How to cleanup Opening balance equity in QuickBooks Online
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- čas přidán 6. 08. 2024
- You're doing a massive cleanup of QuickBooks Online and you come across an account called Opening Balance Equity on the Balance Sheet. What is Opening Balance Equity and how do you clean it up? Let's take a look.
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5.22.21 Thanks for making this video on Opening Balance Equity. Gives insight of what QB is doing. Thanks
You're welcome, Chuck.
Thank you for sharing this video about "Cleaning Up QBO Opening Balance Equity." I believe it would be helpful to me if I was using Quickbooks. Again, I thank you, so much, for sharing this video.
Glad it was helpful Rickey.
Thank you so much, your videos have helped me tremendously ❤
You are so welcome, Lucy.
Very helpful, thank you!
Glad it was helpful!
Amazing. Thank You so much
You're very welcome!
Hello and thank you for this video. When connecting credit cards to QBO, it generates an entry and put the CC balance to opening balance equity. Where you should classify the opening balance coming from credit cards?
In many cases, QBO adds an amount to opening balance equity automatically. This amount is normally deleted. You should reconcile the credit card after deleting the opening balance in opening balance equity.
Can I delete an opening balance journal entry created to bring a checking account into balance? (Through the bank reconciliation process) I have found I have a lot more to clean up. I brought the account to correct ending balance in July, but the previous months are all off. They were reconciled, but not correctly and not to the bank statements. It’s QBO and this is a major clean up for a client.
Yes, you should delete the opening balance journal entry created by QBO.
Hi Veronica, Thank you for the great teaching. Can you help me with this question: Do I need to move/transfer balance from Opening Balance Equity account to another account before deleting/closing out the account? If yes, how and move to where? Thank you so much.
You would need to figure out why the amount is in Opening Balance Equity based on what I discussed in the video. If the balance in the OBE account is for setting up opening balances in bank/credit card accounts, you would normally close out the balance to Retained Earnings.
@@5MinuteBookkeeping that is my issue- but there aren’t any balance in retain earnings
Hello Veronica, thank you for a great video. I have 2 clients that just started using QBO, when I set up their beginning balances for their checking accounts I put their beginning balances under Opening Balance Equity, were should I have put those beginning balances for their business checking accounts?
Hi Brenda, assuming they are sole proprietors, you would reclassify the amounts in opening balance equity to Retained Earnings.
@@5MinuteBookkeeping Thank you!
@5 Minute Bookkeeping Hello, thank you for this video. I need some help though. My Opening Balance Equity shows up as a negative balance from a check. It should actually be a positive beginning bank account balance. I can't figure out how to correct this. Would you be able to help me with this?
I believe you are referring to the bank account opening balance. If the balance is incorrect, then you need to adjust the amount of the opening balance in the bank account. Since I don't have enough details, I can't tell you exactly how to do that.
great
Thanks.
I am in the process of setting up QB Online (simple start) for my LLC partnership. I have an opening balance equity entered but think I should have that split between the two equal partners. Can I go back and fix this?
Yes, look for the transaction in the account register and click on Edit to edit the account categories. Then save the transaction.
Hi, I accidentally deleted one transaction but when I re-enter it again..the reconcile reports are still off. this transaction is connected to a bank and loan. what should I do?
You have to true up the bank reconciliation by marking that transaction as reconciled as of the last reconciliation date.
what to do with the other accounts which were entered with use of opening balance initially?. Can you make video on the issue about what to do when QBO didn't download some transactions?( mIainly for reconciliation purpose)
If transactions were added to Opening Balance Equity in prior years, I normally reclassify the balance in Opening Balance Equity to the Retained Earnings account.
If transactions were added to Opening Balance Equity in the current year, then you should look at each entry and figure out why a balance was entered to Opening Balance Equity. I mentioned one or two examples in the video, but it is dependent on the type of transaction entered.
