Where in Quickbooks do you input original investment

[Tate]

Hi there, let's say you're starting a business at the beginning of the year. You're creating your chart of accounts in Quickbooks. For the sake of argument, you're starting out with $10,000. So, if you're starting out, you have no expenses yet, no customers, where in Quickbooks would you put this amount? It appears that the opening balance equity account is NOT the place to put this, even though Quickbooks provides this for you, and since this business has no history, retained earnings is not the place either. So where would one put this account in the chart of accounts? Any info appreciated, thanks

Paul

[SeanV]

I would say that in the equity account, if that is your initial investment. However, I have not used Quickbooks yet and will love to hear from someone who has. I just ordered my new trial of Quickbooks and will probably have the same questions that you have, since I am starting a corporation with my husband and a friend of ours. Maybe someone else can add to this. I also know that you can book it also as a payable from the corporation owed to you if you are a shareholder. Does anybody know the advantages of doing it this way, is it viewed as a fishy accounting transaction?

[Tate]

Thanks for your reply iafatima, however, so far from my research, it seems that everything points in the direction of putting it in the bank as cash and then quickbooks will automatically assign the amount into opening balance equity account, as a balance. However, you then have to take that "equity account" and assign it to something else, cause that's not the correct place for it...

And so far, the books out there don't say much either... They all have the brilliant advice of "talk to your accountant"... I would think this is something simple you don't have to talk to your accountant. Reading between the lines, what this tells me is that, this is a problem with Quickbooks that has never been addressed. I mean something like "Initial Capital Investment" which then Quickbooks would have assigned correctly in the chart of accounts would have made life easy for the user. So, we'll see what others may have to say...

[dannguyen]

The correct place to post your initial distribution in Quickbooks on the chart of accounts is in the "Owner's Contributions" account. It's an Equity account. It is a Sub-heading to the Owners Equity account. When you get ready to enter the contribution amount, you'll also be required to identify the account in which the contribution should flow (assuming it would be cash in this case) As part of the Owners Equity calculation, once the amount is entered, it become the total of the Owner's Equity account. Good Luck.

[Gorbutt]

Originally Posted by MSS

The correct place to post your initial distribution in Quickbooks on the chart of accounts is in the "Owner's Contributions" account. It's an Equity account. It is a Sub-heading to the Owners Equity account. When you get ready to enter the contribution amount, you'll also be required to identify the account in which the contribution should flow (assuming it would be cash in this case) As part of the Owners Equity calculation, once the amount is entered, it become the total of the Owner's Equity account. Good Luck.

The opening Equity Balance account is a dumping ground for
all new Balance sheet items . . In General the Opening equity balance should be zero. I say in General as if you dont know where to put an entry, that would be the best place to put it. It makes it easier
for your accountant to find it and correct it.

[Tate]

Hi MSS, thanks very much for the info regarding this, definitely it's a start. Now here's a more esoteric bookkeeping question. You put a monetary amount into this Owner's contribution account. So, I gather that this is going to credit that account. Then Quickbooks, in trying to maintain a balance is going to debit the opening equity balance. This is your start up money.

Now, since this is a completely new business, a week after inputting that Owner's Contribution account. you start buying some stuff for the business, a computer, some furniture, a phone, etc. You input your vendor bills, with subaccounts, and these amounts wind up in accounts payable and whatever asset accounts you created. At some point, you "pay them" in Quickbooks.

So, my question is: before doing that, should one move the money amount that's now in the opening equity balance, into a bank cash asset account, as a debit, so the when you "pay" your bills in Quickbooks, quickbooks has something to draw upon to pay these bills? Or does quickbooks do this for you? Any info appreciated, thanks.

I hope all this makes sense and thanks for any information.

Paul

[dannguyen]

Sorry if I didn't make it clear before, but you have to choose the account to which the contribution is to be debited to. When you select "Owners Contributions" in the chart of accounts, once the window opens up, look in the third columb where it says "Account," click on the drop down arrow in that columb. You should be able to scroll until you see the bank account that you are refering to in your question. That is where your debit should be, not "opening equity balance" QuickBooks places it in there as a default, but you should choose the bank account set up using the contributed funds, as the other side of your entry (should appear in the scroll down.) So you would end up with $10,000 in Owners Equity, and $10,000 in Bank Account (cash)

[Tate]

Thanks very much for that clarification, that's a big help... You definitely did mention it, but not being all that Quickbooks savvy, I didn't get it all the first time... Much appreciated...

[Tate]

Ok, I got a chance to do this in Quickbooks this morning and it worked great. Everything flowed to where it should. Thanks very much.

[dannguyen]

Glad to be of assistance..