As we are approaching the end of year 2018, companies and accountants will be working diligently to close their companies’ financial account. Although determination of fiscal year end date is at a company’s discretion, most companies will prefer to set their financial year end around end of the year.
Here is a guide on how to perform your company’s financial year end closing. For companies that are not registered for GST or SST, your financial year end closing is less complicated compared to those with taxes. You have lesser things to cross check before closing your account as well. This blog post will focus on companies without sales or service tax liabilities.
1. Prepare the documents needed
Make sure you store and organize all documents well. This is so that they can be easily retrieved. You will need full year bank statements for each bank account. This is for you to do bank reconciliation. If your company has credit card, loan or others, you will need statement for each of item too. You will need to have your payroll reports and tax return records for that year in hand too. Other than that, if your company have inventory, you will need to count your inventory and prepare a list of inventory count as well.
2. Generate a profit and loss statement
A profit and loss statement (P&L statement) shows your income and expenses. An accurate P&L statement is important as you will need to have accurate information on the flow of your company’s financial. You can also use it to plan for your coming year budget.
You need to make sure that all transactions are recorded for accurate P&L statement. You may want to check whether you have any pending or suspended transactions as you will need to settle it before closing your account.
You may also want to check all your income and expenses consistent throughout your records; are the amount, date and breakdown of direct costs correct. Expenses also include your payment and reimbursement to your employees. For some large purchases, you will also need to account for depreciation and capitalization.
3. Generate a balance sheet
Balance sheet shows your company’s financial position at the point of time. You will be able to identify the value of your company’s equity, liabilities and assets through balance sheet.
It reflects how much you will most probably collect (account receivable) and how much you will need to pay (account payable).
You will not only need to validate your balances against their statements (e.g. customer statement and supplier statement), you also have to validate balances for accounts that do not have statements.
4. Compile your tax returns
In 2018, sales tax in Malaysia has changed from Goods and Service Tax (GST) 6%, 0% to Sales and Service Tax (SST). For companies who are GST and/or SST registered, you will need to make sure that you’ve submitted your tax returns for each period (GST 6%, 0% and SST) respectively before your financial year end closing.
If you are using TreezSoft cloud accounting, the journal ledger for GST and SST return and payment will be automatically created when you declare your taxes and record the payment made to the custom department. Hence, you just need to validate that the amount and date are correct for all the records. All the records will be automatically updated for you to generate your reports anytime, anywhere.
5. Final compilation
After generating all statements and reports needed to close your financial year, make sure you’ve compiled and organized all the documents well. Be sure to backup and store your data as well as you may need to refer back to them when you’re auditing your accounts.
In TreezSoft, you not only can easily generate all the reports needed, your data are stored and organized well in our system. Your data will be stored securely for up to 7 years.
You can also visit the links below to read more on related topics in TreezSoft:
TreezSoft is a cloud accounting software for Small and Medium-sized Enterprises (SMEs). It allows you to access your financial information anytime, anywhere. It also allows you to have unlimited users for FREE for your account in TreezSoft. Our aim is to help reduce our clients' time spent on accounting mainly by using our automated processes and integration to help increase their company effeciency at a minimum costs. SMEs can use TreezSoft to keep track their expenses, accounts, daily operation e.g. Point of Sales (namely QPOS) system and etc.
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