The six steps to closing the fiscal year in your Microsoft Dynamics 365 Business Central system

This article will explain the six steps in Microsoft Dynamics 365 Business Central.  Now that your fiscal or calendar year has concluded, it’s time to close the accounting period in Business Central. Since you might be doing this for the first time in Dynamics 365, our checklist makes it easy and breaks down the steps to successfully close the financial year.

Step One - Perform Month-End Processes

First, double-check that all sub-ledger transactions (Bank, Cash, Accounts Receivable, Accounts, Fixed Assets, Inventory) have been posted. Then double-check that any General Ledger (GL) General Journals have been posted. Finally, run a GL Trial Balance for the year to keep a permanent record.

Month End checklist:

• Post all Activities for the period
  • Sales, purchases, general journals, asset activity, item journals
  • Recurring Journals
  • Calculate Depreciation
  • Intercompany Consolidations
• Reconcile Bank accounts
• Reconcile control accounts
  • Cash
  • Accounts Receivable
  • Accounts payable
  • Fixed Assets
  • Inventory
• Run and Print Reports
  • Including but not limited to any reporting required for regulatory reporting

Step Two - Verify that the Income balance is set correctly for each General Ledger Account

Once you are ready to move on to the year-end close, we need to verify that the chart of account numbers are assigned to the proper report, either balance sheet or income statement.

Step Three - Create New Fiscal Year

One great method is to have two fiscal years open at a time, the current year and next year.

Having two years open will help with deferrals or projections done in fixed assets. Business Central requires only one year out to be created before it will allow you to close a fiscal year.

To create a new year quickly and automatically, go to Accounting Periods > Process > Create Fiscal Year.

Step Four - Close year from the account periods page

The process of closing the year in Business Central is a two-step process.

First, from the Accounting Periods page, select Process > Close Year.

Business Central will go to the oldest open year. This Close Year process cannot be reversed, so you will not be able to reopen the year. But it does not prevent you from posting to a closed year.

It is recommended that you close your year on time. Then if you have an audit or post-closed entries, that’s fine. Any entries made once you close the year will be labeled in Business Central as post-close entries.

Step Five - Close Income Statement and Post Journal Entry

The second step to closing the year is to close the income statement. This is the formal process of zeroing out your Profit and Loss (P&L) Accounts and moving them to Retained Earnings. Business Central will create a general journal entry from you, but you will still need to post this entry.

Chart of Accounts > Process > Close Income Statement.

Step Six - Adjust General Ledger Setup

If you restrict access to posting by a date range, you can adjust the date range for the new year from the General Ledger Setup page. You can also set date ranges per user, which can be done from this page as well.

If you have any questions about what is noted above, feel free to reach out to us for answers. By emailing sales@micro-force.com and referencing this article. Or calling 212-777-7029 x 309.

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