With the year coming to a close, many business owners are scrambling to prepare their accounting records. January 1 marks the end of one tax period and the beginning of a new one. You’ll be required to pay tax on all your business’s profits, as well as any capital gains, for the previous year. If you use the Quickbooks accounting software, however, you can easily close your accounting records for the end of the year so that they don’t affect your records for the new year.
The easiest way to close your books in Quickbooks is to set a password-protected closing date. You can set the previous year as the date, meaning that neither you nor anyone else can modify the records for the previous year unless they log in using your specified password. Keep in mind that this feature is optional, and business owners aren’t required to set a password-protected closing date. Quickbooks Desktop makes automatic adjustments to records at the end of the year to prepare the business owner for the new period. But setting a password-protected closing date helps to preserve records from the previous year so that workers or accountants don’t accidentally make changes to them.
To set a password-protected closing date, log in to your Quickbooks Desktop account and access Edit > Preferences > Accounting. Next, click “Company Preferences,” followed by “Set Date/Password.” You can then choose your closing date — the date on which no more changes can be made without a password — as well as a password. After entering this information, click “OK” for “Set Closing Date and Password” and “OK” for “Preferences.”
In addition to setting a password-protected closing date, you may also want to review changes made to your business’s financial records in the previous year. Quickbooks has a built-in feature for this purpose. To view these changes, log in to your Quickbooks Desktop account and click Reports > Accountant & Taxes > Closing Data Exception Report. Choose your preferences and run the report, after which you’ll see a list of all changes made to your business’s records for the specific year or fiscal period.
Closing your books at the end of the year is important, as it preserves your business’s financial records. Assuming you use Quickbooks Desktop, you can easily close your books by setting a password-protected closing date. You can still technically modify your records from the previous year, but you’ll need to use a special password to do so.
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