How to Fix QuickBooks Balance Sheet Out of Balance Error

QuickBooks is a popular accounting software that helps businesses manage their financial records. One common issue many users face is the Balance Sheet Out of Balance error. This means the total assets and total liabilities plus equity in your balance sheet don’t match. 

In accounting, a balance sheet is a financial statement that shows a company’s assets, liabilities, and equity at a specific point in time. The balance sheet should always balance, meaning:

Total Assets = Total Liabilities + Equity

If this isn’t the case, you get the “Out of Balance” error, which suggests something is wrong in your QuickBooks file. mentioned a step-by-step guide to resolve QuickBooks balance sheet out-of-balance error.

Step 1: Run the Balance Sheet Report in Accrual Basis

1. Run the report:
   • Go to the Reports menu.
   • Select Company & Financial, then choose Balance Sheet Summary.
2. Customize the report:
   • Click on Customize Report.
   • In the Display tab, select Accrual under Report Basis.
   • Click OK.
3. Check for discrepancies:
   • If the balance sheet is out of balance in accrual basis, proceed to rebuild your company file (see Step 3).
   • If it’s only out of balance in cash basis, or if rebuilding doesn’t fix the issue, continue to Step 2.

Note: Take note of whether the issue appears in accrual or cash basis, as this will guide you through the next steps.

Step 2: Find the Date When the Balance Sheet Went Out of Balance

1. Run the Balance Sheet Summary Report:
   • Go to the Reports menu, select Company & Financial, and then choose Balance Sheet Summary.
2. Customize the report:
   • Click Customize Report.
   • In the Display tab, select All under Dates.
   • In the Report Basis section, select Accrual (if the issue is accrual-only) or Cash (if the issue is cash-only).
3. Display by year:
   • In the Columns section, select Year under the Display columns by dropdown.
   • Click OK.
4. Check for discrepancies:
   • Compare Total Assets and Total Liabilities & Equity to identify when the balance sheet went out of balance.
   • Narrow it down to the specific year where the issue starts.
5. Refine your search:
   • Repeat the process by changing the Display columns by dropdown to Month.
   • Continue refining the search by selecting Week and then Day to pinpoint the exact date the balance sheet went out of balance.

Step 3: Find the Transactions Causing the Imbalance

1. Run a Custom Transaction Detail Report:
   • Go to the Reports menu, select Custom Reports, and then choose Transaction Detail.
2. Customize the report:
   • Set the Report Date Range to the specific date when the balance sheet went out of balance (from Step 2).
   • Select Accrual or Cash in the Report Basis section, depending on your findings from Step 1.
3. Simplify the report display:
   • In the Columns section, uncheck Account, Split, Clr, and Class.
   • Select Amount and Paid Amount.
   • Click OK.
4. Review the report:
   • The ending balance in the Paid Amount column should match the amount the balance sheet is out of balance by.
   • Look for transactions that add up to this imbalance. If you can’t find any, proceed to advanced troubleshooting.

Step 4: Re-date the Problematic Transactions

1. Re-date the transactions:
   • Once you locate the problematic transactions, note their current dates.
   • Edit the transaction dates, setting them to a day 20 years in the future.
   • Save each transaction.
2. Check the report:
   • Refresh the report. If the transactions were identified correctly, the Paid Amount column should now show zero.
3. Revert the dates:
   • Now, change the dates back to their original values.
   • Re-run the report to check if the issue is resolved. This re-dating step helps re-link the transactions and may fix the problem.
4. If unsuccessful, proceed to Step 5.

Step 5: Delete and Re-enter the Transactions

1. Delete the transactions:
   • If re-dating the transactions doesn’t work, delete the problematic transactions completely.
2. Re-enter the transactions:
   • Manually re-enter the transactions with the correct details and dates.
3. Check the report:
   • After re-entering the transactions, run the balance sheet report again to confirm if the balance is fixed.

What are the Prerequisites to Fix QuickBooks Balance Sheet Out of Balance Error?

Before attempting to fix the QuickBooks Balance Sheet Out of Balance error, make sure to meet the following prerequisites:

1. Access to QuickBooks: Ensure you have the correct version of QuickBooks (e.g., QuickBooks Desktop or QuickBooks Online) installed and have access to your company file.
2. Backup Your Company File: Always create a backup of your company file before making changes to avoid data loss.
3. Reconcile Accounts: Make sure all accounts, such as bank accounts and credit cards, are fully reconciled. 
4. Accurate Data Entry: Verify that all transactions are accurately recorded. Check that no journal entries, vendor payments, or payroll transactions are missing or incorrect.

How to Identify QuickBooks Balance Sheet Out of Balance Error?

To identify if your QuickBooks balance sheet is out of balance, follow these steps:

1. Run the Balance Sheet Report:
   • Open QuickBooks and navigate to Reports > Company & Financial > Balance Sheet Summary.
2. Check the Totals:
   • Compare the Total Assets with the Total Liabilities & Equity. If they don’t match, your balance sheet is out of balance.
3. Check Accrual vs. Cash Basis:
   • Run the report in both Accrual and Cash basis (via Customize Report). If the issue only appears on one basis, this could indicate the cause.
4. Use the Trial Balance Report:
   • Generate a Trial Balance Report to see a detailed list of all accounts and identify any discrepancies.

How to Prevent QuickBooks Balance Sheet Out of Balance Error?

• Reconcile your bank and credit card accounts regularly to ensure all transactions are accurately recorded and balanced.
• Ensure that all transactions are entered correctly and categorized properly. Double-check journal entries and other manual inputs.
• Run regular Balance Sheet and Trial Balance reports to identify discrepancies early. 
• Use QuickBooks’ Verify Data and Rebuild Data tools periodically to identify and fix any underlying issues in your company file before they cause a problem.

When Should You Seek Professional Help for QuickBooks Balance Sheet Out of Balance Error?

You should seek professional help for a QuickBooks balance sheet out-of-balance error if troubleshooting steps haven’t resolved the issue, if you suspect data corruption or face complex problems, if you lack the time or expertise to troubleshoot effectively, or if the error happens frequently. A QuickBooks expert can efficiently address these issues and identify deeper, systemic problems in your company file.