This article explains how to enter your opening balances as part of FreeAgent's account setup process.
If your business is a limited company and you’ve been trading for a while, you'll have some opening balances to enter when you first begin using FreeAgent. These are your figures as they stood as at your FreeAgent start date. FreeAgent needs to include this brought-forward information in your accounting reports.
As brought-forward balances don’t impact the tax return for the current year of a sole trader, partnership or LLP, a full set of opening balances may not be required for these business types.
We recommend you enter the opening balances before you file your first VAT return as once that VAT return is filed, you won’t be able to edit entries to accounts ‘818 - VAT Reclaimed’ or ‘819 - VAT Charged’.
What might your opening balances include?
Your opening balances as of 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’)
Please note that you’ll need to have full (level 8) access to your FreeAgent account to be able to enter opening balances.
Where to find your opening balances
If you’re starting to use FreeAgent at the beginning of a new financial year, you only need to put in balances for your balance sheet accounts, such as money owed to you by your customers.
If you’re starting to use FreeAgent mid-way through your financial year, you may also have entries for the year to date for your profit and loss accounts, such as income the business has earned since the beginning of this financial year.
Your accountant should be able to supply you with a trial balance (a list of all the balances in your accounts) as at your FreeAgent start date and will be able to advise which entries you need to record in your FreeAgent account. Unfortunately, our support team can’t help you with this as we’re not authorised by HMRC to provide accounting advice.
To find a full list of the categories available in your FreeAgent account, navigate to ‘Accounting’ at the top of your screen and select ‘Reports’ from the drop-down menu.
Select ‘Trial Balance’ from the ‘Detailed’ section.
Select ‘Export Report’ at the top-right and select ‘Chart of Accounts CSV’ from the drop-down menu to download a CSV file of the available categories.
To enter your bank account balances, navigate to the ‘Banking’ tab at the top of the screen, select ‘Bank Accounts’ from the drop-down menu and select the relevant bank account from the list. From the bank account page, select ‘Edit Details’ at the top-right and enter the balance as of your FreeAgent start date. Enter a minus sign if the balance is money you owed to the bank, such as an overdraft or loan.
You may have entered the opening bank balance when you set up your account, but we recommend that you check that the figure is correct.
Adding a bank account for a loan
To add a new bank account for dealing with a loan, follow the steps in this article and enter the outstanding balance as it stood at your FreeAgent start date, including a minus sign at the start of the figure. FreeAgent will then add this as a credit figure in your opening balances.
Adding stock balances
If you had items in stock as of your FreeAgent start date, create new stock items and enter the opening quantity and value of those items.
Completing your opening balances using journal entries
Navigate to the 'Accounting' tab at the 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. To add more opening balances, select ‘Edit Opening Balances’.
VAT opening balances
The balances you enter will depend on a few scenarios, for example whether the first VAT quarter in FreeAgent is a new one or if you’ve started using FreeAgent mid-quarter, and whether or not you’re on the VAT Flat Rate Scheme. Follow the guidance in the relevant article below:
Any reserves of retained profits your business has built up over the years need to go in as a credit to account code ‘968 - Profit and Loss’. If the business is carrying a reserve of losses in its accounts as at its FreeAgent start date, that would be entered as a debit entry to account code ‘968 - Profit and Loss’.
Editing your opening balances
For information on editing your opening balances, please see this article.
FreeAgent is registered with the Financial Conduct Authority under the Payment Services Regulations 2017 (register no. 799763) for the provision of account information services.
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