Closing the year

	How to Close the Year Click here to download an Adobe Acrobat-based version of these year-end closing instructions. Or, click here to take the 20-minute online tutorial. Introduction Closing the year in Clients & Profits is extremely important and should be done sometime after the end of your fiscal year. Since both Clients & Profits Classic 3.x (and above) and Clients & Profits Pro/ 3.x (and above) supports more than one fiscal year (up to 15 periods in C&P Classic, and up to 24 periods in C&P Pro), there's no real sense of urgency about year-end closing. The year can be closed well into the next fiscal year. Throughout that time you can enter data into both the current year and last year, then print financial statements for any accounting period. Once in the new fiscal year, you should run the Close Year tool as soon as you've made any remaining adjusting entries. Closing is performed by a special tool that prepares your database for the next year's accounting work. Closing the year does not affect job tickets, time sheets, accounts payable invoices, purchase orders, client invoices, payments, or checks in the checkbook. Instead, closing only resets the General Ledger. -- You can't enter data into a year that is closed: Once an accounting year is closed, its journal entries are permanently purged in preparation for the new year. So you can't enter any last-minute entries into last year once it is closed. Any forgotten entries will have to be entered into the new accounting year. Closing the year takes all day (or all night), so don't start the process until you have free computer time. Remember, no one can use Clients & Profits while you're closing the year. (If they do, they'll lose their work.) You'll see an "ok" message when the year has been successfully closed. Once the year has been closed, you and your users can start entering work into the new year. Before you close the year you should be able to answer "yes" to the following questions: -- Have you posted everything? Transactions that are not posted prior to closing will become part of next year's financial data if they are posted after closing. -- Have you printed any desired or required year-end reports? Once the year is closed, the year's income statements, audit trails, and other financials can't be printed because the information is no longer part of the database. Also, consider printing client, vendor, and resource summaries before closing the year, as well as the most recent financial statements. These reports will be cleared and reset for the new year as the year is closed. -- Have you backed up your database? Closing is irreversible. Once the year is closed, it cannot be "unclosed" for any reason. Because of this it is important to make a permanent backup of your database, to allow you to reference the previous year's general ledger if you ever need to. The Retained Earnings account The Retained Earnings account keeps track of your net income/loss from year to year. To close the year, you must have a Retained Earnings account. You'll be prompted to enter the Retained Earnings account, which must be an equity account, when closing the year. Clients & Profits calculates the agency's net income by subtracting job costs and overhead expenses from total income. The amount of your profit is then posted to retained earnings, an equity (or "net worth") account. This is the same as manual entries which close income, costs, and expenses into retained earnings -- it's just automated. Clients & Profits will prompt you if the account does not exist. -- Retained Earnings is a separate Equity account, and is not the same as the Year-to-Date Profit account #999999. To close the year 1 Reconcile your bank accounts from the Checkbook. 2 Reconcile other balance sheet accounts using the G/L Reconciliation. 3 Print any last-minute financial statements, including A/R and A/P agings for your hard-copy files. 4 Make a permanent backup of the current year's database on a Zip, Jaz, Syquest, or other kind of drive or tape. You may need to refer to a previous year's journal entries some time in the future, so having a permanent (and easily accessible) backup is handy. 5 Choose Accounting > General Ledger, then choose Edit > G/L Tools > Close Year. 6 Enter your Retained Earnings account, then click OK. The completed steps are checked off in a list so you can check the progress. The close year process takes several hours. It can be run unattended overnight or over a weekend. For best performance, run the close year utility from the file server itself, not a user's workstation (so you can avoid working across the network). 7 Confirm that the year was closed successfully by printing a YTD Trial Balance. The Balance Sheet should not have a net income account listed under "equity." The Income Statement should not have any balances. And the Year-to-Date Trial Balance should only have amounts for the beginning balances of the balance sheet accounts. The Close Year window
	1 A log showing the steps completed during the year-end closing can be printed by clicking the Print button. 2 The Close Year tool takes the shop's YTD income (i.e., income less job costs and expenses) and moves it to your retained earnings (or owner's equity) account. The retained earnings equity account keeps a year-to-year running total of the shop's profit. 3 The steps needed to close the books are listed here, in the order in which they're performed. 4 The completed column indicates when each step of the year-end closing process has finished. You can use the completed times to track how much time was needed to close the year. 5 The status message keeps you constantly informed about the process of the year-end closing.