Learning QuickBooks Online | Focus on Bookkeeping
QuickBooks Desktop QBO Conversion Problems

by L. Kenway BComm CPB Retired

In Canada, one problem you may run into after doing a QuickBooks Online ... QBO conversion from QuickBooks Desktop ... QBD is to have your Balance Sheets not match. Your first reaction may be to cry or swear. But don't get your shirt in a knot, the reason is simple.

Warm up your tea, take a deep breath and exhale slowly. Let's examine why you really don't have a problem.

QBO Handles Sales Tax Differently Than QBD

QuickBooks Online (QBO) uses suspense accounts to handle sales tax amounts that have been filed with the appropriate government agency like CRA or eTaxBC. I like this method of handling sales tax because in one glance at the liability section of your balance sheet you see if there are any amounts pertaining to the latest reports filed. Take look at the sample QBO Balance Sheet below.

One reason for this change might be because the new ASPE (Accounting Standards for Private Enterprise) standards that came into effect in 2011 reduced and simplified the disclosure requirements. A significant disclosure requirement that was added was the necessity to disclose the amount payable for government remittances other than income tax at the end of each period. 

Lenders, as the primary users of small business financial statements, want to see the status of government tax compliance remittances because they have priority status in a bankruptcy.

As you can see in the QBO Balance Sheet above, QuickBooks Online places the government remittance payables BEFORE trade payables.

During the QuickBooks Online conversion process from QuickBooks Desktop, any receivables or payables to the Receiver General or the Minister of Finance (in BC) are pulled out of your receivables or payables and allocated to the GST/HST Suspense or PST Suspense account.

This means your Balance Sheet isn't really out, it's just rearranged but still in balance.

Rachel over at Fischbooks has an excellent blog that walks you through exactly what happens during the QBO conversion process. She compares QuickBooks Desktop reports to QuickBooks Online reports so you can visually see the differences between the two software packages.

Her article concludes with the following advice, "You now have two options:

1. Move the balance back to AR or AP since that tax return has already been filed anyway, or 
2. Leave it where it is and just make sure when the tax payment is made or tax refund is received, that you offset the Suspense account."

My preference is to just leave the balance where QBO puts it.

Other QBO Conversion Problems

In case you weren't aware, you may also have problems with inventory conversion because QBD uses weighted average and QBO use FIFO.

I also found multi-currency valuations made it next to impossible to get a clean conversion but that was a few years ago and Intuit may have come up with a solution since then.

A current problem I'm experiencing (January 2016) is with bank feed matches and transfers between two US accounts when your home currency is CAD. QBO does not recognize that the "transfer to" account is USD and converts it to CAD. I end up having to go in and manually input the USD amount. So much for automated data entry if you have multi-currency ... and who doesn't these days if they have any kind of online presence.

UPDATE January 2019 - QBO now handles USD transfers. If you are doing a CAD to / from USD transfer, enter the transactions from the USD bank feed side not the CAD side if you want the entry to book correctly.

P.S. If you are converting from Sage to QBO, check out this Intuit article on Sage conversions.

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