Closing Your Fiscal Year

Some people look forward to December 31 because of the parties, the people and the abundant optimism for the coming year.

But if you're a business owner or managing executive, all you're probably hoping to survive your firm's fiscal year end.

A fiscal year end - or closing of the books - marks the completion of a one year accounting period. The date of your company's fiscal year-end may or may not be on December 31 - it can be on any day throughout the year, depending upon the date you and your accountant set when your corporation papers were filed.

Most small businesses employ the year end strategy, except for retail entities. Another common year end date - or fiscal year end date - is June 30. The default IRS system is based on the calendar year, so fiscal-year taxpayers have to make some adjustments to the deadlines for filing certain forms and making certain payments. In many instances, even fiscal year taxpayers must adhere to the calendar-year deadlines.

Additionally, the year-end date is different for different business entities because every company's needs are different. Retailers typically choose to establish their year-end date sometime in Spring because of their sales cycle. Many retailers see a heavy selling season in November and December, making it virtually impossible to produce annual financial statements, count inventories, etc. because its manpower will be going toward selling its product.

It's important that you check with a reputable accounting firm when closing your books on another fiscal year. Here's a quick list of year-end procedures that you might find helpful, courtesy of MSN.com. 

• Verify the closing options that you have selected. 
• If you are using Inventory management, complete the inventory closing process.
• Complete month-end and other period closings in all modules other than General ledger, including exchange adjustments on unrealized transactions.
• Complete month-end and other period closings in General ledger and print financial reports for the month and quarter.
• If your company is a consolidation company, complete steps 1 through 4 for each subsidiary, and set up the subsidiary accounts to consolidate data. If the data for the subsidiary companies is in a separate database, export the subsidiary data to use in a trial consolidation.
• To close the fiscal year for a subsidiary company, refer to Prepare a consolidated company for a consolidation and Perform an online consolidation.
• Complete year-end closing activities in all modules, other than General ledger, that might create some ledger postings, such as processing year-end depreciations in Fixed assets.
• Create the new fiscal year. For more information, refer to Create new year (form).
• Set appropriate periods to Stopped for the current fiscal year.
• Back up your company's data.
• Make adjusting entries. Click General ledger > Periodic > Fiscal year close > Closing sheet to create and post all necessary adjustments, including adjustments to taxes and write-offs.
• Print final financial statements.
• Print 1099 statements for vendors that require the statements.
• Transfer opening balances for ledger accounts to a new fiscal year.
• You can reset number sequences. Click Basic > Setup > Number sequences > Number sequences.
• Print the final reports for the fiscal year, including financial statements, such as the operating statement and the balance sheet, and 
• publish the statements as required by law.

There is nothing simple about year-end closings and caution is recommended if you're going to try and do this yourself. But you can do it if you follow the rules!

If you would like to get some input from a reputable accounting firm, contact Neikirk, Mahoney & Smith PLLC at 502-896-2999.