Your year-end reports are crucial to close out one year, and set you up for success next year. Here are five commonly asked questions about year-end reports.
1. What are the benefits of running a year-end report?
By running a year-end report you can evaluate how your business has performed over the last year. Also, running reports is also an essential part of preparing for taxes.
2. What are the most important reports I need?
The two most important reports that you and your accountant need are the following:
- Profit & Loss report
- Balance Sheet report
|Note: Both of these reports are available directly from the Reports tab.|
3. How do I customize these reports for my previous fiscal year?
If your business runs on a calendar year and today is January 10th, set the dates on the report for Last Year or manually enter the dates in the To and From fields at the top of the report.
4. What is the Profit & Loss report?
- Profit and Loss accounts are referred to as “transitory accounts.”
- At the end of each fiscal year, QuickBooks Online will automatically zero out Income and Expense accounts and transfer the net amount (the Net Income or Loss) to the Retained Earnings account on the Balance Sheet. This allows the new year’s Net Income account to begin to accumulate new totals for the new year's profits.
|Note: If your Profit & Loss report is totally or partially blank, it may be set to run for this year-to-date or this calendar-year-to-date. If today’s date is January 10th, then the report is only capturing the last 10 days of transactions. Be sure to set the correct date range for your previous fiscal year.|
5. What is the Retained Earnings account?
Retained Earnings is a special Equity account that tracks your company's net worth, accumulated over previous fiscal years.
- At the end of your fiscal year, QuickBooks Online automatically transfers your net profit (or net loss) to Retained Earnings.
- There is no actual transaction that takes place. Net Income (income minus expenses) from the previous year moves into the Retained Earnings account.
- To find out how it was calculated, simply run a Profit & Loss report from the previous fiscal year.
|Note: You'll notice that your Balance Sheet has an account near the bottom called Retained Earnings. This amount normally stays the same over the course of your fiscal year. However, when you run your Balance Sheet report at the beginning of a new year (dated as of the new year), the amount in the Retained Earnings account will be different.|