Year-End in Small Business: Unveiling the Importance and Process
As the year draws to a close, businesses enter a critical phase known as year-end, a time to reflect, reconcile, and prepare for the upcoming fiscal year. In the realm of business management, the concept of a fiscal year versus a calendar year plays a pivotal role in financial planning and reporting. In this article, we'll explore the significance of conducting a year-end, understand the distinction between fiscal and calendar years, and delve into the step-by-step process of completing a year-end using Spire's dynamic system.
Understanding Fiscal vs. Calendar Year:
In the business world, the fiscal year and calendar year serve as two distinct timelines for financial activities. A calendar year aligns with the traditional January to December cycle, while a fiscal year is a 12-month period chosen by a company for accounting purposes. This period might not necessarily begin in January, allowing businesses to tailor it to their operational needs.
Spire's Approach to Year-End:
Spire, a comprehensive business management solution, empowers users with a unique approach to year-end procedures. At any given time, Spire provides access to three fiscal years: Last Year, This Year, and Next Year. Although companies primarily operate in the current fiscal year (This Year), the flexibility to backdate or postdate transactions by one year in either direction ensures precise financial record-keeping.
Closing the Loop on Last Year:
Once a company concludes all transactions for Last Year, the system allows for the closure of that fiscal year. Companies may opt to delay this process until close to the end of Next Year, extending the window for historical inquiry. This strategic use of Next Year effectively transforms it into the operational "This Year," offering two years of historical data for reference.
Year-End Closing Process:
To initiate the year-end closing process in Spire, users must follow a systematic approach; but first and always run a backup of your data before proceeding with any of the following steps:
Accessing Year-End Tools: From the top Tools menu, users select Year End. It is imperative to have the necessary permissions to execute this function.
Log in on the Last Day of "Last Year": Users must log into Spire on the last day of the "Last Year" fiscal calendar. This ensures accurate processing of year-end adjustments.
Warning Checklist: Upon starting the year-end procedure, a warning checklist appears, guiding users through essential tasks that must be completed before proceeding. Users must review and check all warnings before the 'Proceed' button becomes active.
Reconciliation Check: Spire conducts a thorough check for unreconciled transactions in all bank accounts. If any discrepancies are found, a warning message prompts users to address these issues before progressing.
Automatic Logout and Fiscal Calendar Adjustment: Upon completing the checklist, Spire automatically logs out of the company. This logout signals the completion of the year-end process, with fiscal calendars adjusted, and the new fiscal year (Next Year) activated.
For an overview of how to run a year end in Spire, watch the following video for the steps listed above.
Conducting a year-end in business is not just a formality; it is a strategic maneuver for financial clarity, planning, and compliance. Spire's user-friendly approach to year-end procedures, with its three-year fiscal calendar model, empowers businesses to seamlessly transition between financial periods. By understanding the significance of year-end and embracing Spire's tools, businesses can usher in a new fiscal year with confidence and precision.
Contact the Tri Tech Helpdesk, and we can run you through the year end for you, to avoid any downtime in your business hours.
