Remember to Set a Closing Date Password

Once you’ve completed your year end closing tasks and submitted your financial statements to your tax preparer, it’s important to set a closing date password.  Setting a  closing date password doesn’t prevent you from making changes to data prior to your closing date, but if you attempt to make changes, you’ll be prompted for the password.  It’s a good reminder.

 It’s amazing how easy it is to accidentally make changes to your prior year’s data, and it’s important that you don’t.   The exception is, of course, any adjustments provided by your tax preparer.  In fact, always ask if there are adjustments you should make to your books after your tax return is complete.  

So, what’s the big deal?  Well, once you’ve filed your tax return for the year, if you make changes to your financial information – your tax return will be incorrect.   For example, you may come across an error – a check that was written in December that cleared in Febuary but was never entered.  If you enter that check in December – one of two things will happen : 1.If you are a corporation – next year your accountant will be pulling their hair out trying to figure out why your Balance Sheet doesn’t match your Tax Return –or 2. If you are a Sole-proprietor and don’t compare your Balance Sheet to the prior year’s closing statement – you will probably never deduct that expense !  

Here’s how  to set a closing date password:

From the Gray menu bar – click Edit – from this menu, click Preferences.  Click Accounting, then the Company Preferences Tab.  Click the button in the closing date section lableled set date/password.  Enter the date you have used your financial statements for Tax returns through and a password (make sure to write it down!).  Then click OK.

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