How Do I Close My Year-End in QuickBooks?

Closing the year in QuickBooks is a “must do” step once your year-end is complete and/or once you have sent your file to your CPA. You want to ensure that data does not change and more importantly, make sure you don’t enter data into the wrong period inadvertently.  It happens  frequently and often creates more work for your CPA the following year.

QuickBooks is different than some traditional software programs, as you don’t do a “hard close” at the end of a month or year (you can close each period if you prefer to run your business this way). QuickBooks keeps your accounting data forever unless you condense your file, which you might do if it becomes too big.

Not properly closing the period means there’s a possibility that you or a employees can change, add, or delete entries made in a previous year. Remember, QuickBooks is driven by the date of your entry so if you enter 1/1/11 on the first day of the new year but meant to date your entry as 1/1/12, that entry is now in the prior year.

To solve this problem, you will want use the Set Closing Date and Password option within Company Preferences.  This option locks the information from your previous period/year, so it can’t be changed without the password being entered.

 

To locate the closing date option, click Edit –> Preferences. Under Accounting Preferences on the left side, select Company Preferences tab. On that tab, you will see an area called Closing Date. This is where you enter the date and password you have elected.

 

 The password you use should not be the same as your login password and should be safeguarded so that only you and sometimes your CPA know this.

The password can be changed each month, year or whatever timeframe works for your business.

Posted by Ed Becker on Friday, July 20, 2012

4 Responses to “How Do I Close My Year-End in QuickBooks?”

  1. August 23, 2012 at 2:45 am, Dawn said:

    Ed,

    This is brilliant! May I quote you in a blog post? Thank you so much for writing this article. It’s terrific.

    Dawn Fotopulos
    Founder, Best Small Biz Help.com

    Reply

    • September 12, 2012 at 1:01 pm, Ed Becker said:

      My pleasure Dawn, thanks for your comments

      Reply

  2. March 18, 2013 at 4:23 pm, James Mackh said:

    Hi Ed,
    Does QuickBooks make the entries to close out expenses and income to retained earnings or do I do that and then set the closing date for the fiscal year-end?

    Reply

    • March 18, 2013 at 4:33 pm, Ed Becker said:

      it will automatically close this into retained earnings or members equity, once you are set iwth the year set the closing date.

      Reply

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