Year-end close in Business Central

The year-end close consists of a few actions, but they cannot be undone, so the order matters. Here is what Microsoft Learn describes: closing the fiscal year on the Accounting Periods page, the Close Income Statement batch job, and posting the result for the year to equity. Use it as a process description for yourself and your auditor. Dates and requirements from authorities follow your local law. The walkthrough is a process description, not accounting advice.

Before you close

Microsoft lists the tasks that typically belong: all documents and journals are posted, exchange rates are updated, VAT is settled, expenses and revenue are allocated, and the pre-close reports for general ledger, customers, vendors and bank have been run. Reconcile and get the figures approved before you go further.

You are not forced to close a year, but it makes the work easier because you get filtering options. All details are kept after closing.

Set a fixed order and an owner for each step. Once the year is closed, you cannot reopen it, so it is a good idea to wait to click until the auditor has approved the opening figures.

Close the fiscal year

On the Accounting Periods page you choose Close Year. All periods in the year are then marked as Closed and Date Locked. Learn stresses that you cannot reopen a year or remove the markings.

You must always have at least one open fiscal year. Create the next year first, for example with Create Year, and be aware that you cannot change the start date of the following year after the close.

Check afterwards that all periods are marked correctly. If you discover an error in a closed period, you can post a correction with a posting date in the year. The entry is then marked as a prior year entry.

Reset the income statement

The Close Income Statement batch job requires a closed fiscal year. It goes through all accounts of type income statement and creates lines in a journal that offset the balance. You specify a balance sheet account and an equity account, typically retained earnings, and post the journal yourself. The job does not post by itself, unless you use an additional reporting currency.

The lines get a fictitious closing date between the last day of the old year and the first day of the new year. This means the ordinary dates in the year keep the right balances.

Use the journal preview. Check that the sum of the lines matches the result for the year in the income statement, and that the equity account is the right one, before you post.

Post in a closed year

You can still post in a closed fiscal year. The entries are marked as Prior Year Entry. If you do so after the income statement has been closed, you run Close Income Statement again, and you repeat this every time. That way later adjustments from the auditor do not distort the balance for the new year.

Correct and post data entry errors in a closed year with the same method, and then run the income statement close again. Reconcile the new year's opening balance to the old year's closing balance when you are done.

Posting periods

Closing the year does not stop posting. The Allow Posting From and To fields on General Ledger Setup and User Setup do. Set them when the year's figures are final, so that only those who need to adjust can post backwards.

Consider giving the auditor a user with the permissions needed, so that the auditor's adjustments are posted directly in the system with documents.

A short sequence

Keep to the order, and decide dates and responsibilities together with the auditor, because local deadlines and requirements for the annual report are not something Business Central decides for you:

Complete posting, reconciliations and deferrals.
Create the next fiscal year.
Close the fiscal year with Close Year.
Run Close Income Statement and post the journal.
Make the post-closing entries from the auditor, and run Close Income Statement again.