Starting Balance Equity

Hi

I am migrating my books of accounts from another accounting package.

I took the trial balance from previous accounting package for migration purpose

I have gone through the thread and suggestions for starting balance equity and following points to be noted:

  1. Company is sole proprietorship
  2. I didn’t touch the Capital Tab

While Migrating my data at first i took the opening the balances for all balance sheet accounts and for A/P and A/R i entered opening invoices

For the profit and loss accounts i pass JE

When I run the BALANCE SHEET report I noticed STARTING BALANCE EQUITY for all opening balances

As an alternative i took only balances of CASH AND BANK ACCOUNTS as for the rest of accounts i will pass JE but still I can see the STARTING BALANCE EQUITY for the CASH and BANK ACCOUNTS

I am familiar with Quick-books and it works the same way as Manager does but when you’re in JE tab you can use STARTING BALANCE EQUITY account but you cannot use in MANAGER

How to bring my STARTING BALANCE EQUITY to ZERO

Thanks

@Tut
@Brucanna

Your insight please on this issue

Please read the guide Set Starting Balances

There is no need to do a JE to enter starting balances

@Joe91

I read it

Please ignore the JE option, setting starting balances create starting equity balance which i don’t want to appear

Can you please help me on this

Thanks

Why don’t you post the figures you want to see here - why is your starting equity zero? that’s most unusual for an existing company with some years of trading

@Joe91

Apologies but you misread the script

While taking Opening balances for CASH AND BANK ACCOUNTS, manager creates STARTING BALANCE EQUITY

As it should

Yes it should but it imblances my accounts

I tried Migration of accounts with QBO and it did the same thing but i offset the effect by passing the JE for balancing my account

See below:

Thanks

If you have a closing balance sheet then you create the same accounts in Manager and enter the closing amounts as opening balances.

Presumably your closing balances balance. Either you have an Equity balance in your closing balances or not. In any case entering the closing balances will ensure a balanced opening balance in Manager, with or without an Equity Balance

You have to enter opening A/P and A/R balances as invoices dated before your Starting date

@Joe91

Let me try tonight as you instructed

Thanks

@Muhammad1, I believe the answer to your problem may lie in your first post. You said you did not touch the Capital Accounts tab. As a sole proprietor, it is acceptable not to have a capital account. But you still need some form of Owner’s equity account. When you enter your cash and bank account starting balances, you must also enter offsetting equity balances somewhere. If you don’t, Manager will force the accounting equation to balance by putting them into Starting balance equity.

A convenient way to handle equity for a proprietorship in Manager is by renaming Retained earnings. See this Guide: https://guides.manager.io/6971. If you go this direction, the balancing entries for your starting balances in cash and bank accounts go to your renamed Retained earnings account.

There is, if you are starting with Manager part way through the financial year and you want to incorporate your prior year to date income and expense balances - they are brought in via a JE.

Thanks @Tut

Hi @Brucanna

Yes exactly, you got my point now

HI @Brucanna

Can you please assist that how can i offset the starting balance equity

Without offsetting the starting balance equity my trial balance isn’t matching with previous accounting package

Thanks

Sorry but I don’t understand your request. You should have a starting balance at a certain date which you can’t and shouldn’t change with any accounting writings.

If you want to keep track of some previous accounting writings your starting balance should be previous to these writings or, at least, net of these writings in order to get the result after that.

In one of my specific case. I have inventories whose values were composed by capex and adjustments and I wanted to keep them divided. Instead of doing a starting balance at 31/12/2017 I did one at 30/12/2017 only for capex and I did at 31/12/2017 a JE with only the adjustments.

The first thing to do is take up the Balance Sheet (not Trial Balance) from your previous accounting system.

Then do exactly as you previously stated “at first I took the opening the balances for all balance sheet accounts and for A/P and A/R I entered opening invoices”. This incudes balances for any Equity accounts. With this done, the Manger > Settings > Starting Balances screen should be a mirror image of your previous accounting system’s Balance Sheet. If yes, tick this off.

Next, if you also want to take up the Profit & Loss accounts (due to part year) then this is done via Journal Entry.

Enter all the individual accounts into the Journal with income accounts being credits and expense accounts being debits. With this done the Journal should have a balance (red figure) matching the profit (loss) of the P&L accounts. If yes, tick this off. Don’t click the Journal’s Create button.

Now, you can’t post an unbalanced Journal, so you need to add another account line - select the account “Retained Earnings” (assuming you haven’t renamed it) and enter a debit or credit so that the Journal balances - red figure = zero. Click Create the Journal. There should be no Starting Balance Equity account showing, if yes, tick this off. All done.

The reason you need to add a Retaining Earnings account value to the Journal is this.
Lets assume that your Balance Sheet’s Starting Balance for the Retained Earnings account was 10,000 being made up of 8,000 for prior years and 2,000 for the current year. When you create the P&L Journal you are in effect recreating (duplicating) the current year 2,000, so the Retained Earning account would become 12,000 due to Manager’s automatically posting (transferring) the P&L profit (loss) to the Retained Earning account, so the Journal’s Retained Earning entry contras / cancels out this automatic posting.

When you commence with Manager in sync with the start of a financial year then you don’t have this complication.