Setting up a bank account in QuickBooks

Dec. 12, 2012 - PRLog -- As you get started in QuickBooks, one of the first things you need to do is set up of Bank Account to be able to conduct transactions.  Each company file will want to have at least one Bank Account, but may have multiple accounts depending on how you keep your money separate for your business, or for the customers that you are serving.  Luckily Quickbooks has made it very easy to add an account, and in this post we will discuss adding a Bank Account that already contains money, and one that has just been opened that does not contain any money.

First, In QuickBooks you will want to select your Chart of Accounts.  From here you will select the accounts button at the bottom of your Chart of Accounts menu and select new, to add a new account.  QuickBooks will open a screen asking what type of Account you are looking to add, and from here you will select the option listed as "Bank".  Once selected the next screen will ask you to start entering important information needed for the account you are setting up including; Account Name, Account Number, Routing Number etc.

Once all this information has been entered, one of the last pieces needed is to enter the opening balance for the account.  The opening balance that you will be entering will be for the start date of your company.  Therefore if you are in the Property Management Industry managing a homeowners association that you just took over.  If February 1st, 2012 is the date you start managing the association, you will want to enter the Bank Statement for the Associations Bank Account that was received for them in January since this will be the most recent and accurate statement showing what is in the account.

There are two schools of thought for entering the amount for the opening balance.  The first is by Intuit that states to use the "Enter Opening Balance" as you are setting up the account for you chart of accounts.  The downfall to this method is that you will need to perform a Journal Entry to clear the Opening Balance Equity account once complete.  You will Journal Entry this amount to your other equity accounts, which is not a hard process, only the most confusing part for most people is understanding the Debits and Credits and how they affect the Equity Account.  In this instance you will want to credit the Equity account the money will need to post to, and Debit the Opening Balance Account.

The second method is to just make a Journal Entry by Debiting you Asset, in this case you banking account, and crediting you Equity Account.