Opening Balance Equity and How to Resolve It in QBO THBS

We can only zero out the Opening Balance Equity if all accounts doesn’t have any beginning balance when they were created. They know how to get your accounts back in balance. After you enter the opening balance, go to your account register and make sure it’s accurate. The Opening Balance Equity account shouldn’t have a remaining balance. Let’s make that there are no transactions linked to that account to delete the opening balance equity in QuickBooks Online. Also, you might want to remove the remaining downloaded transactions from your banking page.

What is OBE in QuickBooks FAQs

However, leaving a balance in this account long term is a sign that something needs attention. When you enter your opening balances, QuickBooks automatically creates a journal entry that debits or credits the Opening Balance Equity (OBE) account. This adjusts the OBE by the corresponding opening balance amount, either increasing or decreasing it to ensure your accounts remain balanced. When you import historical transactions, QuickBooks automatically sets an opening balance for your bank account. Any discrepancies between your initial asset and liability entries may lead to adjustments in the Opening Balance Equity (OBE) account. The image below shows how you can fix Opening Balance Equity entries when you edit a journal entry from the Opening Balance Equity account register.

Step 2: Create a journal entry

Then, calculate the difference in the ending balance on the reports. Once done, you’ll use it to perform a special reconciliation. Opening Balance Equity is a special QuickBooks account in the equity section of the Balance Sheet. The most common reason for a balance in the Opening Balance Equity account is the result of a bank reconciliation that was not balanced to zero prior to completion. The process of entering the ending balance, marking the items that have cleared the bank, and reconciling the difference to zero is the correct procedure. To view the details of a Retained Earnings account, you’ll need to run your previous year’s Profit and Loss statement.

Importance of Accurate Opening Balance Equity

We’re opening balance equity always available and willing to lend a hand to your queries. When you’re done, you can reconcile the account to correct the beginning balance. Enter a note in the Description field so you know what the journal entry is for. At each subaccount level, certain banks might display the total bank balance. This occurs because the bank supplies us with a fixed balance for the complete account, rather than the balance for each subaccount. To properly reconcile, I need the transactions on the primary users account.

What is Retained Earnings and Opening Balance Equity?

The understanding of RE or how to virtual accountant create a journal is not the issue here. I just want to see one line on my balance sheet , with the carried forward balance showing on it. If there’s anything else I can help you with, please let me know.

• When we deactivate the accounts in your Chart of Accounts, the system will automatically make an adjustment.
• If an opening balance shows, you’ll want to delete it to fix the issue since there’s already a created balance.
• Equity accounts are the financial representation of the ownership of a business.
• Thank you for consistently engaging with us regarding your inquiries about the opening balance equity.
• As always, you can visit the Community again if you have any other follow up questions.
• But by being vigilant about avoiding the mistakes discussed above, you can keep the Opening Balance Equity from reappearing.

Customer or vendor balances in Accounts Payable and Accounts Receivable

This will help you configure how to sort and filter transactions in a register. I’m here to help correct the opening balance so you can reconcile the next month’s statement, mgbdc. Not having an accurate financial picture of where all the money is coming from may affect whether you make big financial moves.

Its purpose is to balance your books when entering opening balances for accounts like bank accounts and liabilities. As you enter opening balances for your assets, liabilities, and equity accounts, the OBE account offsets these amounts. Once the setup is complete, QuickBooks transfers the OBE balance to retained earnings or equity accounts, ensuring your financial records are accurate and ready for use. If you find yourself with an opening balance equity account at the first of the month, don’t panic.

Best Small Business Accounting Software 2025

You can do the same for the Opening Balance Equity account if it reflects historical equity transactions. For example, if the remaining balance reflects investments made by the business owner, you would credit the Owner’s Equity account and debit Opening Balance Equity to reduce it to zero. The first step is to review the opening balances entered for your accounts. For future reference, check out this article on how to Change an account opening balance on a bank account. At Juna, we often handle the accounting function for business owners who initially tried to do the books themselves.

Why do you have an opening balance equity account in your chart of accounts?

This ensures the OBE account no longer appears on future financial statements, providing a clear and accurate view of your business’ financial health. Moving your existing books to QuickBooks without entering equity accounts will result in Opening Balance Equity assets = liabilities + equity because QuickBooks needs to balance debits and credits. This happens when you only import asset and liability accounts from your existing books to QuickBooks. To avoid this issue, import all accounts so that your opening debits and credits are equal.