You save time on bookkeeping and paperwork because many of simple bookkeeping tasks are handled automatically making it easier to run your business.
Accounting Basics Part 3: The idea behind setting up the opening balance is that you have started your QuickBooks file as of a certain date, and already have assets or liabilities associated with your business.
Instead, you take the current balances for the bank accounts, assets, and liabilities as of your start date and enter them into QuickBooks. So what date should you use as your start date? If you have just started your business, you should use the date when you incorporated your business or opened your bank account or transferred your own money to purchase business assets.
Whenever your first transaction occurred, that should be when you open your QuickBooks. If you do this, then there is no need to go through the following steps. If this is not the case in your quickbooks business planner, then when should you start your QuickBooks file? My recommendation would be to start your file as of the first day of the year.
Opening Balance Amounts So where do you get your opening balance amounts? Ask your accountant or review your tax return to find the balance sheet amounts. These amounts should be the balances in your accounts as of Dec.
Keep in mind that there are asset accounts that will be credits and liability accounts that will be debits.
These should be shown clearly on the Balance Sheet, so you should enter it as it is shown on the tax return. The transaction will balance as it is being pulled off the Balance Sheet, but ensure that the equity balance account goes to the Opening Balance Equity account.
An example of this journal entry is as follows: It is also a good idea to enter a note on the memo line for future reference or for your accountant to know where the amounts came from.
Verify the Balance Sheet Amounts In order to verify that you entered the journal entry correctly, you will want to run a Balance Sheet as of Jan. View the Balance Sheet shown below and compare it with the balances shown on your tax return. If the balances are off, find the error and adjust the journal entry accordingly.
If they are correct, then congratulations! You have successfully set up the opening balances in your QuickBooks file!
I hope this little tutorial helped you in your understanding of Accounting, how to use QuickBooks, and how to set up your company file. Let me know if you have any questions or troubles with what I have outlined here and I would be happy to help you out.
Check back in next week as I take you through the next step of entering data into your file.We offer day-to-day financial planning, personalized mentoring, and consulting services that will help you better understand the financial needs for your business and plan to meet your long-term goals.
Zen Planner fitness business software makes studios, gyms & schools wildly successful. Experience 20% annual revenue growth when you use the complete Zen Planner Suite. Schedule a demo today! Jan 06, · QuickBooks is by far the most popular accounting application for SMBs and deservedly so – it’s full featured, easy to use and well supported by Intuit.
My company is an Intuit partner. We sell. Writing your business plan is not easy. Read our guide to make sure you write the best business plan possible and set yourself up for success.
Budgeting software is used for establishing a planned level of expenditures. It serves to create both a short-range, month-to-month budget plan for at least one calendar year and a long-range, quarter-to-quarter plan you use for financial statement reporting and forecasting.
Upgrade to Ultimate Business Planner®, brought to you by Intuit and Atlas Business Solutions, the maker of the QuickBooks Business Planner! You'll get all the .