Your financial year has ended. Now Business Central needs to zero the P&L accounts and move the year's profit into retained earnings.
It takes three actions, and BC does the maths for you. One of them can't be undone, so do them in this order.
Quick answer
- Accounting Periods: make sure next year exists, then choose Close Year.
- Search Close Income Statement: enter the year-end date, a journal batch and your retained earnings account, then OK.
- Open that journal batch, check the lines, and Post.
- Posted something into the old year later? Post it, then run Close Income Statement again.
The whole flow at a glance
Accounting Periods → Create Year (if it isn't there yet)
Accounting Periods → Close Year (can't be undone)
BC creates the closing lines in a journal
P&L accounts zeroed, profit moved to retained earnings
Before you start
- Everything for the year is posted. Depreciation, accruals, exchange rate adjustment, and if you hold stock, Adjust Cost – Item Entries and Post Inventory Cost to G/L.
- Every G/L account has the right Income/Balance setting. BC closes every account set to Income Statement and leaves Balance Sheet accounts alone. One wrong setting, and an account gets closed when it shouldn't (or stays open when it should close).
- You have a retained earnings account, set up as a Balance Sheet account.
- Your allowed posting dates include the year you're closing (General Ledger Setup and User Setup). If not, the journal won't post.
Step 1: Make sure next year exists
BC won't close a year until the next one has been created.
- Search Accounting Periods.
- Scroll down. Look for the first month of the new year with New Fiscal Year ticked (1/1/2026 in this example).
- Not there? Choose Create Year. Enter the Starting Date (first day of the new year), No. of Periods = 12 and Period Length = 1M, then OK.
Check the Starting Date. BC fills it in from the last period on the list, which isn't always the first day of your new year. In the screenshot above it suggested 1/12/2026. For a January–December year, it should be 1 January.
Need 15 months this year instead of 12? See Extending your financial year.
Step 2: Close Year
- On Accounting Periods, choose Close Year.
- BC tells you which year it will close. Check the dates, then choose Yes.
This can't be undone. A closed year can't be reopened. That sounds scarier than it is: you can still post into a closed year if you need to (see the FAQ below).
- Closed and Date Locked are now ticked for every period of the year.
Good to know
- BC always closes the earliest open year. If 2024 is still open, Close Year closes 2024 first.
- Date Locked is also ticked on 1/1/2026. That's normal. Once 2025 is closed, BC won't let you change when 2026 starts.
Step 3: Run Close Income Statement
- Search Close Income Statement.
- Fill in the options:
| Field | What to enter | Example |
|---|---|---|
| Fiscal Year Ending Date | The last day of the year you just closed. BC fills it in. Check it. | 31/12/2025 |
| Gen. Journal Template / Batch | A batch just for this, so the closing lines don't mix with daily journals. | GENERAL / FYE2025 |
| Document No. | Something you'll recognise later. | FYE2025 |
| Retained Earnings Acc. | Your retained earnings account. | 3120 |
| Post to Retained Earnings Acc. | Balance (default): one extra line with the total for retained earnings. Details: every line has retained earnings as its balancing account. |
Details |
| Posting Description | Shows on every closing entry. | Close Income Statement FY2025 |
| Close by: Dimensions | The dimensions you report your P&L by (see below). | BUSINESSGROUP, DEPARTMENT |
| Close by: Business Unit Code | Only in a consolidation company. Otherwise leave it off. | Off |
Balance or Details? Either works. Details lets you trace each P&L account into retained earnings line by line. Balance gives you one clean retained earnings figure.
- Choose the ... next to Dimensions, tick the dimensions you need, and close the page.
Why tick dimensions?
Without them, BC creates one closing line per account, with no department on it. The account is zero in total, but not per department. If you run a P&L by department, tick DEPARTMENT (and any other dimension you report by).
- Choose OK. BC confirms the journal lines have been created.
Using an additional reporting currency? Then BC posts the closing entries straight away. There's no journal to review.
Step 4: Review and post the journal
- Search General Journals and open the batch you chose (FYE2025 here).
- Check the lines. The Posting Date is C31/12/2025. The C means closing date: a date that sits between 31/12/2025 and 1/1/2026.
- Choose Post.
Don't run Close Income Statement twice before posting. It adds a second set of lines on top of the first. If you need to run it again, delete the lines in the batch first.
Step 5: Check it
Open General Ledger Entries and filter Source Code = CLSINCOME and Posting Date = C31/12/2025. These are all your closing entries.
✓ Done. Your P&L accounts are zero at C31/12/2025, and the year's profit is in retained earnings.
FAQ
Why does my 2025 P&L still show the profit after I closed the year?
Because the closing entries are dated C31/12/2025, not 31/12/2025. A report for 01/01/25..31/12/25 doesn't include them, so it still shows the year's real result. That's by design. Use 01/01/25..C31/12/25 if you want to see the P&L accounts at zero.
The auditors sent adjustments after I closed. Can I still post into 2025?
Yes. Post them with a 2025 date as usual (your allowed posting dates must include 2025). BC marks them as Prior-Year Entry. Then run Close Income Statement again. It only picks up what isn't closed yet.
Can I reopen a closed year?
No. Closed and Date Locked can't be unticked. You rarely need to, because you can still post into a closed year.
Do I have to close 2025 before I post in January 2026?
No. You can post in 2026 while 2025 is still open. Close 2025 when the figures are final, for example after the audit.
Close Year won't close my year.
Next year doesn't exist yet. Create it first (Step 1), then choose Close Year again.
Close Year wants to close 2024, not 2025.
BC always closes the earliest open year. Close 2024 first (and run Close Income Statement for it if that was never done), then close 2025.
We came from Dynamics GP. Do I need to carry balance sheet balances forward?
No. In GP, the year-end close also brought balance sheet balances forward into the new year. BC has nothing to carry forward: balance sheet balances are always calculated from every entry to date. Only the P&L accounts get closed.
Stuck somewhere? Drop a comment below — happy to help.
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