Lots of people want to start a new GnuCash file for a new year. Well, here’s how it is done.
GnuCash is a free accounting package based on double-entry bookkeeping.
It supports multiple accounting files (so you can have multiple businesses) but you can also have a separate file for each financial year of the business.
If you do use a new file for each year, each year you need to create a new file with the same account structure (Chart of Accounts) and with a new set of opening balances. The way to do this is not as obvious as it should be.
The Hard Way
Use “File”, “Save As” from your current year’s file to create a new file with a new name. Open the new file. Delete all the transactions.
This isn’t as easy as it could be because you can’t select multiple transactions: Open the first account. Select the first transaction. Click the “Delete” button. You are now on the next transaction. Click the Delete button again. Repeat this for every transaction in the account. Open the next account. Delete all transactions just like you did with the first account. Repeat this for every account.
If you have lots of transactions and lots of accounts this can take some time. At least a couple of hours in my case.
The Seemingly Easy Way
GnuCash has a menu option “Tools”, “Close Book”.
This is well-intentioned but doesn’t remove any transactions. It adds two more. I shouldn’t have been surprised. It does say this in the manual or guide.
What it actually does is add one transaction to all of your Income accounts transferring the money to another account (such as Equity:Opening Balances) and one transaction transferring all of your expenses to another account (often the same one: Equity:Opening Balances). Each transaction is split across all of the Income or Expense accounts and the total is balanced by a matching amount in the nominated transfer account (Equity:Opening Balances).
It is a neat solution from an accountant’s point of view. No information is lost. The Income and Expense accounts are all zero-ed ready for the new year and the opening balances have been tweaked to reflect the new starting position.
However, for those of us that don’t think like an accountant, it is a pain in the neck. We’d reconciled all of last year’s transactions. We’ve been through that pain, and we never want to have to re-reconcile those transactions ever again. We don’t want them there to edit by mistake (and mess up the starting balances). We want a clean slate. We wanted an empty file and a new start for a new year. It would also have been nice to have had new opening balances for each of the asset and liability accounts. Their balances are correct but not because of a fresh opening balance transaction. They are correct because every transaction in every asset and liability account is still there.
If you do “Tools”, “Close Book” and want to reverse it, that’s pretty easy. Go to the “Equity:Opening Balances” account (or whichever you specified) and delete the two transactions. That will undo all of the splits entered into all of the Income and Expense accounts.
Anyway, this menu tool does a very good job for accountants and does it very well and eligently; but it isn’t what most of us are looking for.
Anyone who has been using GnuCash for a while has probably already said, “What on earth are you doing?”
It is actually incredibly easy. Provided you know how. It is one of those “You have to be there to be able to get there” things.
It is probably even documented somewhere and I just didn’t notice it.
Maybe it is self evident and so obvious that no-one would even think of explaining it.
You create a new file by “File”, “Export”, “Accounts”.
Choose the directory where you want the new file and give it a name that matches your convention for business and year.
Now, pretend you haven’t created an export of some information from your existing account file. Pretend it is a new account file just like your current one. Use “File”, “Open” and select the export file. It opens. You can add transactions to it. It has your existing accounts. There are no transaction in it (until you add one). All of the Income and Expense balances are zero. So are the Asset, Liability and Equity accounts; but it is a much better starting point.
Add the opening balances of your Asset and Liability accounts and you are up and running.