Retained Earnings in MaxxTraxx

Retained Earnings in MaxxTraxx

Overview

In MaxxTraxx, retained earnings cannot be posted to directly. The system automatically calculates retained earnings using the following formula:

Income – Cost of Goods – Expenses

Because of this structure, any adjustments to retained earnings must be made indirectly through other General Ledger (GL) accounts.

Year-End Adjustments

There are times when your CPA or accountant may request year-end entries that impact retained earnings. Common examples include:

  • Depreciation
  • Clearing owner draws
  • Other closing adjustments

To accommodate these entries in MaxxTraxx, you must post them to either:

  • A Cost of Goods account, or
  • An Expense account

Example: Depreciation Entry

Scenario: Recording depreciation for office equipment.

  • Date: 12/31/XX (use the last day of the year being adjusted)
  • Credit: Account #16310 – Office Equipment Depreciation
  • Debit: Account #62410 – Depreciation, Office Equipment (Expense)

Result:
Debiting the expense account increases expenses, which in turn reduces retained earnings.

Owner Draw Adjustments

For owner draw or equity-related adjustments:

  • Your accountant should determine which accounts to use.
  • Entries should still follow the same principle:
    • Post to Cost of Goods or Expense accounts
    • Ensure the correct year-end date is used

Important Considerations

  • Timing is critical:
    Always use the correct year-end date (e.g., 12/31/XX) to ensure the adjustment affects the intended retained earnings period.
  • Avoid using Sales accounts:
    Do not post adjustments to sales accounts unless specifically directed by your accountant.
    • This can alter General Ledger sales totals
    • It may create discrepancies with reported sales (e.g., sales tax filings)
    • It does not change actual tax collected, only reported totals

Alternative Option: Retained Earnings Clearing Account

If you prefer not to impact your existing Sales, Cost of Goods, or Expense accounts:

  1. Create a “Retained Earnings Clearing” account
  2. Assign it as a Cost of Goods or Expense account (per your accountant’s guidance)
  3. Use this account to offset your journal entries

Benefit:

  • Keeps your primary GL accounts unchanged
  • Consolidates adjustments into a single account
  • Maintains clean year-end reporting 

Key Takeaways

  • Retained earnings in MaxxTraxx are system-calculated, not directly editable
  • Adjustments must be made through Cost of Goods or Expense accounts
  • Year-end dating is essential for accuracy
  • Always follow guidance from your CPA or accountant
  • Consider using a clearing account for cleaner reporting

    • Related Articles

    • MaxxTraxx Integrations

      MaxxTraxx Integrates with several online vendors. The following are some of the vendor that we know integrate with us: Labor Guides AllData Mitchell Mitchell Heavy Duty Part Vendors 1-800 Radiator (Wrenchead Nexpart) Advanced Auto Parts (Wrenchead ...

    • Quickbooks / MaxxTraxx Integration Setups

      Quickbooks has two types of software that they offer to small businesses throughout the world. The one that is most familiar is the Desktop version that runs locally on your PC. There is a newer Online version that they are attempting to push with ...

    • MaxxTraxx Backup Solutions

      Workstations can be backup destinations. Make sure you take advantage of our additional workstations-as-backup-locations option. All workstations including the server should be logged out of MaxxTraxx each night to enable MaxxTraxx message, backup ...

    • Backing up MaxxTraxx data

      Having a computer failure can cause tremendous problems for a business. If your local-based MaxxTraxx server fails, or a disaster strikes, it could wipe out your company's data and records. Please note this does not pertain to MaxxTraxx Anywhere ...

    • MaxxTraxx Version 9 Introduction Webinar

      MaxxTraxx Version 9 Introduction Webinar Conducted Wednesday, April 26, 2023 @ 12pm PST Below is a recording of one of the MaxxTraxx V9 Introduction webinars for those of you who were unable to attend or who want to review. Very informal but covers ...