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+1-802-778-9005The opening balance in QuickBooks is defined as the amount of money in a company’s account at the start of a new financial period or year. This is well known as the first entry, which is made when a company starts its processes or after a year-end. There are many steps to editing or recording the opening balance in QuickBooks.
Your accounts in QuickBooks are required to match the real-life bank and credit card accounts you’re tracking. When you make a new account in QuickBooks, you select a day to begin tracking transactions. After that, you enter the balance of your real-life bank account for whichever day you select. This amount and start date represent the account’s opening balance.
Choose an easy date to begin your opening balance. If you’ve recently opened a new account at your bank, then you can use that day. If you’ve had the account for a long time, then you can start your opening balance on the same day as when you start your next bank statement. Whichever date you select, utilize your bank statement to get the account balance for the day.
Important Tip: QuickBooks tracks the opening balance for all of your accounts in an Opening Balance Equity account. This makes it simple to go back and search for what you entered later on.
If you are recording the opening balances using journal entries, you should be aware of the following:
When you make a new account in QuickBooks Desktop, select a day to start tracking all of your transactions. You need to enter the balance of your real-life bank account for the day you’ve picked. Through this way, QuickBooks will match your bank records from the beginning.
This starting point is defined as the account’s opening balance. It sums up all the past transactions which came before it. Here’s how you can enter an opening balance for accounts you create in QuickBooks.
Follow the steps mentioned below for the type of account the opening balance is for:
Before you make a new account on your QuickBooks Charts of Accounts, ensure that you know what to enter for your opening balance.
It is convenient for you to input an opening balance of a real-life checking account that you just opened or an existing one you have.
Get your bank statements or sign in to your bank’s website to access the necessary account information.
Go to the Company menu at the top of the screen and then select Chart of Accounts.
Right-click anywhere on your Chart of Accounts window and select New from the context menu.
Choose Bank or Credit Card for the account type, depending on the type of account you are setting up, and then select Continue.
Give your account a name. If you have multiple accounts of the same type or at the same bank, ensure the names are unique to avoid confusion.
Complete the rest of the data fields with the relevant information for the account, such as the account number, description, and any other required details.
Select Enter Opening Balance. This will allow you to input the opening balance of the account as of a specific date, typically the beginning of your fiscal year or the date you started using QuickBooks.
Note: If you need to edit the opening balance later, you can select Change Opening Balance instead.
What you enter as the opening balance depends on how you want to handle your past transactions:
1. If you plan to enter something other than older transactions that come before the opening balance date in QuickBooks, You should insert the amount of money you have left and the date of your last bank statement. Then select OK. This gives a summary of all the transactions previously made. Moving Forward, you will start tracking new transactions.
2. If you want to enter your past transactions in detail, Decide how many records you want to look back. Choose a date prior to the earliest transaction you’d like to include in QuickBooks. The balance you have indicates all the amounts before a specific date that you choose to be the initial balance. In the Ending date field, put the date you selected. For the ending balance, enter the balance of the real-life account on that date. Then select OK. In this method, you are able to avoid an inaccurate count where some past transactions have been counted more than once.
Once you have entered the opening balance and filled out all necessary fields, review the information to ensure it is correct. When you are ready, select Save & Close to record the opening balance and save the new account.
If you have any pending transactions for your real-life bank or credit card accounts, it is no problem. Once the pending transactions that appear at the end of the bank statement have cleared the bank, revisit the opening balance entry to correct it.
You can access the account information you need for the correction by getting your bank statement or signing in to your bank’s website.
Go to the Company menu at the top of the screen and select Chart of Accounts.
Find the account for which you want to change the opening balance. Right-click on the account name and select Edit from the context menu.
In the account editing window, select Change Opening Balance.
Adjust the opening balance amount to the correct figure. If necessary, you can also change the date to reflect the date on which the opening balance should be recorded.
Once you have made the necessary adjustments, review the information to ensure it is correct. When you are ready to finalize the changes, select Record to save your edits.
You can enter an opening balance for a real-life bank account that you have opened or that you have been operating for some time now.
Care should be exercised when entering the opening balances for accounts on your Balance sheet. Some of them are Fixed Assets, Equity, Long-term Liability, Other Assets, Other Current Assets, and Other Current Liabilities.
Get your bank statements or sign in to your bank’s website to access the necessary account information.
Go to the Company menu at the top of the screen and then select Chart of Accounts.
Right-click anywhere on your Chart of Accounts window and select New from the context menu.
Choose Fixed Asset, Loan, or Equity for the account type. If you need a different type, select the Other Account Types dropdown menu and choose the appropriate type. Then, click Continue.
Give your account a name. If you have multiple accounts of the same type or at the same bank, ensure the names are unique to avoid confusion.
Complete the rest of the data fields with the relevant information for the account.
Select Enter Opening Balance. Later on, if you require editing your opening balance, the option will be Change Opening Balance. Whatever you will enter in the opening balance depends on how you need to handle your past transactions:
1. If you don’t plan to enter older transactions that come before the opening balance date in QuickBooks: From your latest statement, insert the value at the ending balance and the ending date you have. Then select OK. This entails records of all your previous interactions with the supplier. You will begin recording new transactions as they occur in the future.
