The equity balances consist of the partners' capital account.
In this post, we'll share exactly where you can find your equity balances and how to report them in Finaloop.
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1. Finding the opening balances
Your beginning equity for this year, should always be the as same your ending equity in last year's tax return, unless you had some major adjustments or errors in your tax return.
For each partner, you can find last year's Ending capital account balance on Schedule K-1, item L ("Partner's Capital Account Analysis") of your business tax return (Form 1065):
Once you have everything ready, report the balances using the "Report per partner" option in the Report opening balance page.
2. What to do if the opening balances are not in the tax return?
If your business has yet to file a tax return (or the tax return is lacking the Ending capital account), you can find the opening balances of each partner in other records, such as the business's balance sheet. If you have no records of each partner's opening balance, you may consult with your CPA or tax preparer as to how to find or reconstruct it.
3. What to do in case you are unable to find or reconstruct each partner's opening balance?
Don't you worry! Just report the total equity balances found in your records, using the "Report total" option in the Report opening balance page. We will allocated this opening balance to the different partners according to their current ownership percentages.
