BC Tip #12 - Year End Close
- Ben Cole
- Jan 19
- 4 min read
Updated: Jan 26
Practical Steps to Close 2025 and Start 2026 Right
A smooth Business Central Year End Close saves time, avoids surprises, and gives you clean opening balances for 2026. Below is a compact, practical checklist and step-by-step guide to close your accounting year and income statement correctly.
Table of Contents
TL;DR
✅ Ensure All 2025 Transactions are Booked and Reconciled
✅ Close 2025 Accounting Periods
✅ 2026 Accounting Periods Created
✅ Reconcile Inventory, Run Cost Adjustment Posting, and Close Inv. Periods
✅ Apply Posting Date Restrictions (GL Setup / User Setup)
✅ Run Close Income Statement Function (Remembering to Check Dimensions)
✅ Post Year-End General Journal Batch
Quick preparation checklist
Before you run the Business Central Year End Close, do these essentials. Skipping any of them commonly creates year end chaos.
Book all 2025 transactions and make sure subledgers are reconciled to the general ledger.
Restrict posting dates for most users to January 1–31, 2026. Make an exception only for the user who will run the year-end close (manage this in User Setup)
Inventory reconciled: post all cost adjustments and reconcile inventory so inventory periods can be closed.
Create the 2026 accounting periods so the system has the next year ready before closing 2025.
To create the next year in Business Central, go to Accounting Periods and use the Create Year action. Confirm the settings for another 12 months in 2026 and click OK.
Close the accounting period for 2025
In Accounting Periods confirm that 2025 is not already closed. If it is open, select the year and click Close Year. This locks the periods for 2025 and prevents accidental posting after the close.
Close the income statement (move P&L to retained earnings)
The income statement close is the key step in the Business Central Year End Close process. Search for Close Income Statement and fill in the form:
Set the fiscal year ending date (typically 12/31/2025).
Select the batch you want to use and set the document number.
Choose the GL account that is your Retained Earnings account.
Choose Balance to create a single retained earnings line, or Details if you want a retained earnings line for each GL account.
Add a posting description such as Close Income Statement 2025.
If you run consolidations, toggle the Business Unit Code option on.
STEP 7 One crucial step many forget: open the Dimensions area and check all dimension boxes so the close posts by dimension. This ensures your retained earnings balances maintain the same dimensional breakdown as the closed income statement.
Post the generated entries
Running the Close Income Statement action creates a general journal batch. The process is not finalized until you open that general journal, find the year-end batch, and post the entries.
Once posted, your year is closed financially and your opening balances for 2026 are correct.
Watch the video below on how to quick finalize this process.
Troubleshooting and tips
Why restrict posting dates? Limiting posting dates prevents users from entering 2025 transactions after you have closed the year.
Inventory adjustments: If inventory periods are not reconciled, you may need to reverse or correct inventory entries before the close.
Balance vs Details: Use Balance for a cleaner retained earnings entry; use Details for auditability or when you need per-account retained earnings lines.
Dimensions matter: Always close by dimension if your reporting relies on dimensions for department, location, cost center, project, or other tracking.
Final checklist before posting
✅ Ensure All 2025 Transactions are Booked and Reconciled
✅ Close 2025 Accounting Periods
✅ 2026 Accounting Periods Created
✅ Reconcile Inventory, Run Cost Adjustment Posting, and Close Inv. Periods
✅ Apply Posting Date Restrictions (GL Setup / User Setup)
✅ Run Close Income Statement Function (Remembering to Check Dimensions)
✅ Post Year-End General Journal Batch
Other Resources
For a longer form video I have created on this process - See it on YouTube
For more information from Microsoft - Check out Microsoft Learn
Another Year-End Close Blog Post from my friend Kristen Hosman - Blog Link
FAQ
When should I restrict posting dates for users in Business Central?
Restrict posting dates to January 1–31, 2026 for most users before starting the Business Central Year End Close. Allow an exception for the user doing the close so they can post year-end entries and any necessary adjustments. Moving forward, the General Ledger Setup should always just be the 30 day period for the current month, and any other users that need to post outside of that should be setup individually in the user setup.
What if I still have inventory adjustments to post?
Post all inventory cost adjustments and reconcile inventory before attempting a Business Central Year End Close. Inventory periods should be closed only when cost and quantity are reconciled to avoid unnecessary rework.
Should I choose Balance or Details when closing the income statement in Business Central?
Choose Balance for a single retained earnings line and more concise journals. Choose Details if you want separate retained earnings balance lines per GL account for audit trails or more detailed reporting.
Does the Close Income Statement automatically post entries in Business Central?
No. The Close Income Statement action creates a year end journal batch. You must open the General Journal, find the year-end batch, and post those entries to finalize the year-end close. Hint - all of the entries start a C (example > C12/31/2025)
Can I close by dimension?
Yes. Be sure to select all dimension boxes in the Dimensions section when running the close. Closing by dimension preserves dimensional reporting in retained earnings and future reports and also helps reduce errors in future reporting.
Ready to optimize your Business Central environment with guidance from a BC expert?
Contact Ben Cole at Ben@BenColeBC.com or (214) 433-0923.
Ben Cole is passionate about making Microsoft Dynamics 365 Business Central work smarter for real people—users and partners alike. With roots in public accounting, Ben’s seen firsthand how automation and clever solutions can transform the Business Central experience. He’s known for breaking down complex topics with a dash of wit and plenty of practical advice. If you want to get more out of Business Central (and maybe even enjoy the process), Ben’s your go-to guide.
(214) 433-0923
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