What is an opening balance?
Every [balance sheet](/glossary/balance-sheet) account (cash, receivables, payables, loans, equity) carries its closing balance into the next period as an opening balance. Income and expense accounts reset to zero at the start of a new [fiscal year](/glossary/fiscal-year), with the net result moving into [retained earnings](/glossary/retained-earnings).
When you need to enter opening balances
- Starting a new business (often just opening capital and cash)
- Moving from spreadsheets or another accounting system
- Taking over the books part-way through a year
What to bring across
- Bank and cash balances as at the conversion date
- Unpaid customer invoices (receivables)
- Unpaid supplier bills (payables)
- Inventory value
- [Fixed assets](/glossary/fixed-asset) and [accumulated depreciation](/glossary/accumulated-depreciation)
- Loans and other liabilities
- Tax balances (VAT, payroll, income tax)
- Equity and retained earnings
The opening [trial balance](/glossary/trial-balance) must balance: total debits equal total credits.
Tips
- Choose a clean conversion date, such as the start of a month or year.
- Use the last approved financial statements or trial balance as the source.
- Enter receivables and payables invoice by invoice so you can track collections.
- Reconcile opening bank balances to statements.