As a powerful business accounting tool, QuickBooks® can be a huge help when it comes to streamlining your business’ accounting process. From pointing your company in the right direction financially to saving you hours on payroll, the program makes going online with your accounting easier than ever.
Listed below are a few year-end tasks to take on before the end of 2013; this will get you off to a fresh start for the new fiscal year!
Update Retained Earnings
Did you know: at the end of each fiscal year, QuickBooks automatically enters an adjusting entry to your income and expense accounts? This posts the net income into a special account created called Retained Earnings—the closing entry for the year.
In fact, QuickBooks never really creates a transaction for the closing entry. Instead, a Balance Sheet is created and the program calculates the balance in Retained Earnings or Unrestricted Net Assets (for nonprofits) by adding together the total net income for all prior fiscal years.
At the end of your company’s new fiscal year, the balance in Retained Earnings on your Balance Sheet will increase overnight by the amount of net income on the previous day’s Balance Sheet.
Process 1099s for Vendors
At the end of each year, it’s imperative that you prepare, print and send the necessary 1099 IRS forms to your vendors no later than January 31.
Use Form 1099-MISC to report payments made to vendors who performed business-related services for your company. If the vendor is a corporation or if the total annual payments to the vendor are no more than $600, you aren’t required to prepare a 1099-MISC for that vendor.
Keep in mind: QuickBooks doesn’t print any 1099 forms—you’ll need to purchase preprinted forms and then print the detail information onto them. Also, in order for your 1099s to print correctly, your tax tables may need to be updated. To verify that you have the most current tax tables, select the Employees menu and choose Get Payroll Updates.
If your business is a partnership, take the time to enter a General Journal Entry. This will distribute your net income for the year to each partner’s capital account. If your business is a sole proprietorship, enter a General Journal Entry that will close Owners Drawing and Owners Investments into Owners Equity.
Don’t forget to run reports for the year and verify each for accuracy. If necessary, enter adjusting entries and rerun the reports as needed.
Print and File Reports
When it comes to your filing and records, be sure to report the following reports as of your closing date: General Ledger, Balance Sheet Standard, Statement of Cash Flows, Inventory Valuation Summary (if applicable) and Profit & Loss Standard of the Year.
Back up your Data File
At the end of each fiscal year, always back up your data file! Whether it be on a backup diskette, thumb drive or blank CD, store the file somewhere where it will never be touched.
Close the QuickBooks File
Last but not least, make sure you set a closing date to the last day of the period you’re closing!
Although QuickBooks doesn’t require you to close your books at year’s end, one advantage is restricted access: You can set a password to restrict access to data from the prior accounting period; this includes the details of every transaction. Transactions can’t be changed without your knowledge and, to modify or delete a transaction in a closed period, a user must know the closing date password and have the appropriate permissions.
So, are you ready to delve deeper into QuickBooks—the #1 rated, best-selling small business accounting software? Good news: we have upcoming QuickBooks Training Seminars where you can receive hands-on training by expert instructors!
To register to attend or for more details on the seminar and information on QuickBooks Training, including how it can help you and your business, call us today! (631) 921-6894. Have a question or certain topic you’d like to see addressed in our next blog post? Just leave a comment, or e-mail us at firstname.lastname@example.org.