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 do not 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.

  • Profit and Loss. This report 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 stared 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 have printed your reports, you can change your fiscal year, and if required, lock it down so that other colleagues cannot enter transactions before the start of the new year. Follow the steps below to change your fiscal year end date and lock down the previous year.

  • 1. Go to Settings, and then Financial Settings.
  • 2. In the Year End Date field, enter the last day of the new fiscal year.
  • 3. If you want to stop people entering transactions before a certain date, enter a date in the Year End Lock Down field. For example, if your fiscal year ends on 12/31/2018, enter 01/01/2019 here.
  • 4. Click Save.

You have successfully changed your fiscal year-end date and can continue processing as normal. If you chose to lock down your previous fiscal year, you cannot 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 do not 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:

  • 1. Go to Reporting.
  • 2. Click Trial Balance.
  • 3. On the Period list, select Last Year and verify that the dates displayed match your fiscal year.
  • 4. Click Export and choose the file format.
  • 5. Go to Journals.
  • 6. 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 Credit Debit Ledger 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