With MYOB, you do not need to close your previous financial year before you can start recording transactions for the new year.
In actual fact, you can continue to key in transactions without actually closing any financial year.
The limitation is if you wish to view and print your financial statements. MYOB only allows you to generate financial statements and certain other reports for 3 periods:
- Last Year
- This Year, and,
- Next Year
Note that last, this and next does not refer to the current year, but the financial year in MYOB itself.
So if the current financial year is 2014 in MYOB, you can view and print financial statements for last year (2013), this year (2014) and next year (2015) only, although the actual year today is 2016.
MYOB allows you to maintain at least two financial years before you need to close.
If you have been updating MYOB with 2016 information, you will need to close 2014 before you can generate Income Statement, Balance Sheet, etc for 2016.
After closing 2014, in MYOB, Last Year will be 2014, This Year will be 2015, and Next Year will be 2016.
When you close your financial year, you will not be able to enter transactions into that period, and you cannot undo the process (see note below).
It is therefore important to ensure that the financial data for a particular year is complete before you close it.
There are some essential steps that you must perform before you close your financial year:
- Ensure all bank accounts have been reconciled
- Reconcile your accounts receivable
- Reconcile your accounts payable
- Perform a stock take and reconcile inventory counts and values
- Make all necessary journal entries for depreciation, accruals, prepayments, etc.
- Make any adjusting journal entries necessary to match your MYOB balances to the final audited accounts balances
- Print out the following reports:
- Trial Balance, Income Statement and Balance Sheet
- General Ledger
- Accounts Receivable aging report
- Accounts Payable aging report
- If you carry stocks, Inventory Value Reconciliation
If you are required to have your accounts audited, you would ideally have completed steps (1) to (5) above before submitting it to the auditors.
So once the audit has been completed, you just need to do steps (6) and (7).
The reports in (7) are not an absolute necessity, but it’s always good to have a hard copy on hand to refer to or when you need to produce it for Inland Revenue if necessary.
When you are satisfied that everything is in order, proceed to closing the financial year following the steps shown in Start New Year.
While it’s not possible to undo a close financial year, you can still restore a data file from before closing and go through the process again.
Note however that any transactions entered after the closing will have to be entered again.