Do you need to finalize year-end journal entries and close out your books, but put it off because it creates anxiety? If so, fear not. Bayou Bookkeeping and Tax Services is here to help. “Closing the books” simply means making journal entries to get your temporary accounts to a zero balance. Here’s an easy explanation of how to close your books for the previous year: First, you’ll create an account called Temporary Income Summary. Second, you close your income and expenses by transferring their balances to the Income Summary. Third, the Income Summary is then closed to Retained Earnings. Finally, dividends are closed out; however, they are moved directly to Retained Earnings as opposed to the temporary Income Summary account. Here is an example using a freelance writer as an example.
Congratulations! Your books are closed. Done properly, your year-end journal entries should match those reflected on your financial statements. When everything is reconciled and closed, you're finished.
Transactions are the foundation of your financial records, so it’s important they are accurate and current when it comes to year-end journal entries. If you need help and live in the Baton Rouge area, call Bayou Bookkeeping today at (225) 442-1137 or schedule a consultation online. We'll give you access to a certified bookkeeper along with other accounting services, such as payroll and tax filing. Together, we'll ensure your bookkeeping, accounting, and finances are solid so that you can focus on what you do best: running your business.
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