Not all corporate fiscal years end on December 31, but it’s certainly the most popular date—so this timely article provides a recap of key steps for a year-end close. Remember that iSOFT is here should you have any questions; just open a ticket so we can get the best person to help you most quickly.
Why close the fiscal year?
Not every business routinely closes their fiscal year. Here’s why we recommend that you do it every time. Until you close the fiscal year you won’t have beginning balances on the Balance Sheet for the next fiscal year. And, since there’s only a three-year posting window, if you get a whole year behind then you won’t be able to enter ANY transactions—which we see from clients who aren’t actively using General Ledger in their installations. Yes, it’s true that once you’ve closed a fiscal period then the source transactions aren’t editable, however you can always post back. So don’t confuse “closing” the period with “Posting Period Restrictions.”
The final reason to close is so that you can then post back into AccountMate’s Magic 13th Period of the prior fiscal year and not obscure the operational financial performance of your actual 12th period.
- AccountMate provides a “Magic 13th Period,” called Prior Year End Adjustment, to which you can post correcting Journal Entries and not obscure the results of your last fiscal period of your prior year. In order to hit this period for 2022, you must have closed that year and be in 2023—but with the ability to post back there’s no downside to closing 2022, and all the upside of being able to make your correcting entries while still having a perfect picture of what happened in the 12th fiscal period. So, if you’re a little nervous about closing 2022, then don’t be. AccountMate is designed to accommodate closing the fiscal year and then posting correcting entries—and doing it to the magic 13th period! If you have any questions, reach out to us.
Step 1 for closing
The best advice we can give is: Make a Backup of the Company Database at the End of Your Fiscal Year.
Even if you’re not closing the fiscal year, it’s invaluable to have that snapshot for validating the Balance Sheet since the “as of” reports in the system can be adversely affected by back-dated transactions. A backup is easy for your IT colleagues to do from inside the Microsoft SQL Server Management Console, or contact us if you have questions.
Closing procedures
Here are links to detailed written instructions and then to videos—with all information applicable to AccountMate SQL and LAN from Version 8 up to the current release:
- Article #1257: Period-End Closing Procedures
- Article #1258: Common Closing Errors
- Article #1261: Year-End Closing Procedures
- Article #1262: Year-End Closing Tech Tips
- Video: Closing the Period in AccountMate presents the recommended procedures for closing the period in subsidiary modules and identifies some common issues that may be encountered during closing with tips on how to resolve them.
- Video: Fiscal Year-End Closing in AccountMate focuses on the requirements and procedures for closing the fiscal year in the General Ledger module. It also provides tips to help effectively perform year-end closing.
Special considerations if you run AccountMate Payroll in-house
- Regardless of when your fiscal year ends, or if you’re closing the fiscal year on/about December 31, you’ll need to run <Housekeeping><W-2/1099 Year-End Closing> very near that date. This is usually done as part of the payroll tax update process.
- Video: Closing the Payroll Tax Year in AccountMate discusses the steps to close the Payroll tax year and identifies the reports affected by the tax year closing process.
- The IRS has increased the 401(k) individual contribution limit for 2022 to $22,500. The “catch-up contribution limit” for individuals age 50 and over has increased to $6,500. Please update your employee-specific deduction limits appropriately after closing 2022. Consult with your CPA for advice on this topic.
- Release of the 2023 Payroll Tax Update is expected in late December. We’ll discuss scheduling this important and required update to your system to happen.
And that’s the summary for a fiscal end close in AccountMate! As you go through your closing this year, if you’re reminded that there’s something that’s always an issue, run it past us to see if there’s an easy process tip or a system tweak that could eliminate that issue going forward.