How to Close the Books and Set a Closing Date in QuickBooks Desktop

What QuickBooks does at year end on its own

Intuit says you don't have to close the books in QuickBooks Desktop at the end of each fiscal year. QuickBooks makes its year-end adjustments automatically, based on the month your fiscal year starts.

• Income and expense accounts close out to zero at year end. The new fiscal year opens with no net income.
• Run a Balance Sheet for the last day of the fiscal year, and the equity section shows that year's net income as its own line.
• On the first day of the new fiscal year, last year's net income moves into Retained Earnings.

QuickBooks doesn't save these closing entries as transactions. It calculates them when you run a report, such as a QuickReport of Retained Earnings. That's why you can't QuickZoom into them, as you can with your own adjusting entries.

Before you start

• Check your fiscal year start month: go to Company > My Company, select the pencil icon, then Report Information.
• Back up the company file before and after your final year-end changes.
• Sign in as the admin. Setting the closing date also needs single-user mode.
• If your accountant has an Accountant's Copy, Intuit suggests updating the closing date and password after you import their changes.

For the backup, see how to back up and restore a QuickBooks Desktop company file.

Step 1: Review the year before you lock it

1. 1Go to Reports > Customers & Receivables and run A/R Aging Summary or A/R Aging Detail. If you find open balances, Intuit suggests sending customer statements.
2. 2Reconcile your accounts against your bank statements.
3. 3Go to Reports > Company & Financial and run Profit & Loss Standard and Balance Sheet Standard. Look for anything that doesn't fit.
4. 4Intuit suggests working with your accountant on year-end procedures.

For the reconciliation, see how to reconcile a bank account. If your accountant will make adjustments while you keep working, see how to create and send an Accountant's Copy.

Step 2: Set the closing date and password

1. 1Sign in as the admin and go to File > Switch to Single-user Mode.
2. 2Go to Company > Set Closing Date.
3. 3Enter a Closing Date and a Closing Date Password.
4. 4Select OK.

Intuit recommends closing your books when a new year starts. To move the date later, such as after your accountant's changes come in, follow the same steps with the new date.

Step 3: Control who can change closed periods

A closing date doesn't freeze the period completely. People can still enter transactions that affect the closed year. When they do, QuickBooks either warns them against it or asks for the closing date password. To change or delete a transaction in the closed period, a user needs both the password and the right permissions.

In Pro and Premier, set permissions at Company > Set Up Users and Passwords > Set Up Users. For Enterprise, see users, roles and permissions in Enterprise.

Step 4: Review changes with the Closing Date Exception Report

1. 1Go to Reports > Accountant & Taxes > Closing Date Exception Report.
2. 2Review each change made after the closing date to a transaction dated on or before it.

Intuit's article on moving a Pro or Premier file to a Mac lists the Closing Date Exception report as a Premier feature, so Pro may not have it. If you don't see it under Accountant & Taxes, check which edition you have.

The Closing Date History lists each closing date, current and past, and who set it. For more detail on who changed what, see how to track changes with the Audit Trail report.

Voiding a check from a closed period

Voiding a check dated before the closing date that uses an expense account brings up a message. Choose Yes if you want QuickBooks to add two journal entries that balance the affected accounts. Intuit says those entries are optional, and you can void the check without them. See void vs delete in QuickBooks Desktop for the rest of the steps.

Where QuickBooks Desktop leaves the work to you

• Deciding when a period is final and setting the date. QuickBooks doesn't require a closing date.
• Running the Closing Date Exception Report and following up on what it shows.
• Keeping the closing date password with the right people.
• Year-end adjustments, which you and your accountant decide.
• Moving the closing date after your accountant's changes come in.