How do I close my books for the previous year?

At the end of a year (companies may have a closing date different than the fiscal year or calendar year end date), the revenue and expense accounts are set to zero and their balances are transferred to a permanent equity account in the Balance Sheet such as Owner's Capital or Retained Earnings. This process is known as 'closing the books'. Since the balances of these accounts are set to zero (closed out) at the end of a period, these accounts are sometimes referred to as temporary or nominal accounts. After closing the books for the year, the only accounts that have a balance are the Balance Sheet accounts. That is why the Balance Sheet accounts are also referred to as permanent accounts. 

Keeping this concept in mind, here are the steps to close your net income in retained earnings for the previous year in BillQuick:

1. Run the Profit and Loss report as of your closing date, say December 31 of the previous year 20xx.

2. You can use the Profit and Loss report to make a journal entry for the new year, say January 1, 20xx to close your revenue, Cost of Goods Sold and expense accounts into retained earnings.

Note: BillQuick does not support automatic closing; you have to manually close your income and expense accounts into the Retained Earnings account.

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