The Open Balance Equity account balance should be ZERO. This account is only used when first setting up QuickBooks. When you have “accounted” for everything the balance in Open Balance Equity should be zero and remain zero. I recommend making the account inactive to avoid using it by mistake.
As you review each General Ledger (G/L) account found on your Balance Sheet and Profit & Loss statement, look for accounts which have, ” – Other” in them. This is a typical indicator that transactions have been recorded to a parent G/L account.
The rule for QuickBooks is, whenever you have sub-accounts (a.k.a., child accounts), you never post ANY transaction to the parent account. The parent account serves as a means to SUM the transactions within the sub-accounts.
Tip # 3
Sales Tax – This is one of the areas most often improperly used by people who don’t know better. The bottom line is this…
Whenever a taxable item is used on an invoice or sales receipt, sales tax is accrued in the Sales Tax Payment liability account. When it’s time to pay your sales tax, you should create a Sales Tax Payment check, not a regular check. When you drill down into the Sales Tax Payment account the only transactions you should find are invoices, sales receipts, credit memos, an occasional sales tax adjustment entry and sales tax payment checks.