Quickbooks Tip: How to Lock a Previous Year

intuit-qbIntuit’s Quickbooks remains the world’s most popular and widely used accounting software for small business owners. It’s fast, versatile, easy to use, and it’s loaded with features. But if you’re looking for an option to “lock” a previous year, you may not find one, and here’s why.

Normally, accountants and small business owners lock their accounting at the end of the year (or beginning of the following year). This is done to prevent the accidental alteration of existing transactions or the addition of new transaction. If you accidentally add a new transaction to the previous year, it will throw off your entire balance, forcing you to go back and identify/fix the problem. Quickbooks, however, takes a different approach by eliminating the need for locking end-of-year transactions.

Any data that you enter into Quickbooks is there to stay. Some people may find this to be confusing, as you are unable to lock a previous year. However, the vast majority of users (myself included) find this to be helpful since you can go back to fix dependencies or other problems at any time, regardless of whether or not the year has passed.

There are some problems associated with Quickbooks’ stance on keeping financial transactions logged, one of which is the potential for an accountant to modify transactions after the company has already filed their taxes. Even small changes could result in major discrepancies — something that you probably want to avoid after filing your taxes. So, how do you prevent this from happening in your Quickbooks account?

The easiest solution is to use the software’s Set CLosing Date and Password commands. After logging into your Quickbooks account, choose Edit > Preferences > Accounting > Company Preferences.  Next, click on the option titled “Set date/password,” at which point you can specify the date for which you would like to close off the transactions. You must also specify a password for this “lock date.” Changes can still be made to the locked date period, although the user must enter the password specified here.

Did this tutorial work for you? Let us know in the comments section below!

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