Starting balance equity

1

Hi,
It is my first year with Manager, although my business has been running for a couple of years.
I am having some issues with the ‘starting balance equity’ which messes up my balance.
My retained earnings equals my profit and loss for all the years that I have been in business. However the starting balance equity line is subtracted to the retained earnings. which messes up my accounts for hmrc.
My profits for the previous years were 10599 and this year is 6318, so it should equates to 16917. This is exactly my retained earnings figure, however I do not know where to position the starting balance equity.
Have you got any advise?

2

Not quite understanding what this means, are you able to provide a screen shot of the equity section of the Balance Sheet? Its good that your Retained Earnings totals correctly. So I am guessing that the issue relates to the entry of the Starting (Opening) Balances when you commenced with Manager.

Did you use the Capital TAB or create a Chart of Account for the Equity? Can you also provide a screen shot of the equity section of the Starting Balances Report? This information will assist in providing a clear picture.

3

Hi Brucana,
I think that you are right that the issue is in the Starting Balances.
Do you need more details than this?

I haven’t used the Capital TAB

4

OK - are you a corporation?
If you haven’t used the Capital TAB, was that Capital Accounts created directly in the Chart of Accounts?

It appears that the Starting Balances are incomplete, that Starting Balance Equity should be zero.
Note that the figure is in black - that’s Manager balancing calculation as you enter starting balances.
You need to go back to the last Balance Sheet before you started with Manager and compare that to the Starting Balance Report - It appears that an asset amount is missing, perhaps Accounts Receivable

5

Yes, I am a limited company in the UK.
The Capital Accounts and Retained Earnings were both already there when I started using Manager.
When analysing what is included in starting balance equity I have:

  • The profit for my previous years = 10,599
  • The value of my stock = -6156
  • Owner’s equity = 500
  • Purchase invoices = 9910
  • Cash and banks = -5323

Everything is right in my balance sheet except purchase invoices. I am looking into this.
But I am unsure how it will get rid of my starting balance equity line.

6

To the best of my knowledge the Capital Accounts is created when the Capital Accounts TAB is used, you don’t have it listed on the Left Hand Side? - Anyway that is a side issue
You really need to get a copy of the last balance sheet before you started using Manager, then you can just tick off the matching figures and those that aren’t match are where to focus.

It would appear from your comments that you don’t have accounts receivables, so you only do cash/credit card sales - true.

If you think that the problem lies within the Accounts Payable balance then a report dated 31.12.14 should list the suppliers with opening balance Purchase Invoices - compare that report to the Accounts Payable 31.12.14 report from your previous system. Once again, unmatched items need to be focused on.

To get rid of your starting balance equity line you need to find the source of the problem via the process outlined above - there is no magic wand.

For example: you may find a Purchase Invoice with a total of 9,000 instead of 900. Editing that Purchase Invoice will amend the starting balance equity. Once you have found all the mismatched items and edited the corrections - the starting balance equity line should disappear. Happy Hunting

7

You could try this - on the assumption that your Suppliers are paid regularly and are up to date then create an aged Accounts Payable dated today, do you have unpaid balances in the oldest aged column and does that column total by chance equal the Starting Balance Equity. You could now delete those transactions that make up those balances.

8

@pity, your situation is difficult to diagnose at long distance. But one thing seems clear. You are not using Manager’s features as they were meant to be employed:

  • If you have contributed capital or shareholders, you must use the
    Capital Accounts tab.
  • You should not have both owner’s equity and retained earnings. Owner’s equity is for sole traders. Retained earnings is for corporations. They are very similar, representing the net of operations as adjusted for capital contributions and draws or dividends.
  • You should have no difficulty picking up your previous accounts with Manager, presuming those accounts were properly organized. You need to set a Start Date. And permanent (balance sheet) accounts will very likely need opening balances. Accounts payable and Accounts receivable will have to be brought in line with 2014 year-end balances by entering outstanding sales and purchase invoices (with their pre-start-date transaction dates).
  • You have presented two mini-balance sheets that do not agree.

I recommend taking a step back and resetting. Read all the Guides. Take the necessary time to design a proper chart of accounts, in consultation with an accountant, if necessary. Only then should you begin making entries. For convenience, remember you can create as many businesses as you want, so you might want to start fresh to rebuild until you are sure the accounts are in order and you understand how to use them. Then you can remove the old business.

9

The use of Managers Capital Accounts tab is optional not compulsory. For myself I don’t use the Capital Accounts tab as I want the Balance Sheet Equity area to show full details then just a summary figure, the same with Fixed Assets tab, I don’t use it. I want my Balance Sheet to talk to me and not be hidden behind summary figures. That’s the advantage of Manager, the user has the choice to use it as it suits them.

You are right when you state “You have presented two mini-balance sheets that do not agree” because the two screen shots aren’t mini-balance sheets. The first screen shot is the Equity section of the current Balance Sheet, the other screen shot is the Starting Balance Journal of a year earlier.

10

Dear All,
Thank you very much for all your help.
What happened is that my invoices had the wrong date which meant that they were counted in 2014 and not 2015. Now the line has disappeared.
Regarding capital account, at the time I didn’t understand the question :slight_smile: I do use the capital account (just for my initial input in the company).
Once again thank you so much for your help, all is good now.
Pierre

11

So glad we could assist from such a long distance. With regards to the Capital Accounts can it be suggested that the title be changed to “Issued Capital” - then it better communicates that you are a corporation