QuickBooks Desktop Year-end Guide (2023)

Editor's Note: December is "Managing Your Year-end Month'"at Insightful Accountant, including a series of features to help you prepare for year-end. Look for both payroll and non-payroll topics.

Review your fiscal year starting month

Review the starting month of your fiscal year to ensure that QuickBooks can clear your ledgers (behind the scenes) while you work on other year-end activities.

To review or change the first month of your fiscal year:

  1. Start at the Menu Bar, either on the left side or at the top, and find Company.
  2. SelectMy Company.
  3. Select thePencil icon.
  4. Choose Report Information. Ensure the first month of your fiscal year is correct (this will ensure your financial reports use the correct dates).

Review customer account balances, send statements, clearoutstanding depositsand make any required accrual to cash adjustments (as needed)

As the year ends, make sure your clients have up to date balances, billingsand payments. You also may need to make adjustments if you report financials on a cash basis rather than accrual.

(Video) Year-End Guide for Small Business - QuickBooks Online

  • Run an Accounts Receivable Aging Summary or Detail report.
  • Review the report to find any customers with outstanding balances.
  • Once you find outstanding balances, send statements to your customers.
  • Make sure you don't have any outstanding customer deposits.
  • If you're on a "cash basis,"you may need to make journal entries to ensure you properly reflect account balances for accounts receivable, which typically are not reported on the balance sheet at year-end. Consult your accountant to determine whether these types of entries apply to your business and seek assistance with the required entries.

Review vendor/vendor account balances and pay bills or write checks, reconcile credits, discountsand returns, and make any required accrual to cash adjustments (as needed)

The end of the year is the perfect time to take care of Accounts Payable issues, including:

  • Run an Accounts Payable Aging Summary or Details report. Check the reportfor outstanding bills to pay before the year ends.
  • Outstanding credits, discountsor products you owe from your vendors
  • If you're on a "cash basis,"you may need to make journal entries to ensure you correctly reflect account balances for accounts payable, which typically are notreported on the balance sheet at year-end. Consult your accountant to determine whether these types of entries apply to your business and seek assistance with the required entries.

Review all new equipment purchases and make asset depreciation entries and adjustments

The end of the year is when you review each major equipment purchase and make sure you have recorded it correctly. This also willbe when you make depreciation entries if you have not previously done so. You also maymake adjustments for your other assets.

  • Typically, you expense fixed assets over the useful life of those assets, not just the year in which you make the purchase. Therefore, keeping track of the details of major equipment purchases such as date of purchase, purchase price, asset type, make/model/year, and new/used status all provides the basis for the proper recording of value and depreciation.
  • Consult your accountant to determine how to record depreciation for fixed assets like vehicles, furnishings, office equipment, buildingsand building improvements. The long-term value of each type of asset may be treated differently, and assets may be depreciated differently on a "book basis"in contrast to "tax basis."

Take and reconcile inventory (if appropriate)

The end of the year is when you reconcile your actual inventory against the inventory recorded in QuickBooks if your company maintains inventory. Depending on the version of QuickBooks you're using, you will be able to use various QuickBooks tools to create a record of physical inventory so you can perform a physical count and compare the information.

  • Run a Physical Inventory Worksheet if you intend to perform a manual count of your inventory. This report reflects every item, the current quantity on handand provides a workspaceto record the physical count results for each item. You will then need to enter manual inventory adjustments to update your inventory to the correct values.
  • If you're using QuickBooks Enterprise with Advanced Inventory, you have the option of performing a Cycle Count, which allows you to create an exportable Excel version of the same information within the Physical Inventory Worksheet. Once you have updated the manual counts in the Excel worksheet, you can import the worksheet back into QuickBooks Enterprise to update your inventory, rather than make each inventory adjustment manually.

Reconcile all accounts (bank, credit cards, and petty cash)

It is a good practice to match your QuickBooks data to your bank accounts. This makes sure all transactions are correct, and your year-end reports display the correct financial info.

  • Enter all uncleared or missing transactions for the statement period.
  • Review outstanding checks more than a year old, and verify or void checks as needed.
  • Have a copy of your year-end bank or credit card statements.
  • Don't forget to post interest on bank and credit card accounts.
  • Make sure all petty cash entries are up to date and balance your petty cash account. Record any missing petty cash transactions.

Run year-end reports

Run year-end reports to review the info, identify and resolve any possible issues. It is important to understand that QuickBooks makesautomatic adjustmentsat year-end in preparation for the upcoming fiscal year. These adjustments should be reflected in your year-end reports.

