What is a quarterly close?

Quarterly close is the process of finalizing financial records every three months, including reconciliations, adjusting entries, and financial statement preparation, providing periodic checkpoints between monthly and annual closes. For professional service firms, quarterly close supports estimated tax calculations and business reviews.

Key characteristics

• Performed every three months

• More thorough than a monthly close

• Supports quarterly estimates

• Enables trend analysis

• Precedes quarterly reviews

• Less intensive than year-end

Why it matters for professional service firms

Quarterly close ensures accurate financials for estimated tax payments and business reviews. Waiting until year-end for a thorough review creates surprises. Professional service firms should perform quarterly closes that enable accurate tax estimates and informed business decisions.

Real-world example

Patricia implemented a quarterly close process: all transactions recorded and reconciled, adjusting entries for accruals and deferrals, financial statements prepared and reviewed, and estimated tax calculation based on actual results. Q3 close revealed higher than expected profits; adjusted Q4 estimate upward to avoid underpayment penalty. Quarterly discipline prevented year-end surprises.