If QBO didn't download transactions from the bank feed, you have to enter them manually in QBO or import them from your bank/credit card account.
@@5MinuteBookkeeping is this covered in more detail in your course?
Thank you for video! I didnt see where you move the money when a new bank account was added in previous years- still showing on current Balance sheet? I see how they are created but I still not see where you put the opening bank account?
If a bank account was added in previous years and it still shows a balance on the Balance Sheet, you would not adjust Opening Balance Equity. You would need to adjust the bank balance. You would need to reconcile the bank account, if statements are still available. Otherwise, you would need to consider writing off the balance in the the bank account. I can't tell you what account to use to make the write-off since I don't know the amount or why the balance is still on the books. Typically, it's best to get the client's tax preparer involved in deciding how to write off old balances.
Great video thank you. I have opening balance in credit card what does it mean? I just check that on my bank register and it says there it is a opening balance equity on my credit card. Can i delete this? Pls. Advise thank you
Whenever you connect QBO to a bank or credit card account, QBO will set up an opening balance for the account and categorize it as "Opening Balance Equity". If you have already done the reconciliation for this account, you would not want to delete the balance since it will mess up your credit card reconciliation. If you haven't reconciled the credit card, then you can delete the amount in the opening balance.
@@5MinuteBookkeeping thank you for reply. Appreciate it. Just follow question please. So if you connected a newly credit card the opening balance should always zero when you start the reconcillation? If quickbook gives you opening balance i shoulb have to delete it?thanks
I had JE added an opening balance for checking accounts as the company has been around for years but only put the last couple into QBO - How do I remove this from Opening Balance Equity account but still have the year started off with correct balance?
You would need to recategorize your JE from opening balance equity to another account. You would need to determine with the assistance of the tax preparer which period to adjust and which account category to use.
Hello, quick question. Is it possible to remove credit cards added to QuickBooks that relate to your personal use and not the business?
Hi Moises. Yes, but you must first delete the transactions before you can delete the account from the chart of accounts.
This was helpful, but after the deleting the JE that QB recorded for making an account inactive, what's next? I still need to clean up the accounts and need to make them inactive as they are very old and for a different business that morphed into my current business QBO. Will I need to manually delete each transaction?! That will take days! I need a clean slate -0-.
You can make a journal entry to 0 out the balance in the account you're trying to clean up. You'll need to determine the best account category to use to 0 out (or write-off) the balance.
Great video but it now puts me back at the original problem. So now how do I clear and delete the account correctly?
Hi. I'm not sure what you're trying to do. Can you provide more details?
I can't make it in my quickbooks enterprise 2021,,, i can't find view register, not like online quickbooks
Hi. My tutorials are specific to QBO. For QBD tutorials, check out Hector Garcia CPA's CZcams channel.
Where is the link to the colossal clean up guide for purchase?
Hi. Here's the link bit.ly/cleanup_checklist
I want to start with zero balances but with my existing chart of accounts which I have been added, how is this possible?
Hi Atif. I'm sorry but I don't understand your question. Can you try to rephrase your question?
@@5MinuteBookkeeping I want all figures in zero in my accounts. As I have been recorded wrong entries and openings by mistake. and how to delete multiple entries in one go/click?
Your video was helpful but I have a different dilemma related to Opening Balance Equity. I purchased a business that was already in existence. What I purchased was quite a bit of "blue sky" because the seller then taught me how to do many things. The part of the blue sky was $27000 which I paid from my personal savings. When I start QuickBooks, how do I show that amount as owners equity? When I create the Owner's Equity account, if I put in the 27000 as a beginning balance, it does exactly what you showed - puts an entry in opening balance equity, but how do I clear that or avoid that so the 27000 shows as my owner equity? The rest of my owner equity for the inventory is correct. Thanks in advance
If you put in $27K of your own personal savings into the company, it is an Owner Contribution.