  • Run a Trial Balance Report for the day after the year-end. This enables you to ensure all income and expense accounts have a zero balance and are closed out to Retained Earnings.
  • Run a year-end Profit and Loss Report set to the appropriate accounting method (cash or accrual).
  • Run a year-end Balance Sheet Standard Report set to the appropriate accounting method (cash or accrual). If you're using cash basis, make sure all necessary adjustments from accrual postings to cash have been made. In addition, verify that the year's beginning Retained Earnings match last year's ending Retained Earnings.
  • Run any additional customized reports needed.

It is important to understand that QuickBooks makesautomatic adjustmentsat year-end in preparation for the upcoming fiscal year. Therefore, these adjustments will be reflected in your year-end reports.

(Video) How to close the month and year end in QuickBooks - What Steps Do You Need To Complete The Month End

  • QuickBooks adjusts your income and expense accounts at year-end to zero them out. Therefore, you start your new fiscal year with a zero net income.
  • QuickBooks makes an adjusting entry to your net income. For example, if your profit for the year was $30,000on the last day of your fiscal year, the equity section of your Balance Sheet would show a line for net income of $30,000.
  • On the first day of the new fiscal year, QuickBooks increases your Retained Earnings equity account by the previous year's net income (in this example, $30,000) and decreases your net income by the same amount. This way, you start each new fiscal year with a net gain of zero.

Invite your Accountant to collaborate and consult

As a trusted advisor, your accountant can provide expert advice on your financial data and assist you with your year-end process. In addition, your accountant also canhelp forecast your company's financial future.

One easy way to work with your accountant is by using anAccountant's Copy, which QuickBooks Desktop will produce for you. You can save the accountant's file locally and share it electronically using a file transfer service. Then, your accountant can review and make changes directly to the accountant copy data, which then can be incorporated into your company file. As an alternative, your accountant can use the Send Journal Entries feature if they're using an accountant's version of QuickBooks. You can easily import those journal entries.

Prepare year-end tax return (with your Accountant's assistance)

The company's accountant typically prepares taxes. Sending the Accountant's Copy of your QuickBooks datato your accountant gives them access to all the financial information they need to prepare your company taxes for review and filing.

Close your books

QuickBooks Desktop does not require you to close the books as part of year-end, butit offers you the ability to restrict access by setting aclosing date and passwordto limit access to the closed accounting period.

You can set a password to restrict access to data from the prior accounting period, including the details of every transaction. Transactions cannot be changed without your knowledge. To modify or delete a transaction in a closed period, a user must know the closing date password and have the appropriate permissions.

Any changes made after the closing date to transactions dated on or before the closing date will appear in the closing date exception report.

(Video) QuickTips™ Closing the Books in QuickBooks® Desktop by QuickBooks® Made Easy™

Archive a copy of your QuickBooks Desktop data file

You should back up and archive a copy of your company data file as part of your year-end. Saving a copy of the data just the way you had it when you finalized your reporting and closed your books is a safety precaution that can help in case of disaster, auditor other financial investigation. Ensureyour archived copy is put in a safe location where it is protected from fire, theftor other forms of disaster.

Acknowledgments and Disclosures

Content used within this feature was derived or adapted by the author in part from Intuit and/or QuickBooks source materials, including (but not limited to), QuickBooks Pro/Premier Help Year-end Guide;QuickBooks Enterprise Help Year-end Guide;Intuit QuickBooks Support Website Help Document: Year-end guide for QuickBooks Desktop;and other related content.

Adapted source materials published within this feature by Insightful Accountant are for educational purposes only.

QuickBooks, QuickBooks Desktop, and QuickBooks Enterprise, as used herein, refers to one or more registered trademarked products of IntuitInc., a publicly-traded corporation headquartered in Mountain View, California.

FAQs

How do I end a year in QuickBooks desktop? ›

You can follow these steps on how to do it:
  1. Go to Edit > Preferences > Accounting.
  2. Select the Company Preferences tab.
  3. Under Closing date, click the Set Date/Password button.
  4. In the Set Closing Date and Password window, select the Closing Date.
  5. Enter the Date Password, and confirm it.
  6. Click OK once done.

What should I do at the end of the year in QuickBooks? ›

At the end of the year, it's a good idea to check each client's account balance. Make sure this their info is up to date: Go to Business overview and select Reports (Take me there). In the search bar, enter Accounts Receivable Ageing Summary or Accounts Receivable Ageing Detail and select the report you want to review.

