Recording pre-opening costs in QuickBooks involves creating journal entries to account for expenses incurred before a business or project’s official opening. Here’s how to do it:
Step 1: Create a Journal Entry for Pre-Opening Costs:
- Go to the QuickBooks homepage.
- Click on the “Create” button (usually represented by a plus “+” sign) at the top of the screen.
- Under the “Other” column, select “Journal Entry.”
Step 2: Enter the Pre-Opening Cost Details:
In the journal entry:
- Debit a specific pre-opening cost expense account for the amount of the pre-opening costs incurred. Enter this as a positive value.
- Credit a liability account to represent the deferred pre-opening costs or prepaid expenses. Enter this as a positive value. This liability account represents the amount that you haven’t yet recognized as an expense.
- Add a memo or description to explain the nature of the entry, including the purpose of the pre-opening costs and details about the costs incurred.
Step 3: Review and Save the Journal Entry:
Review the journal entry details to ensure accuracy and save the journal entry.
Step 4: Reconcile Your Accounts:
After recording the pre-opening costs, reconcile your accounts in QuickBooks with your actual financial statements to ensure accuracy.
Step 5: Recognize Expenses Over Time:
As your business or project progresses and begins generating revenue, you should recognize the pre-opening costs as expenses. This involves creating additional journal entries to debit the deferred expense liability account and credit the appropriate expense accounts.
For example, if you have pre-opening rent expenses, you would debit the liability account and credit the rent expense account as you incur rent expenses each month after the opening.
Step 6: Consult with Your Accountant:
Pre-opening costs can have accounting and tax implications, and it’s advisable to consult with your accountant or financial advisor to ensure that you’re correctly accounting for pre-opening costs and addressing any specific tax or compliance requirements.
By following these steps, you can accurately record pre-opening costs in QuickBooks, helping you maintain accurate financial records and track the expenses incurred before your business or project’s official opening.
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