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Start 2019 by Closing Out Last Year’s Financials the Right Way

Start 2019 by Closing Out Last Year’s Financials the Right Way

We’re in the first full week of the New Year — it’s time to buckle down and get back to work, putting all your plans for 2019 into action. But without some vital pieces of information, you won’t see a true picture of where you’ve been and how to get where you want to be.

You’re not done with 2018. January’s the time to take a deep dive back into 2018’s financials and close out the year the right way.

The Good Close

A good close is vital at year-end. It draws a line in the sand between one year and the next, and calculates an accurate equity number which allows you to accurately compare year-over-year results.

This kind of close also gives you insight into the effectiveness of your bookkeeping and accounting functions. It also enable you to tie your year-end financial statements to your tax return, and meets GAAP (generally accepted accounting requirements).

What You’ll Need

A good close includes a complete review of your Balance Sheet accounts, as well as reconciliation between Profit/Loss and Job Profitability Summary.  

Remember that all negative balances reflect an abnormal balance — research and figure out how that happened! Exceptions (above the Equity line) are Accumulated Depreciation, Indirect Expense Allocation (not the total) and Medical Insurance Payable.

Start by setting up a Memorized Report Group entitled “Year End 2018” to hold all the financial statements and related reports in one place.

  • Year-End WIP. The WIP affects both the Balance Sheet and the Profit/Loss. The year-end WIP is critical to the accuracy of assessing the gross profit, both for last year and current year.
  • The Balance Sheet. When the account balances are correct on the Balance Sheet, the Profit/Loss is correct to the penny!  
    • Liabilities:
    • Equity: depending on your company corporate structure the Equity accounts might be laid out differently.  
    • Owner/Shareholder Distributions for the current year should be posted to the Profit/Loss in the “Other Expense” section for development of the RA Focus Packet. Then journalized back to the Balance Sheet for tax prep.
  • Profit/Loss. Reconcile the Profit/Loss to the Job Profitability Summary (JPS) for the year to the Gross Profit Line.

Tying up your 2018 financial information is a crucial step to having a great, profitable year in 2019. Take some time to look back before plunging ahead!

Take a Deeper Dive with Judith

If you want to learn more about closing out 2018, Judith will be holding a one-time, 90-minute Strategic Action Group telecourse on how to properly conduct your year-end close. She’ll have a more detailed checklist and show you how to close right and bring your numbers in line.

This course will be held Thursday, Jan. 24, at 11 am ET. The cost is $325 and space is limited. For more information — and to register — e-mail Judith at



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