@@5MinuteBookkeeping Wow. thanks for your quick reply. when you record an owner contribution, it's usually money going into checking or into inventory, but I don't have any account to accept that money. The previous owner took it as purchase for the business. if we forget about the other actual assets that I purchased, here's what happens. When I start in QuickBooks, if I enter the 27000 as any kind of income/asset/equity then QB creates the offset entry and my Balance Sheet shows that offset and, therefore my equity is still 0. I'm lost.
@@jeanjohnson5414 I'm not sure if you're still searching for an answer on this, but if you are, I have one. The thing is, when you traded $27,000 of your savings for ownership of the company, you weren't making a contribution to the company. The company's finances actually weren't affected at all by the transaction (unless of course the previous owner withdrew funds from the company before selling it, in which case that should be recorded as a draw by the previous owner). The only way this transaction would show up on a balance sheet would be if the company had been acquired by another company (a Parent Company). In that case, the Parent Company would record a new asset on it's balance sheet for this company (a Child Company) and would need to offset it by either reducing another asset or by recording a liability. Hope this helps!
if we deposited our own $ into our account when opening the business , what is this called?
It is an owner contribution.
New Client has moved from Xero to QBO, previous year taxes done and books cleaned already. I connected bank and now I have Opening Balance Equity. Do I delete OBE?
Do I Journal Entry to Retained Earnings?
All I am supposed to be doing is Entering Opening Balances from Balance Sheet and start reconciling each month but I cannot figure what to do with this OBE😢.
QBO has a bad habit of putting balances to OBE when you connect the bank feed. You should delete the entry to OBE.
@@5MinuteBookkeeping Thank you
Mam where i can find clients for QuickBooks?
I find all my clients via my CZcams channel. Perhaps you could start a CZcams channel or blog. You can also use social media.
am I supposed to zero out my owners draws or something? Mine are still showing up in Xero following into the new year. For tax purposes wouldn't I want to get this off the balance sheet. I don't want to pay taxes on an owners draw twice.
I don't use Xero so I can't say for sure what you should do in Xero. However, for US tax purposes, owner draws are not taxed. You are taxed on the taxable income of the business.
@@5MinuteBookkeeping Okay that makes perfect sense. I guess its just more of a balance sheet bookkeeping thing. I zeroed it out. I just wanted to make sure I'm doing taxes right.
Maám, I'm not able to join your Facebook group, can anyone help me?
Make sure that you answer both questions to be allowed in the group. We approve requests once a day.
Do you offer one on one coaching for 1 hour?
Daylyn, I currently focus my coaching with bookkeepers or business owners on Shopify bookkeeping using QBO and A2X.
Now..How can I undo that 50k chart account that you created? Im starting on quickbooks and I was thinking you were teaching how to clean...Now I have 50000k in my balance..
Hi Carla. Can you provide more details regarding what you were attempting to clean up?
@@5MinuteBookkeeping I think I could finally take the 50k out of my balance.. but the Fixed assets building I can’t remove..😅
It look just the loan balance was just put back on books at was originally prior the owner deleted the acccount. Why didn't you show JE how to zero out the balance?
Hi DJ. After reactivating the account and deleting the adjustment made by QBO to opening balance equity, you could certainly enter a JE to clean up the loan balance. I just didn't show that part for the sake of time.
@@5MinuteBookkeeping OK thanks.
@@5MinuteBookkeeping Bdw, you run awesome channel keep up good work! :)
@@dmekas Thank you!
This video shows how to rectify OBE only if it's been caused by deactivating an account with a balance.
How can I rectify OBE that was created when our QBO first went online? This video does not cover that.
Hi. Thanks for the feedback. When cleaning up OBE, you need to take each transaction and figure out what was done to create the OBE entry. If you were setting up beginning balances in QBO, the balances in OBE would need to be recorded to Retained Earnings. There may be other reasons why the balances are in OBE, for example when bank feeds are first connected to the bank. In some instances, those amounts should be deleted.
@@5MinuteBookkeeping thanks so much for the advice.