As we move through March and April approaches, many businesses begin to think about the financial year end and how to get ready for the 12 months ahead. Taking a few preparatory steps now, and checking that your accounts are in order, could save you a lot of time in the long run.
What does ‘year end’ mean?
Companies usually organise their accounts over a specific period of time, known as the financial year. Running a year end simply means updating your accounts and gathering information for the necessary statutory reports. This also a good time to review the performance of your business and plan for the future.
What happens in my software?
In Sage’s accounting software running a year end triggers up to four processes:
- You can create an archive of the past year so you can report on it whenever you need to.
- Your profit and loss figures transfer to the balance sheet so you are ready for profit and loss reporting in the new year.
- Your financial year start date moves forward by a year
- If required, you may be able to set up budgets for the new year based upon your results from the closing year.
What should I do now?
The key to a smooth year end is preparation. If you make sure that your accounts are up to date, and do a few pre year end checks, running the year end is a quick and easy process.
Make sure your accounts are up to date – Enter as many of your outstanding transactions as possible. Don’t worry though, you don’t have to run the year end specifically on the last day of the year, most businesses wait until they have processed all of the payments and receipts for the year they are closing. In the meantime you are free to post transactions for the new year.
Check your chart of accounts – The chart of accounts or COA defines which accounts relate to your profit and loss report and which relate to the balance sheet. Ultimately at year end the COA controls which accounts are cleared down for the new year so it’s important to make sure it’s right.
Check your data and create a backup – Sage Accounts has a data checking routine that will tell you if there are any problems, run it now and make sure you tackle any errors early. If you have no errors, take a backup so you can always get back to where you started.
Visit the help centre – We’ve created a Financial Year End help centre that’s designed to guide you through the year end process in a series of simple steps. The centre features video demos of the year end process and answers the popular year end questions. All of the processes mentioned in this blog are expanded upon in the help centre.