@clive, I echo @Brucanna in saying you are in no trouble. It’s just that once topics get past a certain length (maybe a dozen posts), people don’t read the entire thread, so they tend to go astray. Many unrelated comments typically creep in. In this case, you were the seventh person to start a “subtopic” within the thread. The topic was about payroll tax and liabilities, and SBE only came up in helping one person resolve a related problem. Your question did not seem to be related to payroll, but to SBE itself.
As a relatively new user, I strongly recommend reading through the Guides, even those that may not seem directly related to your questions, as that will help you get the feel of the program. And I especially recommend experimenting with a test company.
Hi again @Brucanna, I have never used an accounting system previously. I have set up a test company (and read the guides and spent weeks reading the forum posts). I have been entering data according to my real transactions starting from 1 July 2016.
I have a negative Stating Balance Equity due to a GST Payable amount and a PAYG Payable amount both from the previous quarter.
I now understand that previous person in this forum (Janine) entered a starting amount in Owners Equity and that solved her issue. I just tried to do the same but there is nowhere to enter the starting balance. So I have set the starting balance in my Bank account to cancel out the negative SBE.
Please tell me the good news - is this correct?
Ok thanks - as this is just a test (albeit of actual transactions) I’ll zero the bank balance and keep the negative SBE. Back then I had just one bank account for business and personal use so I’m not looking to test that particular aspect of Manager just yet.
cheers
Seems I forgot to mention that I renamed the Capital Accounts to “Owners Equity” - sorry about that!! So when I try to enter a starting balance it wont let me.
So now I’ve renamed Retained Earnings to “Owners Equity” and set the starting balance to equal the negative SBE and…I now am back to square 1 with a negative SBE (which apparently is OK)
For a start, any SBE account with a positive or negative is NOT ok, unacceptable.
It would also be beneficial if you quoted figures as part of your illustration, they don’t have to be the real ones.
Now you have two choices, either Capital Accounts tab or “no” Capital Accounts tab.
The Capital Accounts tab is general used for partnerships or multiple owner situations.
Therefore for a sole proprietor, the Capital Accounts tab is not necessary.
For a sole proprietor you would create an Owners Equity and Drawings account via Settings - Chart of Accounts. The example uses a different name but same thing.
Or you can use a single account - a renamed Retained Earnings, as you mentioned above.
Now to enter the starting balance you have to set it correctly to get the starting balance correct.
A negative SBE actually means a DEBIT balance, so the starting balance has to be entered as a debit, not credit.
Your GST & PAYG balances are credits, so to balance them out you need a debit entered.
That shouldn’t be an issue, but you may find that having a separate Drawings account as shown above to be more beneficial as a management tool.
EDIT: to clarify enter the starting balance as a positive number and use debit/credit selector
I am not clear why you say this. I thought you just took the opposite position in another post a few days ago. But maybe I misunderstood.
Why, if making a transition from a previous accounting system, is this not OK? I certainly agree there should be no SBE starting balance for a new company, but I am failing to see why there could not be when transitioning. It seems that if this was not possible, the automatic account in Manager would not be there. What am I missing? (I have never been in this situation, so I have no feel for it.)
A SBE balance is no different to having a Suspense account balance - something is wrong.
The SBE and Suspense are both automatic accounts in Manager and both are designed to highlight errors. With the SBE it means the starting balances haven’t been entered correctly
If transitioning from a previous accounting system, then that system wouldn’t have had a SBE account, therefore why should you have a SBE balance in Manager.
The quirky thing in Manager in this - all accounts can have a starting balance except Accounts Receivable and Payables where their balances are created via invoice creation.
In the example above, which you are referring to and highlighted to by @clive , they were using cash basis accounting and therefore the Invoice creation did not get shown in the SBE as they were unpaid, which gave the SBE an illusion that it had a balance - switch to accrual basis and that illusion would have disappeared.
