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What to do at the end of the year

Forum|Forum|7 years ago
December 11, 2018
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I use QuickBooks 2013 on my MAC. I am a small LLC contracting company, I started November 2012.

When the end of last year came around I asked whether I should do anything in QuickBooks to start up the new year and a few people said that I didn't need to do anything at all.

After reading around a little, I saw other people mentioning that certain things should in fact be done to start the new year. I am wondering what those things are, what should I do to separate each year.

I have QuickBooks setup pretty simple. I have a checking account that I deposit my job income into, I have a credit card that I make purchases with and then pay off with the checking account.

I have an Owners Equity Account that I deposit (or make purchases with) personal money into when necessary. As a sub account of the Owners Equity account I have an Owners Draw account that I draw money out of when there is some extra (not too often yet lol).

So how does that sound? Am I doing it correctly? And if so, what exactly do I do at the end of the year and why did people say that I didn't have to do anything?

Thanks a lot!

QuickBooks Desktop

Best answer by Rustler

@ electricalcont

At the start of the new year QB closes all expense and income accounts to retained earnings unless you are set up in QB as a sole-P, then they close to owner equity

that is the aspect that people were talking about that you do not have to do anything

Owners draw, and owners investment (if you have that), and retained earnings, should also be closed to owner equity at the start of the year. That way during the year you can easily see what you have taken or invested in the business. You do that with a journal entry

clear owners draw
debit owner equity and credit owner draw

I have a step by step targeted tutorial on this, see this posting if you are interested
http://onsale-apparel.com/Rustler/my-tutorials

I recommend you never use condense data in the utilities menu, too often there are problem issues that crop up. If your file gets so big that it is slowing down, a period copy can be made by anyone with the accountants version. A period copy basically creates a new file as of a certain date that you use going forward, and the old file is retained separately for audit purposes

There are also a pair of third party utilities that will make the period copy if you can not find someone with an accountants version who do it

RustlerAnswer

@ electricalcont

At the start of the new year QB closes all expense and income accounts to retained earnings unless you are set up in QB as a sole-P, then they close to owner equity

that is the aspect that people were talking about that you do not have to do anything

Owners draw, and owners investment (if you have that), and retained earnings, should also be closed to owner equity at the start of the year. That way during the year you can easily see what you have taken or invested in the business. You do that with a journal entry

clear owners draw
debit owner equity and credit owner draw

I have a step by step targeted tutorial on this, see this posting if you are interested
http://onsale-apparel.com/Rustler/my-tutorials

I recommend you never use condense data in the utilities menu, too often there are problem issues that crop up. If your file gets so big that it is slowing down, a period copy can be made by anyone with the accountants version. A period copy basically creates a new file as of a certain date that you use going forward, and the old file is retained separately for audit purposes

There are also a pair of third party utilities that will make the period copy if you can not find someone with an accountants version who do it

ElectricianAuthor

Thanks for both of your replies.

Quick question, what happens if I don't clear owners draw and debit owner equity and credit owner draw? I didn't do it last year, what if I don't do it this year too? What happens?

FWIW, my accountant doesn't use the MAC version of QuickBooks so last year I just printed out a bunch of different reports and stuff to give him, which he said was fine.

A

arkvalleyinfo

The biggest thing to do, especially since this year is mostly through and your tax returns should be done by now, is to set the Closing Date. This will keep the data from being changed for those prior filed dates.
It should also be whn to reconcile all the balance sheet accounts so that transactions are marked cleared. This will be necesary if you ever need to condense your data file in the future.
Each year is already seperated by the date of each transaction. An Annual backup should be made once evrything has been entered for the prior year.

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