22 Jan #1 Most Overlooked Year End Step That Saves You Tons of Headaches
Have you ever run a whole load of laundry but forgot to add the soap? Maybe you have mopped the floor to have kids and dog walk across it with muddy boots? Well doing all your year end bookkeeping, reconciling the accounts, recording your amortization and getting your payroll tax forms all printed can be wiped away as easily as a clean floor if you forget to set your closing date password in your Quickbooks file. It is as simple as posting one transaction to a closed period and your trial balance is changed. Post more than a few transactions and it gets messy fast. Once tax forms are filed (sales tax, payroll tax, income tax etc) you shouldn’t change that information. Make sense? If the IRS came in for an audit you would want your accounting files to match the return that was filed. Still with me?
What doesn’t occur to many is that when you get that call from a customer and go back and change that invoice for them you are changing financial data in a prior period. If that period isn’t closed and you haven’t filed taxes or reported on the period you are going to be o.k., but if you are changing an invoice from a period you have already filed and paid sales tax for you could be creating some real problems.
The easiest way to prevent this problem is to set the closing date password in your file once you close a period. Most small business will only close each month or even year. To set the Closing Date Password in Quickbooks you can simply select the option under the company drop down menu, set the date as the last day of the closed period and assign a password.
Once this is done this you can still make changes to a prior period, but will be prompted for a password to do so. This means you will need to stop and take a moment to consider what you are doing before you do it. Once you have prepared your QuickBooks file for your accountant this year and sent them a back up file set your closing date password and you can save yourself and your accountant tons of time adjusting your trial balance and figuring out what you did next year.