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Year End in Sage 50cloud Accounts | Where do I even begin?

In Sage 50 by Paul Newton

Reading Time: 5 minutes

How do you process a financial year-end in Sage 50? What even is a year-end? And are they even important?

If these are the sorts of questions you are asking yourself, you are in the right place! To process a year-end in Sage 50, we first have to understand what it is all about…

What is a Financial Year?

A “financial year”, otherwise referred to as a fiscal year, is typically a consecutive term of 12 months. In some industries such as construction or retail, they may adopt the 4-4-5 calendar methodology. By using this form of calendar, a business will usually run their year-end on the same day year after year. A company uses data generated from these periods to report its financial information. Every business will have a date on which they began, but this isn’t necessarily the start of their financial year. What businesses can do is choose when their financial year starts and ends. Be this following the calendar year, tax year or a 12 month period of their choice.

“Why would a business want to choose an alternative beginning?” I hear you ask… Well, sometimes a company would align their financial year with their business year. For example, a school may choose to have their fiscal year run alongside their business year being July 1st – June 30th. Another reason you may choose to have a differing fiscal year could be due to the sector in which your business operates. What I mean by this is, say you were a high street retailer… Your busiest quarter would be October, November and December due to the holidays. You wouldn’t want to be processing your year-end at your busiest period now, would you?! Typically a retailer would run their fiscal year from February 1st – January 31st to allow for the festive sales and New Years returns. Now we know what a Financial Year is, what does it mean to “end” it?

What is a Financial Year End?

A year-end in accounting terms refers to the closure of a fiscal year. When a year-end is processed in the UK, a business will usually generate 4 main statements. The Statement of Financial Position (Balance Sheet), the Profit & Loss Statement (Income Statement), the Statement of Changes in Equity and the Cash Flow Statement. These may differ dependant on your business setup, so it is always best to consult with your accountant first! Each of the year-end financial statements provides an idea of the firm’s annual performance with respect to previous years. This kind of information is useful to many people, but mainly for managers, shareholders, investors and financial institutions.

So, what does a year-end actually do? Well, when an establishment processes their year-end they are effectively collating information about the year that’s past. The year-end will transfer the profit or loss balance to the Retained Earnings nominal account. By doing this, the profit or loss ledgers will be cleared down, ready for the new financial year. For balance sheet nominal accounts, the year-end will balance the ledger, bringing forward the balances for the new fiscal year. By doing this process a business basically draws a line under the last year. The year-end allows a company to move forward, knowing how they have been performing.

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How do you process a Financial Year End in Sage 50?

The steps to run a Financial Year End in Sage 50 are fairly straightforward. Thanks to Sage 50’s user-friendly interface, a task like this seems like a walk in the park. So long as you have practised good bookkeeping skills for the year, I am confident you will find this process a breeze.

Before running your year-end be sure that you have completed all of your postings for that year and allocated as much as you can. Although you can still allocate for the previous year, it is best practice to keep your accounts as up to date as possible.

  • Print and Save all Financial Reports
  • Navigate to ‘Tools’ on the toolbar
  • Select ‘Period End’ and then click ‘Year End’

  • Review the Prepare for Year-End section – this includes running a check data, checking all active chart of accounts for errors, running the all-important Backup and then also archiving your data.

  • In the Year-End Options section you can review and update any budget options you may want or need.

  • Ensure that your Year End date is the last day of your FY and if choosing a lock date that it is entered at this stage.
  • Check you are happy, then review the Run Year End section.

  • Select ‘Run Year End’ and on the confirm prompt select ‘Yes’.
  • On the ‘Year End Report’ select to Preview.
  • Check you are happy with the profit and loss postings, then ‘Export’ the report
  • Click ‘Nominal Codes’ and select ‘Trial Balance’
  • Check you are happy with the postings, then ‘Export’ the report
  • Put your feet up, sit back and relax… You are done!

And it is as easy as that… In 14 simple steps, you have successfully processed your year-end in Sage 50cloud Accounts!

Conclusion

If you would like a more in-depth walkthrough of your financial year-end in Sage 50, then please get in touch, call us on 01824 780000 or email info@itassolutions.co.uk. At itas we have a dedicated team who are always happy to assist with all of your Sage needs! We also have a range of Sage 50 help guides that are available for anyone to download, we are keen to create more, so if you have any ideas for Sage 50 guides you would like to see, please let us know! You can browse and download our guides, here.