Quick Books Implementation Steps/ Switching to Computerized Accounting/How to Enter Opening Balances in Quick Books (QB)

Quick Books/Accounting Software/ERP Implementation Steps

Switching to Computerized Accounting Solutions Strategy

How to enter Opening Balances in Quick Books?

In this blog you will learn steps to be followed for switching to automated/computerized accounting solutions from manual system or from small accounting solution to other ERP system.

For me the subject matter will be Quick Books but you can follow these steps for other accounting solutions with slight changes.

Steps before moving to computerized Accounting System:

• Understanding of business processes and design solution accordingly
• See the configurations/customizations in new solution to align the digital process with manual business process flow
• Prepare Chart of accounts and decide about the modules that will be required
• Add all entity's master data (Customers, Vendors, Employees, Items/Products, Banks, Fixed Assets etc.) in each respective module as per new solution requirments and verify
• Categorization and classification depends on your business reporting requirments
• Setup and configurations should be based on final output i.e. reporting requirements, the way clients will extract reports from the system and features they require to manage business process
• Decide Cut off Date. This would be a day before the start date of your fiscal year to segregate opening balances and that day transactions. e.g. a company having fiscal year starting from January to December should enter opening balance on December 31 of previous year. 
• Compile Opening balances on Cut off date/ Prepare financials on that date
• Each item/entity (Customers, Vendors, Employees, Items/Products, Banks, Fixed Assets etc. and GL account balances) breakup should match with the total figure appearing in trial balance. e.g. Account Receivable total should match with each individual customer balance
• Create " Opening Balance Equity" account of Equity type to enter opening balances. After entry of all opening balances make sure that this account should be Zero.
• Each entity balance should be added individually using templates provided for each entity's opening balance entry.
• Don't enter directly to main GL account except GL accounts which don't have subsidiary accounts. If you do subsidiary ledgers will not show accurate results but only main GL.

In quick Books Add opening balances as per under given instructions:

Items/Products                 -        Inventory activities/Item Adjustment Form 

Customers                        -        General Journal Entry Form

Vendors                             -       General Journal Entry Form

Cash and Banks               -       General Journal Entry Form

Employees                         -       General Journal Entry Form (not using Payroll Module)

Fixed Assets                      -       General Journal Entry Form (not using FA Module)

 As single entry concept is no more existed so you have to use Opening balance Account for entry of opening balances, the double entry for each type of account will be:

Account Nature                                                Debit Head                                   Credit Head

Assets Nature  Account                                    Asset Account                              Opening Balance

Liability Nature Accounts                               Opening Balance                         Liability

Equity Nature Accounts                                  Opening Balance                          Equity               

At the end Opening Balance Account must be Zero else there is problem in your entries.

See the screenshot to show you how to record entry. I have entered here opening balance for customer, Vendor and Employee but you will use only one entity at one time as system will not allow you to enter receivable and payable type accounts in one entry and same accounts for multiple times (repetition).

Note :

In case of "Customer/Vendor Negative Balances " reverse the accounting entry as guided above.

I suggest you to follow this way for opening balance entry rather than entering opening balance in customer form field.

Thank You!