When closing the books for month-end and year-end processing in NetSuite, there are a few important things to keep in mind. How to correctly set up periods, how to execute the period close task and what the features and preferences are all included. Aside from these three, a couple other year-end tasks are valuable to understand, such as 1099 processing and record management. 

Managing Accounting Periods

In order to start the process of closing books in NetSuite, the period must be set up in the first place. This requires a fiscal year and base periods to be created before any transactions in NetSuite. This is typically one of these three options: standard calendar months, four weeks or 4-4-5 weeks.

Now that the fiscal year is set up, you can decide if you’d like to allow for Non G/L Changes to transactions in a closed period. This might be updating the memo field on a bill. Every time you see your accounting periods, you’ll see them in one of these three states: unlocked, locked or closed. Unlocked implies there are no restrictions on the posting of transactions, locked only allows users with the “override Period Restriction” permission to edit transactions, and closed means no users, no matter their status, can post or make changes to transactions. 

Period Close Checklist

At the end of your transactions in a given month you will go through the Period Close Checklist on the Manage Accounting Periods page. On this page, certain enabled features will determine which tasks you must complete by month end. Below are some common close tasks in NetSuite:

• Lock A/R: When locked, only Override Period Restriction users can make AR transactions
• Lock A/P: When locked, only Override Period Restriction users can make AP transactions
• Lock All: This locks all users from making journal entries or transactions, even those with the override permission.
• Resolve Date/Period Mismatch: NetSuite requires the notice of the mismatch between transaction date and posting period for transactions. You can proceed with the month end checklist without aligning the two, however, this can cause confusion in reporting. For example, if two users run seemingly the same report but user A runs it on transaction date while user B runs it on Posting period, the users could come to different results. Date/Period Mismatches can be avoided by setting the “Allow Transaction Date Outside of Posting Period” accounting preference to “Disallow.”
• Review Negative Inventory: While NetSuite requires the acknowledgement of negative inventory balance, you are able to proceed with closing the books with a negative balance. 
• Review Inventory Cost Accounting: This task ensures that all inventory costing calculations have been completed, and if they have not there is a button to do so.
• Reevaluate Open Foreign Currency Balances: This calculates currency revaluations for open customer and vendor transactions, foreign currency-denominated accounts and other non-equity balance sheet accounts.
• Eliminate Intercompany Transactions: This generated elimination journal entries for any transaction lines that are flagged to be eliminated.
• Close: This is the final step in the close process; once it is done, no user can make any G/L impacting entries or edits

Year-End Considerations

As previously discussed, there are a few other factors that will make closing in NetSuite easier to utilize once in practice. The first is 1099 processing NetSuite which requires a certain setup. The steps are as follows:

• Select a 1099 Misc Category on your Gl accounts
• Fill in Tax ID and mark “1099 Eligible” checkbox under the Financial subtab.
• Within NetSuite, there is a free 1099 bundle that can be installed in your environment. This creates a saved search that queries your 1099 data points to report on vendor bill payments. This query can later be used to manually populate 1099’s 

To keep up with data housekeeping, review your Vendors, Customers, GL Accounts, and inactive unused records. Periodically review AR and AP Aging’s for past due transactions and take action if necessary. In NetSuite, you are not required to perform a formal year-end closing in NetSuite. Instead, it automatically closes year-end after all periods are closed. 

Once you’ve practiced using NetSuite for a short while, you will benefit from how straightforward and simple to use it is. If you have any questions, our NetSuite outsourced accounting experts are here to help.