Financial year end procedures
At the end of your fiscal year, you can produce the reports needed for your year-end accounts. The year-end procedure is a simple process. You don't need to produce any journals or move values to your profit and loss account. All you need to do is to produce the reports required by your accountant and then change your year end date. You can also lock down your fiscal year so that no one can enter transactions in a previous year once your accounts are complete.
Before producing your year-end reports and changing your fiscal year, verify that you have entered all of your transactions up to and including the last day of the year. If you run any month-end procedures (for example, posting prepayments and accruals or depreciation), post them as normal.
What reports should I produce?
As part of the year-end process, we recommend you run the following reports. You may want to check with your accountant which reports they want you to produce. For more information, see About reports.
- Profit and Loss. This reports shows how your business has performed over a specified period of time. When running it, you should run it from the first day of your fiscal year to the last. This shows the value of sales, expenses, and overheads and the resulting gross and net profit or loss for the year.
- Balance Sheet. You should run this report up to the last day of your fiscal year. It then shows the worth of your business from the day you started trading up to the end of the fiscal year. It includes your company assets and liabilities.
- Trial Balance. You should run the trial balance from the first day of your fiscal year to the last. This shows the balance on each account between these dates.
After you've printed your reports, you can change your fiscal year, and if required, lock it down.
After you lock down the year, other colleagues cannot enter transactions before the start of the new year.
To change your fiscal year end date and lock the previous year down
- Go to Settings.
- Under Financial Settings, click Fiscal Year.
- In the Year End Date field, enter the last day of the new fiscal year.
- If you want to stop people entering transactions before a certain date, enter a date in the Year End Lockdown field. For example, if your fiscal year ends on 12/31/2018, enter 01/01/2019 here.
- Click Save.
You've successfully changed your fiscal year end date and can continue processing as normal. If you chose to lock down your previous fiscal year, you can't enter any transactions in the old year. If you later realize you need to enter a transaction in the previous year, you can delete the year end lock down date.
Closing your books
Traditionally, accounting systems follow a year-end process where values are cleared from Profit and Loss accounts to Retained Earnings. The process is simplified so you don't need to produce any journals or move values to your profit and loss account--just produce the reports required by your accountant and then change your year end date (as mentioned above).
However, you can follow the steps below if you prefer to manually close accounts to a Retained Earnings account:
- Go to Reporting.
- Click Trial Balance to open the Trial Balance Report.
- On the Period list, select Last Year and verify that the dates displayed match your fiscal year.
- Export the report.
- Go to Journals.
- Create journal entries as needed to post amounts to your Retained Earnings ledger account, using the last day of your fiscal year as the date. Refer to the table below for more information.
This information is for reference only. Contact your accountant for advice that may relate to your company or situation.
Account Type Debit Credit Normal Account Balance Assets Increase Decrease Debit Balance Liabilities Decrease Increase Credit Balance Owner's Equity Decrease Increase Credit Balance Revenue Decrease Increase Credit Balance Expense Increase Decrease Debit Balance Draw Increase Decrease Debit Balance