Preparation for End of Year: What to Do First?

Closing out the fiscal year in Microsoft Dynamics 365 Business Central is a critical process that sets the foundation for accurate reporting, compliance, and a smooth start to the new year. With the right preparation and a clear sequence of steps, end of year doesn’t have to feel overwhelming.

A successful end of year close starts well before you run any closing routines. Taking time to review and reconcile data upfront will save time and prevent issues later. 

Below is a practical guide to help you confidently navigate end of year tasks – from preparation through final close.

Finalize Operational Activity 

Before closing the year, ensure all routine transactions are complete: 

• Post all remaining sales, purchasing, payroll, expense reports, and fixed asset depreciation 

• Confirm no unposted operational batches remain 

Reconcile Subledgers to the General Ledger 

Make sure subledgers tie out to the General Ledger, including: 

• Accounts Receivable 

• Accounts Payable 

• Bank accounts 

• Inventory and project ledgers (if applicable) 

Review Control Account Settings 

For control accounts such as A/R, A/P, cash, and inventory, set Direct Posting = No. This reduces the risk of out-of-balance issues caused by manual postings. 

Handle Currencies and Allocations 

• Complete foreign currency revaluation routines 

• Run allocation processes so balances are properly distributed before closing 

Run Draft Financial Reports 

Generate a trial balance and key financial statements early to catch anomalies before closing. 

Perform a Sandbox Dry Run (Recommended) 

If this is your first year using Business Central – or if configurations changed during the year – rehearse the end of year close in a sandbox environment. This helps identify potential issues without impacting production data. 

Create the Next Fiscal Year 

Defining the next fiscal year before closing the current one ensures continuity and prevents downstream issues. 

Best Practices for Fiscal Year Setup 

• Match your corporate fiscal calendar exactly 

• Verify period start and end dates carefully 

• Double-check configurations for 13-period or 4-4-5 calendars 

Business Central includes a Create Year function that can automatically generate the next fiscal year, saving time and reducing setup errors. 

Close the Income Statement 

Running the Close Income Statement process creates closing entries that zero out income and expense accounts and transfer net income to Retained Earnings. 

What Happens During This Step? 

• A General Journal batch is created with closing entries 

• Entries use a special closing date; (For example: C12/31/2025) 

• Net income is posted to the designated Retained Earnings account 

Recommended Setup 

• Use a dedicated journal template and batch; (For example: Template: General | Batch: YE Close) 

• Assign a clear document number for audit traceability (e.g., YECLOSE2025) 

• Choose whether to post Retained Earnings as a balance or with detail 

• Select required dimensions such as department or project 

Review and Post Closing Entries 

Before posting, carefully review the closing journal entries. 

Key Review Steps 

• Confirm all income and expense accounts are included

• Verify total debits equal total credits

• Ensure the Retained Earnings line matches the year’s net result

• Check that all entries use closing dates (C dates)

• Review descriptions for consistency and clarity

Quality Checks After Posting 

• Run a trial balance for the closed year (including closing entries)

• Confirm Profit & Loss accounts are zeroed out

• Verify Retained Earnings reflects the correct net result

• Save PDFs of pre-close and post-close trial balances for audit purposes

Lock Down and Finalize the Year 

Once end of year processing is complete, it’s important to prevent accidental postings to the closed year. 

Tighten Allowed Posting Dates 

You can: 

• Set Allow Posting From to the first day of the new fiscal year and Allow Posting To to the last day of the new year, or 

• Restrict posting dates to a specific month or period 

This ensures only authorized adjustments can be made. 

Archive End of Year Records 

Save and securely store all reports, trial balances, and ledgers required for audit and compliance purposes. 

Final Thoughts 

End of year close in Business Central is all about preparation, accuracy, and following the correct sequence. By completing reconciliations early, validating setup, and reviewing closing entries carefully, you can reduce risk and start the new fiscal year with confidence. 

If you have questions or need help with your Business Central end of year close, our team is here to support you.

Contact Us:

Consulting and Support: support@iscorp.biz
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