How to Close a Financial Period in Quickbooks
QuickBooks does not force you to close your books at the end of a financial period, but doing so has benefits. For instance, when you close your books, you can add a password that limits who has access to previous years' information. When you close your books, QuickBooks automatically zeros out your income and expense accounts, creates a net income entry and adjusts your retained earnings for the new period. All you need to do is set a closing date.
Start QuickBooks and open your company file. Select the "Edit" menu and click "Preferences" to open the Preferences window. Choose "Accounting" in the list of options.
Select the "Company Preferences" tab. Click on the "Set Date/Password" button in the Closing Date group.
Choose the date you want to close the financial period in the Closing Date box.
Choose "Exclude Estimates, Sales Orders and Purchase Orders from Closing Date Restrictions" if you want to prevent non-posting transactions from being restricted by the closing date.
Enter a password into both the Closing Date Password and Confirm Password boxes if you want to apply a password and click "OK." Users will need to enter both the password and the closing date to access information for the prior period.
Speak with your accountant to determine the best closing date.
Information in this article applies to QuickBooks Desktop 2013. It may vary slightly or significantly with other versions or products.