As discussed, there are several steps you will need to take in order to close your books for the financial period. Depending on how often you close your books (for example, monthly, quarterly, or annually), this will determine how often you need to complete these steps. Remember the importance of closing your books, as this will ensure that all transactions for the financial period have been recorded and that your financial statements are accurate, which is important because your accountant will use them to file your business tax return.
The following is a checklist of the steps you need to complete in order to close your books:
- Reconciling all bank and credit card accounts
- Making year-end accrual adjustments
- Reviewing new fixed asset purchases and adding them to the chart of accounts
- Making depreciation journal entries
- Taking physical inventory and reconciling this with your books
- Adjusting retained earnings for owner/partner distributions...