The system allows you to keep three years open at any time, as established by the Book Year End date on the Setup>Company>Periods screen. This enables you to work in year 3 without immediately having to close year 1. However, at some point during year three you must close year one to ensure that you can enter data for year four.
For example, if the first Book Year End date for your company is 12/31/2020, so that all periods in 2017, 2018, and 2019 are open for entry, you cannot enter 2020 transactions until you close 2017.
Note: Trial Balance, General Ledger, and Financials (financial statements) are exceptions to this three-year rule. These reports are available for two open years. However, you can review any report, including Trial Balance, General Ledger, and Financials (financial statements) for up to two closed years.
When you close a completed fiscal year, the system:
Zeroes out the profit and loss accounts, as well as any equity accounts specific to the entity (Partner's Draw and Capital Contributed for Partnerships, Distribution to Shareholders for S Corporations, etc.)
Calculates and posts retained earnings
Calculates profit-sharing percentages for a partnership or LLC
Rolls over the year's ending balances to next year's beginning balances
Enters the adjusted prior period balances
Resets the fiscal year periods
Important! Transactions cannot be edited once the
year is closed. Once you close
a year, it is permanently closed with one
temporary exception. If
it is absolutely necessary to enter
data in a closed year, the last closed year can be re-opened within 30
days of the close date. Re-opening a closed year can only be performed by accountants.
Before you can close a year you must:
Post any unposted transactions
Print or delete any unprinted checks
Important! You cannot close a year that contains unposted transactions, or unprinted checks.
To close a year:
When you go to the Trial Balance>Close Year screen, the Year End to Close appears along with an indication of whether you can close the year.
If you cannot close the year because there are unposted transactions or unprinted checks, or if the year is out of balance, click the links provided on the screen to open the relevant screens you need to review and resolve any outstanding issues.
If you can close the year, the screen displays a Year End Summary, indicating information for the year, including Retained Earnings Pre-Close, Capital Contributions, Distributions, Net Income/(Loss), and Retained Earnings Post-Close.
Click Close Year from the action bar.
You are prompted that the year has been successfully closed, and a Reopen button for the year you closed appears on the screen. The Reopen button is available for 30 days from the date you close the year.
If you enabled the Auto-Archive Closed Year option on the Firm Administration>Firm Options screen, the system uploads year-end reports, including the client's year-end financials, General Ledger detail report, and the Trial Balance report to Cloud Cabinet, in the client's Accounting sub-folder.
In addition, if you selected the Email Closed Year Reports option on the Setup>Company>Preferences screen, these year-end reports are automatically emailed to the specified client when you close a year.
For more information about:
Setting up periods and Book Year End, see Setup>Company>Periods
Posting transactions, see Enter or Post Transactions
Transactions in the suspense account, see Transfer Suspense Account Transactions
Unallocated contributions, see Set Capital Allocations
Printing checks, see View, Print, or Reprint Checks
Setting firm options, see Set Firm Options
Setting preferences, see Configure Company Preferences