Year-end accounting book closing is crucial for businesses to finalize their financial activities for the year and prepare for the new fiscal year. This process involves several steps to ensure that the accounts accurately reflect the year's transactions. Here are the key steps involved:
Gather Financial Records: Collect all necessary financial documents, such as bank statements, invoices, receipts, payroll records, and previous year-end financial statements.
Review Accounts: Verify that transactions are recorded correctly in the general ledger throughout the year and reconcile any discrepancies. This can be done by evaluating the Profit & Loss and Balance Sheet statements and various chart of accounts.
Adjust Journal Entries: Adjust journal entries as needed to ensure they adhere to legal and government regulations.
Generate Trial Balance: Create a trial balance to ensure that debits and credits are balanced.
Prepare Financial Statements: Once the trial balance is accurate, generate the final financial statements, including the income statement, balance sheet, and cash flow statement.
Inform Your CPA: The final step is to inform the CPA that the accounting books are ready for annual filing.
Closing the books at the end of the year helps businesses understand their net profit or loss, ensures accurate financial reporting and compliance, and sets the foundation for informed financial planning for the upcoming year.
IMPORTANT: This service DOES NOT include past months Catch-up Bookkeeping which is a separate service.