Starting a New Company in QuickBooks
Posted on Wednesday, March 21, 2018 Share
A lot of nonprofit organizations, especially smaller ones, use QuickBooks to record their accounting transactions. Sometimes the organization may feel it is necessary to set up a new company in QuickBooks. This could be because the QuickBooks’ company file is running slow, damaged or is approaching the data limit. If you decide it is time to create a new company file in QuickBooks, there are a few things to remember. It will take time and it is not as easy as just transferring balances.
It is best to start the new company as of the first day of the fiscal year. This will create a clean break between the old company and the new company.
In order to have proper beginning balances for receivables and payables, you will need to recreate the balances on the customer balance and vendor balance detail reports from the old company file as of the last day of the fiscal year in the new company. These items were included in the prior year as revenue and expenses; however, cash has not yet been received or paid. In order for the cash to be recorded properly when it is received, the individual receivable or payable to which the cash applies needs to be included in the new company. Therefore, you will need to enter outstanding balances for each individual customer and vendor in the new company.
You will also need to manually enter any outstanding banking transactions in the new company. Deposits in transit and outstanding checks as of the end of the fiscal year need to be entered separately so that when they clear the bank, they can be properly reconciled in QuickBooks. Because these items need to be entered separately, the beginning cash balance entered into the new company needs to be the balance per the bank statement as of the last day of the fiscal year, not the reconciled book balance.
If your organization tracks inventory in QuickBooks, you will also need to manually enter your inventory listing into the new company file to have a proper listing.
The remaining beginning balances can be obtained from the balance sheet as of the last day of the fiscal year from the old company.
If you are considering starting a new company in QuickBooks, you should consult your auditor to make sure beginning balances are accurate. It is much easier to make sure the opening balances are correct at the beginning of the year than at the end of the year during the audit.
Posted by: Carrie Minnich, CPA
Posted in Mission Minded Nonprofits
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.