Closing Financial Periods is a really good idea:
1. Prevent data user errors.
User cannot enter data into a closed period.
Example of why this can cost you money:
On July 15 you give your accountant an invoice log or Ledger report that includes the previous 6 months, Jan 1 through June 30. She calculates your taxes from this report. You do not close periods.
On July 20 you adjust an invoice dated June 2 for a bad debt of $3,000, and you back date the transaction to June to line up with the invoice date. Your adjustment does not show up on the next report you give your accountant.
You will pay unnecessary taxes on $3,000.
The same thing can happen at end of year. It is the only way of protecting “published” financial statements. Ask your accountant.
2. Create accurate and up-to-date financial records.
3. Save time on tax filing because your financial statements are in order.
Your accountant will thank you.
Last revised: 12/12/23 by HS
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