An introduction to opening balances
This article explains what opening balances are, where you can find them and provides examples of what they might include. It also explains how to enter them in FreeAgent.
Opening balances are the amounts that your business has in each of its accounts at the start of a particular period of time.
If you’ve been trading for a while, you'll have some opening balances to enter when you start using FreeAgent. These are the figures in your accounts as they stood as at your FreeAgent start date.
Please note that FreeAgent needs to include this brought forward information in your accounting reports.
Where can you find your opening balances?
You can find a list of your opening balances on your trial balance, which is a list of balances in all of your accounts at a given point in time.
If you’re moving to FreeAgent from another software package, you should be able to generate a report to view your trial balance as at your FreeAgent start date. For advice on extracting data from other software packages, please refer to that software provider.
Your accountant should be able to supply you with a trial balance as at your FreeAgent start date and will be able to advise which entries you need to record in your FreeAgent account. Please note that our support team can’t help you with this as we’re not authorised by HMRC to provide accounting advice.
Which types of opening balances do you need to enter?
Moving to FreeAgent at the beginning of an accounting year
If you’re starting to use FreeAgent at the beginning of a new accounting year for your business, you only need to put in balances for your balance sheet accounts, such as money owed to you by your customers.
Balance sheet accounts will be numbered differently in each accounting software. For example, accounts with numbers 600 to 999 on a trial balance in FreeAgent are balance sheet accounts. For advice on extracting data from other software packages, please refer to that software provider.
Moving to FreeAgent during an accounting year
If you’re starting to use FreeAgent mid-way through your business’s accounting year, you may also have entries for the year to date for your profit and loss accounts, such as income the business has earned and costs incurred since the beginning of this accounting year.
Profit and loss accounts will be numbered differently in each accounting software. For example, accounts with numbers 001 to 599 on a trial balance in FreeAgent are profit and loss accounts. For advice on extracting data from other software packages, please refer to that software provider.
What might your opening balances include?
Your opening balances as at your FreeAgent start date may include some or all of the following:
- money your customers owe you (your accountant might call this ‘trade debtors’)
- money you owe to your suppliers (your accountant might call this ‘trade creditors’)
- the balance(s) on your bank account(s)
- money you owe to HMRC for PAYE and NIC, or VAT
- opening share capital
- reserves of retained profits or losses your business has built up over the years
- the balance(s) on outstanding loans
How to enter your opening balances
Navigate to the ‘Accounting’ tab at top of the screen and select ‘Journal Entries’ from the drop-down menu.
From the 'Journal Entries' screen, choose 'Opening Balances' from the drop-down menu.
You’ll see that there is already a set of opening balance journals created. You can either import your opening balances from a .CSV file or enter them manually.
To import your opening balances, select ‘Import Opening Balances’.
Alternatively, to enter your opening balances manually, select ‘Edit Opening Balances’.
The balances you enter will depend on your FreeAgent account type and the accounting basis that your business uses to prepare its accounts. Follow the guidance in the relevant article below: