Opening balances and differences
Opening a brand new accounting file, why an existing one never agrees on day one, and how Landara hands the difference to your accountant instead of journalling it away.
Updated 10 August 2026
On the day you connect, Landara's on-hand value and your Inventory account will not match. This is expected. It is also the one number in the whole module with a genuine tax consequence, so it is worth understanding before you act on it.
First: tell Landara which account holds your stock today
Do this before anything else on this page. Landara needs to know two accounts, and they are usually different:
| Slot | What it is | Landara |
|---|---|---|
| Inventory | The account Landara posts to from now on | Debits it from published bills, credits it from COGS journals |
| Inventory before Landara | The account your stock value sits in today | Reads it only. Never posts to it |
Both are under Settings → Connections → Configure Tax Codes, in the journal accounts section.
Xero users: your existing 630 Inventory account belongs in the second slot, not the first. Xero refuses an inventory-type account on a bill line, so Landara cannot post to 630 and does not offer it as your Inventory account. It does offer it for Inventory before Landara, and that is almost always the right answer. This is the one dropdown in Landara where 630 is correct.
Until you set this, Landara guesses: it picks the first inventory-type account it finds and says so on the valuation card in amber. While it is guessing, Accept as opening difference and Post opening balance are both switched off, because both write a figure you cannot take back.
Both also disappear once your opening position is settled, whether you accepted a difference or posted an opening balance. From that point the card compares against the account Landara posts to, and there is no second opening position to declare. If a gap remains it is the migration entry, and the journal your accountant posts is what closes it.
Which situation are you in?
Two different things look identical on screen and need opposite treatment.
| Your Inventory account | What you have | What to do |
|---|---|---|
| Empty, and this is a brand new accounting file | An opening balance | Post it. Jump to the section below. |
| Holds a balance you cannot reconcile to Landara | An opening difference | Accept it as a baseline. Read on. |
The difference is whether the gap is explained. A new file has nothing in it because nobody has told it anything yet, which is fully explained and simply needs the entry made. An existing file holds years of history that will not reconcile, which is not explained and should not be journalled away.
Opening a brand new accounting file
If you have been using Landara and are only now setting up Xero or QuickBooks, your Inventory account starts at zero against real stock. That is a conversion balance, the standard entry when moving onto a new accounting system.
Landara posts it for you:
- Map an Opening balance offset account. In Xero choose 840 Historical Adjustment; in QuickBooks choose Opening Balance Equity.
- Set Inventory before Landara as well. On a genuinely new file it is the same account as your Inventory slot, and saying so is what tells Landara there is nothing to migrate.
- Go to Dashboard → COGS → Valuation.
- Your accounting card shows Post opening balance. It appears only while your opening position is still unsettled, when the account is genuinely empty, and once you have confirmed which account to read.
- Post it. Landara books Dr Inventory / Cr your offset account.
The amount is your on-hand value, plus any COGS you have not journalled yet, less any shipment bills you have not published yet. It is not the on-hand value on its own.
Your books are only ever up to date as far as the last entry posted, and both kinds of outstanding entry will post against this account. The COGS journals credit it, so it has to open high enough to absorb them. The shipment bills debit it, so it has to open low enough that publishing them brings it up to your on-hand figure rather than past it. Open at the full on-hand value and then publish a bill for stock that value already includes, and the same stock is in the account twice.
If your on-hand value is $49,700 with $300 of COGS not yet journalled and no unpublished bills, the entry is $50,000, and posting that $300 brings the account to $49,700. If $8,000 of that stock is still waiting on its bills, the entry is $42,000 instead, and the bills bring it the rest of the way when they land.
The other side goes to a balance sheet account, never to your profit and loss. Using the reconciling journal for this instead would push your entire opening stock through the Inventory adjustment account and show a large fictitious gain in your first month.
From then on the two stay in step on their own: every receipt debits Inventory through the bill you publish, and every COGS journal credits it as stock sells.
The button disappears once the account has a balance, and the check is repeated on the server against the account the journal actually debits. That is deliberate: posting an opening balance onto an account that already holds stock would double your inventory rather than just showing a wrong number.
If your accounting file already has history
Why the gap exists
The two figures are built from different sources:
| Figure | Where it comes from |
|---|---|
| Landara on-hand value | Your Shopify quantities priced at the cost you seeded, usually Shopify's unit cost field |
| Inventory account balance | Whatever your business has historically capitalised, over years of purchases and adjustments |
Most merchants have never maintained Shopify's unit cost field carefully, and many leave it at zero. Meanwhile the Inventory account on the books may not have been reconciled to a physical count for a long time, or ever. A gap of tens of thousands of dollars between the two is completely normal.
Do not post a revaluation journal to close this gap. A revaluation puts the difference through your profit and loss, which is a tax outcome. On day one the gap is a data quality difference, not a real gain or loss, and Landara is not yet the source of truth for it. Landara refuses a revaluation until you have confirmed your opening position, for exactly this reason.
Get the inputs right first
The gap gets smaller, and more honest, if you improve what goes in before you accept it:
- Where you can, correct the unit cost in Shopify before syncing opening stock. The opening sync is insert only, so you get one clean baseline per SKU and location.
- Import your real purchase orders so your layers carry actual landed costs rather than an estimate.
- Fix any layer that is clearly wrong using Set cost or Correct cost on the Cost Layers page. Every edit is logged with who changed it, when, and why.
- When you are satisfied, set Books closed through to that date so a later cost edit cannot restate anything behind your baseline.
Getting to roughly right is enough. Getting to exactly right is usually impossible, which is what the baseline is for.
Finish your costs before you accept the difference, not after. This is the one ordering mistake that causes real confusion, and it is easy to make.
Say you accept the baseline with 80% of your costs entered. Landara reads $100,000 and so does your Inventory account, so the gap freezes at zero. That agreement is a coincidence: your books already value the stock Landara has not priced yet. Four days later you finish the last 20%, Landara reads $117,000, and the whole $17,000 appears as a difference, as though something changed on day one. Nothing changed. You finished typing.
The Cost Layers page only invites you to compare once no layer is left at $0, which is the first moment the two totals are genuinely comparable.
Accept the difference as your baseline
On the Inventory Valuation page, each connected platform shows an Accept as opening difference button while your opening position is still unsettled, once you have confirmed which account to read and an unexplained gap exists.
Accepting freezes that gap. Nothing is posted to your accounting software. It is a record of what the two figures were on the day you drew the line, and it is what your accountant works from.
Accepting also switches which account Landara compares against. Before you accept, it reads the account that held your stock before Landara. After, it reads the account Landara posts to, which on an existing file starts empty. So the difference on the card will get larger, not smaller, until the migration journal is entered in your accounting software.
That is not a fault. It is Landara telling you the entry has not been made yet, with the amount on it. See the journal your accountant posts.
When the difference is really just your record catching up
If you enter costs after accepting a baseline, Landara splits the difference for you rather than leaving you to guess:
| Line | Meaning |
|---|---|
| Total difference | Everything between Landara and your Inventory account right now |
| of which: costs entered after the baseline | The part explained by you filling in unit costs, valued on the stock you still hold |
| left to explain | Everything else. This is the part worth looking at |
That split matters because the two readings need opposite remedies, and a single number cannot tell them apart:
- Nothing left to explain. Your record was simply incomplete when you accepted the baseline.
- Something left to explain. Either your new costs are above what you actually paid, which is common when prices are reconstructed from recent invoices, or your books understate inventory because purchases were expensed rather than capitalised. The first is fixed in Landara, the second with a journal in your accounting software. Work out which before you post anything.
What happens at year end
This is the conversation the baseline is designed to support.
At the end of the financial year you do a stocktake. Landara's figure should be right, because it has costed every movement since you started. Your Inventory account may still be out by the original amount, because it was never truly reconciled before Landara existed.
At that point your accountant decides what to do with it. Usually that means writing the difference off, sometimes in one go and sometimes across more than one period. It is their call, not Landara's and not ours, because the treatment depends on your history, your jurisdiction and your circumstances.
Landara does not post that entry, and no longer offers to. It shows the journal on the valuation page, including the part that needs a judgement call, and your accountant enters it in Xero or QuickBooks. Which side of that difference is wrong is not knowable from Landara, and the two possible answers have opposite remedies, so it is not a button we should own.
Replacing a baseline
You can replace a baseline, and there are legitimate reasons to: a re-sync of opening stock, a major correction to your layers, or finishing the costs you had not entered when you first accepted it.
Superseded baselines stay listed and stay in the ledger export. That history is deliberate. A baseline replaced every month would be a way to bury a difference rather than fix it, and your accountant should be able to see if that has happened.