Is QuickBooks desktop being phased out 2022? ›

Your access to QuickBooks Desktop Payroll Services, Live Support, Online Backup, Online Banking, and other services through QuickBooks Desktop 2020 software will be discontinued after May 31, 2023. This also means you won't receive critical security updates starting June 1, 2023.

What are year end procedures? ›

Also known as "closing the books," year-end closing is the process of reviewing, reconciling, and verifying that all financial transactions and aspects of the company ledgers from the past fiscal year add up. This involves calculating the business expenses, income, revenue, assets, investments, equity, and more.

What happens when you close a year in QuickBooks? ›

This locks your books so no one can edit your accounting data before the closing date. This is an important step when you review the previous year's financial data. Closing your books ensures everything stays the way you want it to. It also prevents any accidental changes that could affect your financial reports.

Do you need to close out a year in QuickBooks? ›

Although QuickBooks doesn't require a close process at the end of a fiscal year, it does allow you to set a closing date for all your transactions. Before getting started, you'll need to make sure all books have been reviewed and all reports are completed.

How do I clean up messy in QuickBooks? ›

From the File menu, select Utilities, then choose Clean Up Company Data. Put a check mark on the Compress data box and select OK after the warning message. (Optional) In the Non-history documents window, select the list you want to remove from your file then select Next.

Does QuickBooks automatically close year end? ›

Year-end adjustments QuickBooks makes automatically

QuickBooks performs certain year-end adjustments based on your fiscal year start month. QuickBooks adjusts your Income and Expense accounts at year-end to zero them out so you start your new fiscal year with zero net income.

How do I close out a book of the year in QuickBooks? ›

Here's how to close the books in QuickBooks Online:
  1. In the upper-right corner, click the Company name (gear icon).
  2. Select Account and Settings.
  3. Go to the Advanced tab,
  4. Under the Accounting section, put a checkmark in the Close the books box.
  5. Enter the Closing date.

Is QuickBooks Desktop now subscription only? ›

If you're in the market to upgrade your QuickBooks Desktop application or maybe even waiting to purchase QuickBooks 2022, it may seem like you can only purchase a subscription plan. However, many are unaware that you can purchase QuickBooks Desktop as a standalone application without having to pay a subscription fee.

Will there be a QuickBooks Desktop 2023? ›

QuickBooks Desktop 2023 products are now available. All Desktop products are being sold at full MSRP, and no discounts are allowed.

Is there a good alternative to QuickBooks Desktop? ›

Xero: Best for unlimited users. Sage 50cloud: Best QB Desktop alternative for multi-company bookkeeping. FreshBooks: Best for excellent customer service. Lendio (formerly Sunrise): Best free alternative to QB Online.

What are the 4 closing entries? ›

4 types of closing entries
  • Closing revenue to income summary. Closing revenue accounts is when accountants move credit balances from revenue accounts into the income summary. ...
  • Closing expenses to income summary. ...
  • Closing income summary to retained earnings. ...
  • Closing dividends to retained earnings.
18 Aug 2021

What is a year end checklist? ›

A year-end checklist is a formalised list of jobs you set yourself at the end of the financial, business, or calendar year. We've outlined why it's important to create an end-of-year checklist and the 12 steps sure to give your business a boost.

What should be included in year end report? ›

An annual report typically consists of the following documents or sections:
  1. Letters to shareholders.
  2. Management's discussion and analysis (MD&A)
  3. General corporate information or business profile.
  4. Operating and financing highlights.
  5. Financial statements.
16 Dec 2021

How do you close out expenses at year end? ›

In order to close out your expense accounts, you will need to debit the income summary account, and credit each line item expense listed in the trial balance, which reduces the expense account balances to zero. When closing expenses, you should list them individually as they appear in the trial balance.

What happens to expense accounts at year end? ›

At the end of each fiscal year, a company prepares for the new fiscal year by closing its books. As part of the process, the entire balance of all revenue and expense accounts are transferred to the company's balance sheet by a sequence of journal entries, leaving the revenue and expense accounts with a zero balance.

What accounts do not close at the end of the year? ›

Permanent accounts are accounts that you don't close at the end of your accounting period. Instead of closing entries, you carry over your permanent account balances from period to period.
...
Permanent accounts
  • Accounts receivable.
  • Inventory.
  • Accounts payable.
  • Loans payable.
  • Retained earnings.
  • Owner's equity.
20 Oct 2022

Do you have to pay every year for QuickBooks Desktop? ›

QuickBooks Premier prices come in two available plans. You can purchase QuickBooks Premier Plus or have access to built-in payroll with QuickBooks Premier Plus + Payroll. Both plans are billed annually.

