Year-End Closing Questions

Every January we hear some frequently asked questions from our nonprofit and church customers who are logging transactions and closing the books for the previous year. Since it can be tough to remember tasks you only do once a year, here are some answers to those common year-end closing questions. As always, these are general guidelines, so talk to an accounting professional if you need more specific guidance related to your organization’s records.

Contributions

Q: Do I have to send contribution statements to everyone who gave to my nonprofit or church?

A: Churches and nonprofits based in the U.S. are required to send contribution statements to people who gave $250 or more in a calendar year. They must be sent no later than January 31 of the year following the gift. Technically, any donation under $250 does not require a contribution statement. However, statements are a great way to reach out to your people and communicate with them to keep them engaged. We highly encourage you to send one to everyone who gives, regardless of the amount. Check out our instructions for how to generate contribution statements in Aplos.

Q: How do I track a contribution deposited after December 31?

A: Go by the U.S.P.S. postmark or payment processing date. Here are some examples:

• You received a check in the mail on January 3. It qualifies for the closing year because the postmark says December 31.
• You received a check postmarked January 2. Even though the date on the check is December 31, it goes into the next year.
• If someone made an online payment using their credit card, you will enter it based on the date the payment is processed.

Pledges

Q: Should I close out pledges in Aplos that haven’t been received?

A: Closing out pledges is not necessarily required. You may want to leave them open and send out pledge statements requesting that people fulfill their pledges.

You should close out unreceived pledges if they have exceeded the time specified by your organization’s policy. There are two ways to close a pledge in Aplos. The first is to have it paid off. The second is to change the amount of someone’s initial pledge to match the amount that has been paid to date. Then add a note to the person’s contact profile regarding the closed pledge and the original amount so you can reference it later if needed.

Multi-year pledges are common with capital campaigns, so you would not close those pledges at the end of the year. When creating multi-year pledges in Aplos, enter an end date that corresponds to the end of the campaign rather than the end of the calendar year.

Q: Should I list my pledges as an Accounts Receivable?

A: It is an internal process to determine if your pledges meet the GAAP standards of an Accounts Receivable. If you decide to track a pledge as an accounts receivable, Aplos does not automatically track it as a contribution. Create a pledge and post the contribution if you want the transaction to appear on contribution and pledge statements.

Closing the Books

Q: How do I close the books at the end of the year?

A: In some bookkeeping systems, the Income and Expense accounts “hold a balance,” which must be posted to the appropriate equity account at the end of the year to bring them back to zero at the start of the year. In Aplos, no closing entry is required at the end of the year. Aplos is a true fund accounting system that uses double-entry accounting. Since every transaction entered is already assigned to the correct fund, the fund holds the balance at all times. Your reports will automatically adjust to the new fiscal year, which will zero out your income and expense accounts, and “roll” the net income (loss) into the proper fund balance equity.

Q: Do I need to do anything to close the books in Aplos?

A: While you may not need to close the books in Aplos by posting a final entry, it is a best practice to do your bank reconciliations to confirm all data has been entered correctly, review your financial statements, and then close the period so no additional entries can be posted. This increases your internal controls and prevents accidental changes that would alter financial statements that have been completed.

Accounting Transactions

Q: What can I do if I entered all of my transactions but my fund balances don’t look right?

A: It is pretty common for account balances (asset accounts) to look correct at the end of the year, but for fund balances to be incorrect. In Aplos, it helps to run a Balance Sheet by Fund report and the Fund Activity report. These will provide you with an accurate snapshot of what money is in what fund. They will also allow you to look into which transactions have moved money in and out of funds.

Q: I’m super behind and haven’t entered anything into Aplos over the past few months. How do I get caught up?

A: The first step is to start with a bank reconciliation up to the point where you got behind. This will ensure your Aplos account mirrors your bank statement so your account is in balance when you import your new transactions. Then enter your missing transactions or import them in a batch if you can export them from your bank. Our import tools can help.

Q: How do I account for Fixed Asset Depreciation (if I haven’t been doing it monthly)?

A: The easiest way to do this in Aplos is to use the Fixed Assets Module to automatically calculate your depreciation and post it for you. However, if you haven’t upgraded to this feature or if you are using another system, you can still post your depreciation by manually creating a journal entry.

Take your total depreciation for the year (from Excel, your tax return, or whatever fixed asset software you use). Then create a journal entry to debit your depreciation expense account and credit the accumulated depreciation account.

Need more info about Fixed Assets? Our free eBook walks you through the basics.

1099s

Q: I switched to Aplos mid-year. How do I generate 1099s without complete information?

A: You have the choice to either import the history or generate 1099s outside of Aplos. To import the history, create an Excel file with the missing calendar year transactions for each vendor. Then enter a reversing transaction that uses the same date, account, fund, and amount as what you’ve recorded for each vendor. Make sure to complete the basic setup steps for 1099s in Aplos. Then add an Asset account for 1099 Historical Transactions and import those transactions. For step-by-step instructions, check out our Support article on importing 1099 historical transactions. You can find additional info about 1099s on the IRS website.

Note: E-filing is now required by the IRS if you file 10 or more returns. File your 1099s for free with IRIS, the IRS Information Returns Intake System. Find out more on the IRS website.

Additional Year-End Closing Questions

We hope this answers your year-end closing questions. Are there any other questions you would add to the list? Let us know in the comments below.

Free eBook: The Essential Year-End Closing Checklist

Need a more in-depth checklist of tasks you may need to complete to close out the year? This free eBook will help you review your organization’s accounting at the end of the year to prepare you for the coming year. Identify the most common accounting tasks to be performed this January. Then accomplish them with confidence knowing it will keep your organization on strong financial footing. This free eBook:

• Includes a year-end checklist so you don’t miss a task
• Walks you through common year-end accounting questions
• Shows you how to pull and analyze your annual financial reports
• Discusses compliance rules for year-end tasks
• Reviews the required reporting that nonprofits and churches must complete each January
• Demonstrates what you need if you are considering changing software