About
Finaloop builds your opening balances from your banks, cards, stores and payment gateways, so they can differ from the closing balances on last year's tax return. This article explains to your tax preparer how to treat that difference, what to report back to us, and where to find your year-end reports.
Who is this for? Tax preparers working from books prepared by Finaloop, and the customers who share this article with them. Please review it before preparing the tax return, and let us know if you have any questions!
1. If you joined Finaloop during the tax year
Here's how Finaloop built your opening balances, and what to do if they differ from the balances on your tax return.
Where the opening balances come from
Finaloop set the opening balances (the closing balances on the day before your books start in Finaloop: December 31 of the previous year for calendar-year companies) using verified data from independent sources of truth, including:
Banks
Credit cards
Online stores
Payment gateways
Information you provided, where independent data isn't available
Undeposited Funds (UDF) balances were created or updated for each connected store and payment gateway that holds available cash, based on information received directly from that store or gateway. Where applicable, these opening balances are adjusted to Coordinated Universal Time (UTC).
What to do about differences
If the opening balances in Finaloop differ from the closing balances on your prior-year tax return, the tax preparer should reconcile the difference and reflect it either in this year's tax return or in an amended return for the prior year.
Example:
Asset 1 on the Finaloop Balance Sheet at the end of the prior year, from an independent source of truth or as you provided it (the "true" balance): $12,000
Asset 1 on the prior-year tax return: $8,000
The tax preparer should consider either reporting the $4,000 difference ($12,000 − $8,000) as additional income in the current year, or amending the prior-year return to show the correct balance.
Journal entry Finaloop records on the last day of the prior year:
Dr Asset 1: $12,000
Cr Retained Earnings: $12,000
Journal entry to pick up the difference as additional income in the current year:
Dr Retained Earnings: $4,000
Cr Income: $4,000
2. If you joined Finaloop before the tax year
Book-tax adjustments made during your previous tax filing that weren't reported to Finaloop aren't in your books.
If tax positions you took (for example accelerated depreciation, recognizing a liability or equity changes) affect the ending Balance Sheet, please email them to [email protected]. Include the adjusting entries (or the balance sheet from the filed return, Schedule L), the fiscal year and the accounts affected. These adjustments won't appear in your books unless you or your tax preparer report them to us.
3. Accessing your financial reports
Once your books are ready, go to More → Year-end Hub and choose the year under Fiscal year. In the Get your books! step:
Profit & Loss and Balance Sheet each have an Export button that downloads an Excel file.
Additional files has the Bank Reconciliation Report (click Download) and the Trial Balance (click Export).
To see reports before they're final:
Profit & Loss and Balance Sheet: in the sidebar, click Report center, then Profit & Loss or Balance Sheet under Financial statements.
Trial Balance: go to Report center → Books & Entries → Trial Balance, or More → Export Trial Balance, choose the Report period and click Export.