How do I close books at year end? ›

A business owner can close their books by zeroing out their income and expense accounts and then plugging net profit (or loss) into the balance sheet. Some accounting software will automatically close your income and expense accounts at year end before adding your net profit (or loss) to your retained earnings account.

What does Ctrl R do in QuickBooks? ›

Start a new task anywhere in QuickBooks

Ctrl + R, then select an account. If you are in an account register, select a transaction and press Ctrl+G. This opens the register for the associated "transfer" account.

How do bookkeepers clean up? ›

Take a look at the following tips on how to clean up messy bookkeeping.
  1. Check for data entry errors. You need to record every business transaction. ...
  2. Reconcile your accounts. ...
  3. Make adjusting entries. ...
  4. Look for duplicates. ...
  5. Upgrade the way you manage your books. ...
  6. Consult an accounting professional.
7 Apr 2022

How much is a QuickBooks cleanup? ›

The month-1 cleanup fee is customized based on signup month, tax filing status, and business start date. The price of each subsequent month is determined by your average monthly business expenses and starts at $200/month. QuickBooks Online not included. See important pricing details below for more information.

How do I close the books in QuickBooks Desktop? ›

How to Close the Books in QuickBooks Desktop
  1. STEP 1: In QuickBooks, click on Edit > Preferences.
  2. STEP 2: Select Accounting > Company Preferences. ...
  3. STEP 3: Enter the date you want your books closed, set a password and click OK.
  4. STEP 4: The closing date is set.

How do you do year end journal entries in QuickBooks? ›

Year-end adjustments
  1. Go to the Company menu and select Make General Journal Entries.
  2. Fill out the fields to create your journal entry. Make sure your debits equal your credits when you're done.
  3. Select Save or Save & Close.
1 Jan 2022

What is closing books in QuickBooks? ›

Closing entries are entries made at the end of the fiscal year to transfer the balance from the Income and Expense accounts to Retained Earnings. The goal is to zero out your Income and Expense accounts, then add your fiscal year's net income to Retained Earnings.

What does it mean in accounting to close the books? ›

Closing your books means returning the balance of your temporary accounts back to zero. To do this, you need to make journal entries to transfer the balance, known as closing journal entries. These are made at the end of the accounting period, typically monthly, quarterly, and annually.

How long is QuickBooks Desktop good for? ›

With a one-time purchase, you pay a single fee to buy the program. Download it to your PC for permanent access, and you will receive updates from Intuit at no additional charge through May 2024.

What happens if you don't renew a QuickBooks Desktop subscription? ›

Once your subscription is cancelled, you'll no longer be able to use or access QuickBooks Desktop. Your company file will remain on your device, but you'll need to re-activate your subscription or purchase an outright license to be able to open and view it.

How much does QuickBooks Desktop cost per year? ›

$349.99 per year

How much does it cost to upgrade to QuickBooks Desktop 2022? ›

A single license for QuickBooks Desktop Pro Plus starts at $349.99 a year. For 2 users, you will be paying $549.99 for an annual subscription. This already includes automatic upgrade once a new version is released as well as unlimited customer support.

What happens if I don't upgrade to QuickBooks 2022? ›

What Happens if I Don't Upgrade? QuickBooks Desktop customers who own their products outright can continue using their products without issue, as has been the case in years past. However, these customers will likely need to pay for a customer support plan if they want to have access to support resources.

How much does it cost to upgrade QuickBooks to 2022? ›

QuickBooks Pro Plus 2022 costs $349.99 annually for one user. You'll need to pay another $200 for each additional user (up to three). QuickBooks Premier Plus 2022 is $549.99 per year. Additional users are $300 each for up to five users.

Is Intuit getting rid of desktop? ›

In 2021, Intuit announced the official cancellation of their QuickBooks Desktop 2018 software. As of June 1, 2021, Intuit will also discontinue critical security updates for its software.

Is QuickBooks Enterprise Desktop being phased out? ›

Any business currently using the desktop version of the QuickBooks accounting software should know by now that on February 1st 2023, it will be discontinued.

Why is QuickBooks Online so different from desktop? ›

When you compare Intuit's two most popular products, QuickBooks Online vs. Desktop, both have strong accounting features, but there is a key difference — QuickBooks Online is a cloud-based software with monthly pricing, and QuickBooks Desktop is locally-installed with an annual license pricing model.

