Sole Prop to S-Corp question

NVColeman3 · ‎March 01, 2019

We use QuickBooks Desktop Pro. On January 1, 2019 we transitioned from a Sole proprietorship to an S-corp. We opened a new checking account and setup a new QuickBooks Pro file for the S-corp. However, in January we paid the business expenses using the Sole proprietor checking account because the S-corp checking account wasn’t opened yet.

We would like to record those expenses (those that were paid by the Sole Prop checking account in January) in the S-corp QuickBooks file. How do I do this? My boss doesn’t want the old Sole Prop checking account to show on the balance sheet of the new S-Corp.

We stopped using the Sole prop checking account on Jan 31 and will be closing it soon. Thank you in advance for your help.

HoneyLynn_G · ‎March 01, 2019

I appreciate you for getting back and providing extra details, @NVColeman3.

Allow me to share some more insights about entering transactions from January coming from your Old checking account.

Since you don't want to add the old checking account on the New S-Corp company, you can create a clearing account to enter those transactions into QuickBooks. Setting up a clearing or wash account will help you move money from one account to another account when you cannot move the money directly.

Here are the steps:

Click Lists.
Choose Chart or Accounts.
Right-click on your mouse, choose New.
Choose the Bank radio-button.
Click Continue.
In the Account Name field, enter Clearing Account, Barter Account or Wash Account.
Do NOT enter an opening balance.
Click Save & Close.

When entering the expense transactions, make sure to select this bank account.

I still encourage seeking help from your accountant. He/she could guide you which option to take based on your recording practice and business needs.

Keep posting here in the Community if you have other questions. We're always here to offer assistance. Have a good one.

View solution in original post

HoneyLynn_G · ‎March 01, 2019

Hello there, @NVColeman3.

I appreciate you providing some details. I'm here to help you record the expense transactions on the S-corp QuickBooks file.

You will have to create and set up an account with the balance same as the amount of all the expense transactions. Accounts with zero balances will not show on your Balance Sheet report, only on your Profit and Loss.

Here's how to set up an account:

Click Lists.
Choose Chart of Accounts.
Right-click on your mouse, choose New.
Select an account type.
Click Continue.
Enter the bank name and opening balance.
Click Save and Close.

Next, enter the expense transactions as checks:

Click Banking.
Choose Write Checks.
Enter the Information.
Click Save & Close.

This is how the Balance sheet report looks like, NVColeman3.

I also recommend seeking an accountant for an expert's advice to ensure there will be no problem with the books in the future.

That should get you going today. I'm still here to help you further if there's anything else you need. Just add a comment below. Have a wonderful day ahead!

NVColeman3 · ‎March 01, 2019

Hi, Thanks for your reply, but this does not answer my question. The old checking account (that was used for the Sole Prop business) has been in use for 5 years and will shortly be closed. We do not want it to be on the new S-Corp QuickBooks. We opened a NEW checking account for the S-Corp. My question is: how do I enter the transactions from January that were still in the OLD checking account without adding the old checking account to the NEW S-Corp?

We've already set up all the accounts in the new S-Corp QuickBooks - the problem is, we want to add the expense transactions from January but NOT the old checking account. I can't enter them as being in the NEW checking account or I will not be able to reconcile the new account. That's my predicament.

HoneyLynn_G · ‎March 01, 2019

I appreciate you for getting back and providing extra details, @NVColeman3.

Allow me to share some more insights about entering transactions from January coming from your Old checking account.

Since you don't want to add the old checking account on the New S-Corp company, you can create a clearing account to enter those transactions into QuickBooks. Setting up a clearing or wash account will help you move money from one account to another account when you cannot move the money directly.

Here are the steps:

Click Lists.
Choose Chart or Accounts.
Right-click on your mouse, choose New.
Choose the Bank radio-button.
Click Continue.
In the Account Name field, enter Clearing Account, Barter Account or Wash Account.
Do NOT enter an opening balance.
Click Save & Close.

When entering the expense transactions, make sure to select this bank account.

I still encourage seeking help from your accountant. He/she could guide you which option to take based on your recording practice and business needs.

Keep posting here in the Community if you have other questions. We're always here to offer assistance. Have a good one.

NVColeman3 · ‎March 01, 2019

Yes the clearing account works!!

Thank you so much. I appreciate your help.

NVColeman3 · ‎March 01, 2019

Yes the Clearing Account works!! this solves my problem.

Thank you so much for your help. I appreciate it.

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Sole Prop to S-Corp question