How-ToFinance & Operations

How to Close a Fiscal Year in Business Central

A step-by-step guide to closing a fiscal year in Business Central, covering period closures, the Close Income Statement batch job, and posting the closing journal.

Stein Sæstad
8 min read

Closing a fiscal year in Business Central is a multi-step process. It involves verifying that all transactions are posted, running the Close Income Statement batch job to transfer profit and loss balances to retained earnings, and then formally closing the accounting periods and the fiscal year itself.

It helps to understand the difference between closing a period and closing a year before you start. Closing an accounting period prevents new entries from being posted to that period, but the year itself remains open. Closing the fiscal year is a separate step that marks the year as complete.

Step 1: Verify All Transactions Are Posted

Before starting the close process, make sure every transaction for the year has been posted. This includes sales invoices, purchase invoices, journals, bank reconciliations, and any adjusting entries.

Warning: Once you close the fiscal year, reversing entries becomes much more difficult. Confirm with all relevant departments that nothing is outstanding before proceeding.

  1. Review open sales orders and purchase orders.
  2. Check the General Journal for any unposted lines.
  3. Confirm that bank reconciliations are complete for all accounts.

Step 2: Close All Accounting Periods for the Year

  1. Search for Accounting Periods using Alt + Q.
  2. Review the list of periods for the fiscal year you are closing.
  3. For each period that is still open, select the period line and set Closed to enabled by choosing Close Year, but at this stage, close individual periods first using the Close Accounting Period action if needed.
  4. Confirm that every period in the year shows as closed before moving on.

Closing individual periods prevents accidental postings to prior months during the close process.

Step 3: Run the Close Income Statement Batch Job

The Close Income Statement batch job creates a single G/L entry that moves all income and expense account balances to your retained earnings account. The entry uses a special closing date, a date that falls at the end of the fiscal year but is treated separately from regular dates in Business Central, so it does not affect period totals.

  1. Search for Close Income Statement using Alt + Q.
  2. In the Fiscal Year Ending Date field, enter the last day of the fiscal year.
  3. In the Gen. Journal Template field, select the journal template you want to use for the closing entry.
  4. In the Gen. Journal Batch field, select or create a batch for the closing entries.
  5. In the Retained Earnings Acc. field, enter the G/L account number for retained earnings.
  6. If you use dimensions, set dimension filters as needed to split the closing entry by department, cost center, or other dimensions.
  7. Select OK to run the batch job.

Business Central creates journal lines in the general journal batch you specified. It does not post them automatically.

Step 4: Review and Post the Closing Journal

  1. Search for General Journals using Alt + Q and open the batch created by the Close Income Statement job.
  2. Review the generated lines. Each P&L account should have a line that offsets its balance, and the retained earnings account should show the net result.
  3. Verify the journal balances to zero.
  4. When satisfied, select Post to post the closing entries.

The closing date entries will now appear in your G/L but will not show up in standard period reports unless you explicitly include closing entries in the date filter.

Step 5: Close the Accounting Periods for the Year

After posting the closing journal, return to Accounting Periods and formally close the periods.

  1. Search for Accounting Periods using Alt + Q.
  2. Select the first period of the fiscal year you are closing.
  3. From the actions menu, choose Close Year.
  4. Business Central will prompt you to confirm. Select Yes.

All periods in the fiscal year will be marked as closed. The Date Locked field will be set, preventing any further postings to those periods without unlocking them manually.

Step 6: Close the Fiscal Year

  1. On the Accounting Periods page, locate the first period of the fiscal year.
  2. From the actions menu, select Close Year if not already done, or verify the year is marked as closed.
  3. Confirm the fiscal year entry shows Closed in the year overview.

Once the year is closed, Business Central will begin treating the next defined fiscal year as the current year for reporting purposes.

Closing Date Entries

Business Central uses a special closing date format (C12/31/YYYY) for entries created by the Close Income Statement batch job. These entries:

  • Do not appear in standard date range filters unless you include the closing date explicitly
  • Are visible when you filter G/L entries with closing dates included
  • Show as a separate entry type in the G/L Entries page

This means your balance sheet accounts carry the correct closing balances without distorting period-based income statement reports.

To manage which users are allowed to post or modify entries during the close process, see How to Configure Security Groups in Business Central.