The year-end close process has the tendency to instill a bit of fear among those of us who’ve been using ERP solutions for a few years. Especially since the COVID-19 crisis significantly changed the way we manage business. There’s typically a long list of to-dos, with cautions about when to do them, when not to do them, and what order to do them in — or else. Enter Sage Intacct. With Sage Intacct, the year-end process for closing the books and producing 1099s is no different than closing your sub-ledgers and your general ledger, just as you do at the end of each month. Here we outline the super-simple year-end close and 1099 production processes to relieve your sense of dread and get you ready to welcome 2022.
Spoiler Alert – You Don’t Even Have To Do It
Sage 2021 Close the Books Survey reveals businesses can shorten close process times by 36%. Sage Intacct is very forgiving about closing the books. It’s so forgiving that in fact you don’t have to do it monthly — or even yearly (not something we advise, though, especially for any company running the only cloud financials and ERP endorsed by the AICPA). For example, if you have not performed period end closings prior to the end of the year, you can choose to close for the entire year. The user (with the correct user permissions) simply needs to select Close Books in the General Ledger module and the time period to close. While closing the year in Sage Intacct is not mandatory, it is recommended to prevent unwanted additions of any transactions after the end of the year. It’s simple enough to complete that there’s no reason not to do it. If needed, adjusting entries can always be made in a separate journal to the appropriate periods and included or excluded in financial reports.
Moving Income/Loss into Retained Earnings
Sage Intacct has a “virtual close,” so, isn’t a month-end or year-end process to move the income/loss for the period into retained earnings. Closing periods in Sage Intacct is more of a state of mind than a series of labor-intensive steps. Unlike with many other ERP applications, retained earnings is handled behind the scenes automatically. It uses the time period referenced in any report selection and is based on the chart of accounts configuration. What could be easier than that?
1099s are another important part of the year-end close process. These information returns document the money your company pays its contractors. Fortunately, Sage Intacct allows you to maintain 1099 records so you can accurately and conveniently produce these important documents. Producing 1099s at year-end can be done directly from within Sage Intacct, whether you‘re printing 1099s directly from the solution or creating a file to send to a third party for IRS file submission.
To ensure you’ve got the right information for your 1099s, start the process by printing the 1099 Reports from the Accounts Payable module. This report shows you a list of vendors and corresponding 1099 amounts. Use the report to make sure that no vendors are excluded, and the amounts are correct. If there are any vendors missing from the 1099 report, you can fix the vendor by going to the Vendor Information screen. Simply choose the Additional Information tab under Vendor details to fill out the Tax ID and 1099 name fields. Then click the Form 1099 hyperlink to enter the Form 1099 Information with Default Box.
Once the 1099 setup is complete, Sage Intacct will automatically tag line-item transactions and accumulate a total for the current year-end 1099 balance. Transactions completed before 1099 setup can be manually added to the beginning balance in order to be included in the year-end total. The solution allows for a user to select or unselect line item transactions from being calculated in the 1099 total at the point of entry. This allows complete flexibility in maintaining accurate 1099 reporting to your vendors or employees.
We’re Here When You Need Us
Sage Intacct truly simplifies year-end processing. Gone are the extensive lists and complicated steps typical of many ERP applications. We’ve provided a high-level overview of the year-end close cycle here, but know that when questions arise, our consultants are available and always happy to offer assistance and answer your questions. Contact us to learn more.