It’s that time of year again. Time to close the books on another successful financial year. On Dec. 14 at 2 p.m. (EST), I will be teaching a deep dive into how to close your books at year-end on QB Talks with much more detail and insights. 

But for those in need of a quick Monday Minute refresher, here are 10 steps to ensure a smooth and successful financial year-end.

Confirm your fiscal year and accrual method — Your financial year is important because this is the timeframe that tells QBO when to start fresh with a new set of books. To check your current financial year settings, go to Gear > Account and Settings > Advanced. Under the Company column, look for Financial Year Start Month.

At the same confirm the accounting method as Cash or Accrual. If you are unsure how the business should be taxed you can review prior tax returns or contact the tax accountant.

Review customer account balances and send statements — As the year closes, it’s time to review all of your clients’ account balances in QuickBooks. First, log into your QuickBooks account. Then, click on the “Reports” tab at the top of the page. Next, select “Accounts Receivable Aging Summary” or “Accounts Receivable Aging Detail” Then, Identify customers with outstanding balances.

Clear any outstanding deposits — Ensure that all pending bank deposits are cleared from the deposit queue. Payments sitting in your undeposited funds account will not be included in your current tax year’s income. Here’s how to create bank deposits in QuickBooks Online.

Review vendor account balances, pay bills, or write checks — Taking a close look at your Accounts Payable Aging Summary or Accounts Payable Aging Details report will help you identify any outstanding bills that need to be paid before the end of the year.

Reconcile all accounts — To ensure QuickBooks records transactions correctly, reconcile your accounts monthly. This will also ensure that you have accurate data at the end of the year. Here’s how to reconcile accounts and tips for checking everything for the year.

Run year-end reports — It is time to run those year-end reports. Analyze your main financial reports to determine how much you have earned, identify issues and locate discrepancies. This includes the Balance Sheet and the Profit and Loss report.

Distribute 1099s as needed — Each year, vendor 1099s should be distributed to vendors who have performed services for the business. Reviewing the Profit and Loss by account for 1099 vendors will help you to identify if all vendors’ services have been identified. Not verified identified vendors have been tracked. By tracking vendors in QBO, you can quickly create reports or even submit 1099s directly from QBO.

Reclassify transactions as needed — Using the Profit and Loss report, identify transactions that need to be reclassified. Use the reclassify tool to move transactions to similar accounts or change their classes. To learn more, CLICK HERE.

Close your books — After each period ends a best practice is to close the books. Closing the books ensures client’s do not change period details. The close the books tool in QBO offers two options to either warn the client before closing the books or not allow changes to closed periods which is accomplished by adding a closing password.

To access the close the books tool, go to the QBO Gear icon select Account and settings, then click on the Advanced tab and update the closing period and details. 

Prep for taxes — If you are a tax accountant the Prep for taxes section in QuickBooks Online is a tool that can guide you through steps for verifying the various steps needed to prepare a client’s tax return. To access Prep for Taxes use the QBO Accountant toolbox and select Prep for taxes.

That’s it. Follow these 10 simple steps and you will be closing the books on another successful financial year in no time. I will teach a deep dive into closing your books at year-end on QB Talks if you want to join me and ask live questions.

CLICK HERE to register.

Liz Scott is a multi-business entrepreneur working to bring together technology and accountants through her business, Liz Scott Consulting. A member of Intuit Trainer/Writer Network, she authored and taught Master level courses, including Advisory Guides and Consulting Tools for Accountants. In addition to Liz Scott Consulting, she also owns Accounting Lifeline, a firm to serve small businesses with their financial needs. Liz is a co-host of the “Appy Hour,” which helps other accountants learn about the different tools and apps for small business needs. Holding a high passion for real estate investment, she owns properties throughout Oklahoma. 

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Insightful Accountant