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Closing the Books for the Year

After ending your business year, you can ‘close the books’ for the year. Closing the books finalizes transactions and moves any profit or loss into equity accounts for the next business year. Although Brass Jacks Bookkeeper doesn’t require you to close your books each year, annual closing is part of good accounting practices. For information and guidance about closing your books for the year, consult your accountant.

You can also get additional information regarding year end processing from our Year End Bookkeeping Series here.

Brass Jacks Bookkeeper provides several equity accounts for you to store your year-end profit or loss:

  • Opening Equity: This is typically the opening account balance.
  • Retained Earnings: This is typically used to carry over profits and losses from one period to another.
  • Capital Stock: This is typically the cash-purchase value of a corporation’s preferred stock.
  • Proprietors Equity: This is typically the investment made by the owners of a non-incorporated company.
  • Draw: This is typically the money drawn from the profits by the owners of a non-incorporated company.
  • Members Equity: This is typically used to carry over profits and losses for a limited liability corporation (LLC).

Before closing your books for the year, make a backup of your records. If you do so, you can return to a pre-closed version of your records, if necessary. For information about creating a backup, see Backing Up Data.

Note: After closing your books for the year, you can’t make any changes to any transactions for the closed year. Any changes will need to be made as adjustments to the current year.

To close the books for the year:
  1. Choose Accounting > Close Books For The Year, or click Year End Close in the Company section of the task bar on the right.
  2. In the confirmation message box, click Yes.
  3. If you see a warning message, click OK. (If you change your mind about closing your books, click Cancel in the Year End Close dialog box immediately and click Yes to confirm.)
  4. In the Year End Close dialog box, review the account balances on the left and your net profit or loss in the upper-right area.
  5. To distribute your profit or loss, select By Dollar Amount or By Percentage.
    You must distribute your profit or loss to the equity accounts in the lower-right area.
  6. To distribute the profit or loss equally to the various equity accounts, click Distribute Evenly. To specify the amounts for each equity account, type the values as needed.
    All the profit or loss must be distributed to the equity accounts. To determine which equity accounts to use, consult with your accountant.
  7. After distributing the profit or loss, to close the books, click OK.

WARNING:  After closing the year, you can’t change the distributions to equity accounts. To properly determine which equity accounts to use and how much to distribute to each, contact your accountant.