Question

"Profit First" and transfers within a group of accounts and uneven balances

Forum|Forum|5 years ago
March 5, 2021
1 reply
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I am having a lot of trouble, Hoping someone can help.

For background; I set up 5 accounts (following the Profit First Method):

* Income

* Operating Expense

* Profit

* Tax

* Owner's Pay.

(These are all sub accounts of a main BANK account.)

Every time I receive a deposit or payment, it primarily is deposited into the Income account (some into Op Ex, but infrequent). From there, I make disbursements through my bank to the other "buckets" or accounts. For example, if I get a deposit of $1,000 in my income account, the $1000 is divided and transferred to the other 4 accounts. The income then have a zero balance. These show up as XFERS from one account to the other, and there are several.

I connected my bank account to Quickbooks and although I was able to reconcile all 5 accounts down the penny, it is showing some crazy balances (Quickbooks) vs. my bank balances which are correct. The Quickbooks balances are way way way higher. I cannot find any duplicates and don't know where to find where Quickbooks is counting something more than once. (at least, I assume that is what is happening). Is there a chance that it is adding a transfer "FROM INCOME into TAX" and then also adding a transfer" INTO TAX from INCOME?" If this is happening, how do I find this?

I am not proficient at Quickbooks at all and am still learning, so "dumb" it down for me please. Thanks in advance.

QuickBooks Online

Rustler

The first problem is the sub accounts, in Profit first the concept revolves around separate accounts at the bank.

For others reading this, this is a good overview of Profit First
https://medium.com/the-crunch/an-accountants-review-of-profit-first-7f888b5d7b
The second paragraph in the conclusions section is important.

In QB all parent accounts become summing accounts automatically, that might be part of the issue if you have posted to the parent account at all. Other than that sorry I can not help since I do not follow this system.

N

NicoleG1Author

Thanks so much. So do you think by unlinking the sub accounts and make them stand on their own that it will correct the problem?

And where can I presently find where the totals in the sub accounts have been summed together? Each sub account has its own balance and there is no rhyme or reason to it. (for example: It's not like my bank balance is $1000 and my Quickbooks is $2000, the Quickbooks balance is $20,568.54 so I'm stumped where the extra dollars and cents are coming from?)

Jen_D

Thanks for posting here, @NicoleG1,

In QuickBooks, when you connect the sub-accounts for online banking, their balance roll up to the parent account for reconciliation.

Some banks may show the overall bank balance at each sub-account level. This is because the bank provides us with a static balance of the entire account, not the balance of each sub-account. This might be the same scenario as yours.

We calculate the balance based on the entries created or received in QuickBooks. You might want to review the transactions to see where the balances came from.

You can open transaction reports by going to the Reports menu in your QuickBooks account. You can use our test account to see how we use parent and sub-accounts in this sample QuickBooks company.

See these links to learn more about how we handle sub-accounts in QBO:

Please post here again if you have other questions about this. I'll be more than happy to share some more insights about reporting in QBO.

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