2. If you want to enter your past transactions in detail, Choose the point up to which you will need the information that you are extracting. Select a date prior to the oldest transaction that you would like to sync in QuickBooks. The balance you carry forward, or state as your opening balance, comprises all the transactions up to the date you select. In the second section of the criteria, enter the date that you have selected in the Ending date field. Ending balance: In this column, you should write the figure that corresponds to your real-life account as of the date shown. Then select OK. This method helps to avoid repeating in the computation of profits the transactions that have already taken place in the computation of sales.
Once you have entered the opening balance and filled out all necessary fields, review the information to ensure it is correct. When you are ready, select Save & Close to record the opening balance.
This one is the alternative to the main method; you can also enter the opening balance as a journal entry. This can be complex. We suggest you work with your accountant if you’re planning to do this:
Go to the Company menu and select Make General Journal Entries.
Set the date for the journal entry to match the date you have chosen for the opening balance. This is typically the beginning of your fiscal year or the date you started using QuickBooks.
On the first line of the journal entry, from the Account dropdown, select the account for which you are entering the opening balance.
You need to enter your real-life account for the day you picked. Dispensing on the type of account:
On the next line, select the Account dropdown and choose the Opening Balance Equity account.
Enter the same opening balance amount in the opposite column from the first line. For example, if you entered an amount in the Credit column for an asset, you would enter the same amount in the Debit column for the Opening Balance Equity account.
Once you are satisfied that the entry is correct, select Save & Close to record the opening balances for your accounts.
Make additional journal entries to enter accounts receivable, accounts payable, sales tax payable, and anything else that was not included in the initial journal entry.
If there’s any remaining balance in the Opening Equity account, it should be transferred to any other equity accounts or retained accounts. Move this money correctly with the help of your accountant.
Income and expense accounts
It is unnecessary to key in the opening balances for income or expense accounts. These accounts only record your revenues and expenses.
Customer or vendor balances in Accounts Payable and Accounts Receivable
If your customers or vendors owe you other amounts before your opening balance date, record them with individual unpaid sales or purchase invoices. This leads to various new account balances, which, when summed, give your Accounts Payable and Accounts Receivable opening balances.
After entering the opening balance, you need to navigate to your account register and make sure it’s correct. The Opening Balance Equity account should have the entire balance.
Go to the Lists menu and select Chart of Accounts.
Navigate and open the Opening Balance Equity account.
Look at the balance displayed for the Opening Balance Equity account. If all opening balances have been properly recorded and the accounts are in balance, it should be 0.00.
Don’t worry if your balance isn’t 0.0. Write down the balance remaining. Then, run a Balance Sheet Report for the last year.
Go to the Reports menu, hover over Company & Financial, and then select Balance Sheet Standard from the list of reports.
Look for the Dates dropdown menu and select Last Fiscal Year.
Scroll down to the Equity section and find the Retained Earnings account within this section.
Now, you need to compare the Retained Earnings balance from the balance sheet report with the remaining balance in the Opening Balance Equity account:
If they match, then you can move forward. Everything is balanced. If it doesn’t match, then you can contact your accountant. They are well aware of these situations and will get your accounts back in balance.
To keep correct financial records, you’re required to have an organized and correct chart of accounts. A major part of this is to ensure any accounts that affect your Balance sheet have an opening balance. This will provide you with a record of where the account started from.
If your bank and credit card accounts are connected, QuickBooks will automatically download your historical transactions up to a certain date. It sums them up and enters the opening balance and date for you. If you don’t decide to connect your account, you can manually enter the opening balance.
Go to the Settings icon and select Chart of Accounts from the menu.
Click on New to start setting up your account.
In the Opening balance field, enter the balance that reflects your bank or credit card account.
Tip: Ensure you have the correct opening balance amount before entering it.
In the As of field, select the date from which you want to start tracking your finances.
Note: You can add a description in the Description field to provide additional information about the account.
Once you have entered all the necessary information, review the details to ensure they are accurate. Then, click Save.
You can begin tracking new transactions in QuickBooks after the opening balance date.
If you wish to add transactions older than the opening balance, you must edit the start date and balance. This creates a new starting point and prevents QuickBooks from counting transactions twice.
Go to the Settings icon and select Chart of Accounts from the menu that appears.
Click on the account to open it, then select View Register to see the transactions for that account.
Look for the opening balance entry.
Important Note: You can sort the date column to show the oldest entries first to find the opening balance easily.
Click on the opening balance entry to select it. Edit the date and the amount as needed. Select Edit to open the transaction for further editing.
After making the necessary edits, review the information to ensure it is correct. Then, select Save to update the opening balance entry.
Entering an opening balance in QuickBooks is important as it sets the foundation for correct financial records and ensures a seamless transition between accounting periods.
If you forgot to enter an opening balance when setting up a new account in QuickBooks Online, don’t worry.
Here’s a step-by-step guide to help you resolve this:
By following these steps, you can successfully enter and reconcile your opening balance, ensuring your QuickBooks records are accurate.
Tips to Prevent These Mistakes:
The opening balance can be either a debit or credit, depending on the type of account. If it’s an asset then opening balance is debit. If it’s a liability then opening balance is credit.
Disclaimer: The information outlined above for “How to Record an Opening Balance in QuickBooks Online and Desktop?” is applicable to all supported versions, including QuickBooks Desktop Pro, Premier, Accountant, and Enterprise. It is designed to work with operating systems such as Windows 7, 10, and 11, as well as macOS.
