Setting up Fiscal Year

  • Author: Support

Fiscal Years are used to separate the accounting years from each other in accounting software. A country’s legal authority has various rules about how these Fiscal Years should be set up. A Fiscal Year often follows a normal Calendar Year, Jan 01 – Dec 31. But it could also be a broken year, f.i. Jul 01 – Jun 30. Many countries allow you to have an initial prolonged year, f.i. Jul 01, 2009 – Dec 31, 2010.fiscal-year

When you start a new Company in accounting software, you should check that the Fiscal Year is set up correctly. If this is not your starting Fiscal Year, then you should start by creating the starting Fiscal Year. After you have corrected the starting Fiscal Year, you can delete other Fiscal Years if there are no transactions in them. Now set this new Fiscal Year on your company by selecting the Setup tab, Company Setup.

If the first year is set up as Jan 01, 2011 – Dec 31, 2011, and your starting Fiscal Year should be Jul 01, 2011 – Jun 30, 2012:

  • Create a short dummy year, Jan 01, 2012 – Jun 30, 2012
  • Create another Year Jul 01, 2012 – Jun 30, 2013
  • Set the company to use this year
  • Close and delete the year Jan 01, 2011 – Dec 31, 2011
  • Close and delete the short dummy year Jan 01, 2012 – Jun 30, 2012
  • Create the correct broken Fiscal Year Jul 01, 2011 – Jun 30, 2012
  • Set this Fiscal Year Jul 01, 2011 – Jun 30, 2012, as active for the company

You are now ready to make your transactions. You have 2 fiscal years and you are using the current (Jul 01, 2011 – Jun 30, 2012) one, whilst the latter one (Jul 01, 2012 – Jun 30, 2013) is not current.

  • When you reach the end of your Fiscal Year, you have to create another new Fiscal Year.
  • When you want to switch Fiscal Year on your company, go into company set up and do that.
  • You will now be able to post to the current or past year:
    • Your document numbers will increase irrespective of the fiscal year you process.
    • Change the process date to be in the correct fiscal year.
  • When you have finished your year-end entries, you may close the Fiscal Year.
  • A closed Fiscal Year can no longer be used for entries.
  • When a Fiscal Year is closed, the difference between all asset and liability accounts is brought forward as a Journal Entry where the Default account for Retained Earnings is credited if this is a profit and debited if there is a loss. And the default account for Profit/Loss Year is debited if this is a profit, and credited if there is a loss).

You can have as many Fiscal Years running in the accounting software as you want, but for performance reasons, you should not have more than needed (by your legislation). When you delete a Fiscal Year, the assets, liabilities, and equities are brought forward. All other unneeded transactions such as documents are deleted.

 

 

Tagged: