A fiscal tax year is a 12-month period that ends on the last day of any month except December. For example, if the start of fiscal year date is 12/01/2021, the end of year date will be 11/31/2022.
Only the first day of the month is valid for a Start of Fiscal Year date (as long as it is not January).
When exporting Drake Accounting® 2022 to the tax software, you will export it to Drake Tax 2021. The other accounting option is a calendar tax year, which is January through December.
To identify a client as a fiscal year client in Drake Accounting®, go to Client > Add or Edit > Business Information tab and set the Start of Year Date to something other than January 1.
The following scenario is used to explain using a fiscal year client in Drake Accounting®:
- The client’s fiscal accounting year is from August 1, 20XX to July 31, 20YY (where 20XX is the prior calendar year and 20YY is the current calendar year). Use the appropriate dates for your client’s fiscal year.
- You process AP, AR, and payroll for this client and are keeping their books (a Chart of Accounts is set up in Drake Accounting® for this client).
In Drake Accounting® 20XX
- Enter transactions for August 1, 20XX through December 31, 20XX.
- Next, post transactions to the General Ledger. Go to Accounting > Transactions > Unposted. Click Post.
DO NOT CLOSE THE YEAR IN DRAKE ACCOUNTING® 20XX AT THIS TIME.
DO NOT WORK IN THIS CLIENT IN DRAKE ACCOUNTING® 20XX AGAIN.
In Drake Accounting® 20YY
- After installing Drake Accounting® 20YY, bring the client forward from Drake Accounting® 20XX to Drake Accounting® 20YY. In Drake Accounting® 20YY, go to Client > Update Prior Year.
- (In DAS19 and prior only) Make that client the active client and open their Chart of Accounts (go to Accounting > Chart of Accounts).
- You must answer YES to the question, “Do you want to update the bookkeeping for this client?” This completes the process of bringing account balance information and payroll transaction information forward into Drake Accounting® 2019 for this client. This step is not required beginning with DAS20.
- Continue using Drake Accounting® 20YY for this client’s accounting work.
- At the end of their fiscal year (July 31, 20YY), close the client’s fiscal year in Drake Accounting® 20YY:
- Post all transactions to the GL (Accounting > Transactions > Unposted. Click Post)
- Close the year (go to Accounting > Year End Close).
Payroll, Payables and Receivables for the current business year will be entered as usual.
- Review Employees > Options and verify that Generate Accounting Transactions is cleared, not selected.
- Review Payables > Options and verify that Generate Accounting Transactions is cleared, not selected.
- Review Receivables > Options and verify that Generate Accounting Transactions is cleared, not selected.
Live and ATF Payroll for employees will be entered in Drake Accounting® 20YY for the 20YY withholding calculations. Quarterly reports (941’s) will be created in the Drake Accounting® 20YY.
Once payroll is entered in Drake Accounting® 20YY, run payroll reports in Drake Accounting® 20YY to have the information needed to manually enter transactions in Drake Accounting® 20XX journals. This will create accurate financial reports in Drake Accounting® 20XX for the fiscal year.
If you choose to create the payroll in Drake Accounting® 20XX for 1/1/20YY to 7/31/20YY, you will need to manually override the calculations using the changes made by the Federal, State and local withholdings as applicable.
Writing the payroll for 20YY in 20XX will allow you to use the Auto Post features for Payroll or the Bookkeeping Payroll Journal in 20XX. If you use this option, you will need to create a payroll report so the payroll information can be entered in Drake Accounting® 20YY for quarterly reports, Forms W-2 and year end 94x reporting. You can use ATF payroll for these entries, as individual check entries, monthly batch, or quarterly batch check entries per employee.
If payroll was entered in 20XX Drake Accounting® for 20YY calendar year prior to updating the client file from 20XX to 20YY, it will move to payroll in Drake Accounting® 20YY. Take caution that this information is not entered twice.