What accounts should be closed at year end? ›

Temporary accounts include revenue, expenses, and dividends, and these accounts must be closed at the end of the accounting year.

What are closing entries examples? ›

A closing entry is a journal entry that is made at the end of an accounting period to transfer balances from a temporary account to a permanent account.
...
Example of a Closing Entry
  • Close Revenue Accounts. ...
  • Close Expense Accounts. ...
  • Close Income Summary. ...
  • Close Dividends.
28 Nov 2022

What are the two types of closing entries? ›

Closing Entry Types

Temporary accounts can either be closed directly to the retained earnings account or to an intermediate account called the income summary account. The income summary account is then closed to the retained earnings account. Both ways have their advantages.

What does a bookkeeper do at year end? ›

Year-end accountants both verify the financial statements representing a business's bookkeeping throughout the year—and prepare the final set of statements required to file that company's annual tax returns.

How do you prepare a year end account? ›

How to prepare year-end accounts
  1. Prepare for your accounts throughout the year. ...
  2. Gather relevant paperwork. ...
  3. Chase late payments. ...
  4. Sort any expenses. ...
  5. Double check your records. ...
  6. Update staff records. ...
  7. Hire an accountant. ...
  8. Be mindful of meeting the deadline for submitting your year end accounts.
28 Jan 2021

What are the 4 components of an annual report? ›

These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels. read more are perhaps the most important section.

What are five elements that should be included in an annual report? ›

5 Elements to Include in Your Annual Report
  • A Statement or Letter from the CEO/President. All good annual reports start with a statement from an important leader in the company. ...
  • Detailed Financial Information. ...
  • Annual Highlights. ...
  • A Future Forecast. ...
  • A “Thank You”
22 Sept 2022

What are the four common format of report? ›

The typical structure of a report, as shown on this page, is often referred to as IMRAD, which is short for Introduction, Method, Results And Discussion. As reports often begin with an Abstract, the structure may also be referred to as AIMRAD.

How do I close the books in QuickBooks desktop? ›

How to Close the Books in QuickBooks Desktop
  1. STEP 1: In QuickBooks, click on Edit > Preferences.
  2. STEP 2: Select Accounting > Company Preferences. ...
  3. STEP 3: Enter the date you want your books closed, set a password and click OK.
  4. STEP 4: The closing date is set.

How do I zero out an account in QuickBooks? ›

Closing the books in a way that sets balance sheet accounts to...
  1. Go to the Gear icon ⚙ on the upper right side.
  2. Select Account and Settings.
  3. Choose Advance, then click the Edit button in the Accounting section.
  4. Put a checkmark in the Close the books box.
  5. Pick a closing date on the calendar.
26 Feb 2020

Does QuickBooks Desktop have to be updated every year? ›

A QuickBooks subscription must be renewed each year to maintain access and to get release updates and online services. Renewal will also allow you access to upgrade to the latest version.

What are the four journal entries required to close the books? ›

The four closing entries are, generally speaking, revenue accounts to income summary, expense accounts to income summary, income summary to retained earnings, and dividend accounts to retained earnings.

What does closing the books look like? ›

Closing your books means returning the balance of your temporary accounts back to zero. To do this, you need to make journal entries to transfer the balance, known as closing journal entries. These are made at the end of the accounting period, typically monthly, quarterly, and annually.

How do I close QuickBooks without saving? ›

Under the Save for later dropdown arrow, choose Close without saving. This removes any selection changes you made during the current session. Confirm that you want to close without saving.

Can I clear QuickBooks and start over? ›

If your QuickBooks Online data is less than 60 days, you have the option to purge your account if you're using QuickBooks Online Plus, Essentials and Advanced. The system deletes all data entered into the company, and you're unable to restore or reverse them.

How do I clean up old accounts receivable in QuickBooks Desktop? ›

Here's how:
  1. Go to the Sales menu then Invoices.
  2. Mark the transactions you want to remove or use the header checkbox to mark all entries in the Invoices page.
  3. Click the Batch Actions drop-down and select Delete invoices.
30 Jan 2019

What happens when your account goes below 0? ›

Key Takeaways. An overdraft occurs when your account falls below $0. Your bank will let your account become negative if you have overdraft protection or may make one-time exceptions but may charge you for every transaction. Federal regulations require bank customers to opt-in to overdraft protection programs.

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