TRUE Accounting Year-End Closing Tips

As another year comes to an end, subcontractors are conducting the necessary steps for fiscal year-end closing. Reconciling the books can be tedious and stressful, especially in construction accounting, where there’s a lot to keep track of with each job. The task list can seem endless, from reconciling bank accounts to union labor expenses. Thankfully, construction accounting software like TRUE Accounting makes the process much easier.

TRUE Accounting simplifies the reconciliation process for year-end. With TRUE, every number can be verified with a subledger report for your balance sheet and income sheet. And the bank reconciliation report ties your balance sheet to your checking account balance. By integrating bank feeds and providing transparent financial reports, it’s easier to identify discrepancies and ensure the books are accurate before closing the year.

Plus, TRUE has features like automated job costing that not only allow you to track expenses in real time but also provide a clear view of where each dollar was spent against your budget. This makes it much easier to reconcile costs on each contract. Construction job costing is crucial to avoid budget overruns and maintain profit margins on your jobs.

In this blog, we’ll review the quick and easy steps to ensure the books are closed in TRUE Accounting. Also, we’ll share some accounting best practices that come in handy across all construction accounting programs to properly close out the year.

Best Practices for Year-End Closing

Reconcile Regularly: Don’t wait until the end of the year to reconcile accounts. Monthly reconciliations make year-end adjustments much easier.
Review Job Costs: Audit your job cost reports in TRUE for accuracy and address any inconsistencies before year-end.
Organize Documentation: Ensure all invoices, receipts, and compliance documents are filed and easily accessible.
Communicate with the Team: Collaborate with project managers and field staff to verify that all expenses have been recorded and approved.
Leverage Software: Use your construction accounting software to generate preliminary financial reports and identify issues early.
Plan for Taxes: Work with your tax advisor to ensure you’re taking advantage of deductions and preparing for upcoming tax deadlines.

Closing Out the Year in TRUE Accounting

With one click, TRUE closes a year to solidify figures. This disallows users from making modifications to a previous year once closed, which is important for maintaining accurate data. This step should only be conducted once all entries have been made and post CPA/third party review.

Steps for Closing Out the Year in TRUE:

Navigate to the Financial Module of TRUE
Select the Journal Module
Select the ‘Closed Periods’ submodule
Ensure all periods are closed (indicated by the ‘lock’ button next to each period)
Select ‘Close Year’

How TRUE Helps the Year-End Closeout

Closing Entries Per Each Period (Month)

In TRUE’s ‘Close Periods’ Module, you can easily close out each month. By selecting the ‘lock’ icon, TRUE will create an entry (behind the scenes) to close Revenue and Expense accounts to a Net Income/Loss ledger account. This process allows the system to gather year-to-date profit and loss data, offering a snapshot of your company’s financial performance. This insight into revenue and expenses helps you make more informed business decisions.

More importantly, it will close the Net Income/Loss to a Retained Earnings account. Other construction accounting programs require the user to compile the statements separately and make a Journal Entry to close the Net Income/Loss to Retained Earnings. TRUE does this automatically.

Lastly, a closed period will disallow users from adding/removing Journal Entries in a locked/closed period; which is an extremely important step to maintaining accuracy across periods.

Ledger Account Balances

The majority of the TRUE user base relies on and is often required to have a CPA or external third party who conducts a review and sign off on the company’s financials. A typical step in this review process is producing balances for each ledger account in the company’s ‘Chart of Accounts’. In TRUE, you can easily export those reports.

Navigating to the G/L Module in TRUE and running filters for each ledger (typically by ledger account number) is the best practice. Then, using the native ‘export’ icon to export the data to a PDF will provide the CPA and/or third-party reviewer a clear breakdown of every dollar across all ledger accounts; the underlying building blocks of the company’s financial statements.

Archiving Data

With thousands of records being created each year, it’s always advantageous to archive old/stale data. Especially so for modules that contain the most records, so that you have increased navigability. Within TRUE, you can batch-select records after filtering data by ‘Date’. This will allow users, in one easy motion, to remove this data from active lists without deleting it. Archiving data will improve the performance of your accounting system, as the old records will not be pulled up during searches which slow down the system.

Prepping 1099 Reports

So long are the days of manually typing and printing out 1099 forms for delivery! TRUE has developed an integration with Tax1099.com to simplify the once arduous process. The Tax1099 integration allows users to select Vendors/Subcontractors within TRUE and, with one click, generate 1099 forms out of Tax1099 for delivery to their respective recipients.

Final Thoughts

Subcontractors can streamline their year-end closing process and gain confidence in their financial reporting with the right construction accounting software. TRUE provides much more than just an accounting solution, it also offers project management and enterprise resource planning solutions. Whether for commercial contracts or residential jobs, TRUE is built to help subcontractors succeed from start to finish.

Contact our team to explore how TRUE can support your construction business today: https://constructtrue.com/contact-us/