Earnings. The final P&L number flows into RE, where you then have to manually distribute the RE amongst the equity holders depending on their ownership percentage in the company. It acts like a collection point so you can then make all your equity distributions. So there's usually multiple accounts involved - the RE account and the individual member equity accounts, which are Shareholder Equity / Member Equity.. or Shareholder Distribution / Member Distribution. (Ideally a member should have their main Equity account with subaccounts called Distributions, Contributions, and Draws.. "distributions" are just the part of their equity that comes from the P&L. Total equity is made up of all collective activities.) So the names change and multiple accounts can exist, but there will still be that one account in QB tied directly to P&L activity.
If everything else in QB is set up correctly, the retained earnings you're looking for will be one of those Equity accounts, it just might be named something else. There should only be one of them tied to P&L, which collects all activity even if you imported stuff. Swapping company structures shouldn't change anything but the name used on the equity account, because the swap applies changes to the entire company file, for all years (unless the set Closing Date affects something, so maybe play with that date?). I could see QB creating both an Owners Equity and a RE account if you're trying to merge/import QB data with different company structures, but that would be glitchy. The info being imported should adopt the settings of the company you're importing into. But, I've never actually tried it. Maybe try changing the company structure on the one being exported so it matches the structure of the other company, so everything would have the same settings and should merge without issue. It could be that the equity accounts tied to P&L activity in the two companies are named two different things, which might prevent QB from being able to merge them straight from the import (unless Account names match perfectly, QB creates both names when merging). If you can find two such P&L related equity accounts, try manually merging them by giving them the same name.
For anyone wondering what this equity account looks like, it should only have 1 Closing Entry for each year, created automatically by QB, and the number on that entry should match the final number on your P&L report (make sure both reports are either in Cash or Accrual or they might not match). Anything else is not your "retained earnings" -type account.
You really solved my dilemna. Kudos
This is exactly the problem that I am encountering. My clients went from Sole Prop to an S-Corp with the same QB's file. I see that my "retained earnings" is STILL going to owner's equity, even though I changed the Company settings to S-Corp status. Without having to update Quick Books entirely, and I am unable to rename Owner's Equity, how did you solve this?
Thanks for joining this thread, @VickiM.
Allow me to chime in and help share some troubleshooting steps to resolve your concern in QuickBooks.
To fix the problem, you have to resort the list of your accounts so you can rename the Owner's Equity. This will also fix any odd behavior in QuickBooks.
Also, make sure to switch to single-user mode and back up your company file before undertaking an action that can’t be undone.
Here's how to re-sort list:
You can click this article for detailed information: Re-sort lists in QuickBooks Desktop.
I've shared these articles that provide tips on how to close your books at the end of every fiscal year:
Additionally, do check our Income and expenses page for future reference. From there, you can read great articles that can guide in managing your expenses.
Let me know if there’s anything else that I can help with the account by leaving a comment below. Take care and have a wonderful day!
I met the same problem. And I did create a new company as an SCorp. How did you move all transactions over to the new company file? Thanks.
Hi there, @Cassy11.
For now, the option to move all transactions from one company file to another isn't available in QuickBooks Desktop (QBDT). However, you can use the IIFs files to move some of your QBDT data. Here is the list of data that you can import using this feature:
Additionally, you can use the Payroll Setup window in QuickBooks to enter your payroll data. This way, you can enter paychecks that you have issued the year before using the payroll service.
For other transactions such as invoices, bills, and expenses, you can reenter them manually in QuickBooks. Or else, use a third-party app when moving them to the new company file. Go to this link and look for accredited third-party app: https://desktop.apps.com/home.
Once your transactions are moved, you can run some reports in QBDT. This will help you check if all your data are successfully transferred. Just go to Reports and select Report Center. Then, look for the report that you wanted to use and click the Arrow icon to display the report.
If you need additional assistance in doing your task with QuickBooks, don't hesitate to visit us back. We'll be happy to help.
Did you ever solve this without creating a new company file and transferring all the data? I am having the exact same issue :(
Hello rpsga,
Thank you for joining the thread.
Changing the entity from Sole Prop to S-Corp will not affect how and which account the retained earnings are reported. It's always in the Retained Earnings account, which is automatically created when you close your books.
If your scenario is similar to VikiM's, it could be that your Retained Earnings account was just named as Owner's Equity. You can name it back to Retained Earnings.
We're just right here if you have more questions about this.
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