Year-End Close

Updated on 03 Jul 2024
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Year-End Checklist

For a smooth transition into the new year, review the following checklist to make sure that all tasks are completed before the the current year’s end.

✔	Task	Details
	Fiscal Year	Set up next year's Fiscal Years for all active legal entities. Make sure there's no gap or overlap between your current year end date and your next year start date for both the fiscal and operational calendars. Note, any changes to the operational calendar after the start of the new operational year will only be effective going forward. To reflect changes retroactively, re-poll the DSS for any affected locations.
	GL Detail	Update the Rent GL Account in R365 from being a Non-Controllable Expense to a Current Liability to follow the new ASC 842 Federal Accounting Mandate. Follow this process to update the account. When you need to run a GL Detail report for audit purposes, try the GL Account Detail Export or the GL Account Detail with Legal Entity Export. Note, these reports are optimized for larger data sets. Due to the large data sets these reports use, running the report can take up to 15 minutes, depending on selected parameters.
	1099	Run the 1099 Review to make sure that all 1099-eligible vendors are configured properly. Update Vendor records as needed, based on your findings. If a 1099 vendor has a 1099 Type set as 'Company' when it should be set as 'Individual', follow the Updating 1099 Vendor Type training article to make corrections. Note, when you make a vendor 1099-eligible, you have the option to update all invoices for that vendor automatically. Learn more about 1099 setup and management.
	Budgets	Check that at least one of your current year budgets is designated as a reporting budget. Make sure your budget is based on the correct calendar for your organization's needs (fiscal or operational).
	Retained Earnings	We've got you covered! R365 makes a dynamic YE Close posting to move your balance from the P&L to Retained Earnings.
	Closing Periods	Once you have wrapped up the current year, don't forget to close all open periods. If you are not already using it, check out our powerful Advanced Close feature.

Retained Earnings

Retained earnings are the total profits that have been earned to date. In R365, retained earnings appear for any set date range and are based on net profit. In most accounting systems, closing out retained earnings is the last step in closing the fiscal year, whether through a journal entry or an internal process.

In R365, this step is completed for you. Because there are many steps involved in these calculations, there is no journal entry that you can drill into to change this amount. It is also important to note that any changes made to the general ledger will cause that entry to update the retained earnings.

Viewing the Retained Earnings Calculation		Example for years 2020 to 2021
At the end of the old year, a Net Income/Loss line appears on the Balance Sheet, labeled YTD Income (Year-to-Date Income).		The Balance Sheet from 31 December 2020 displays a YTD Income of (-$50,457.29).
At the beginning of the new year, the Net Income/Net Loss line moves into Retained Earnings.		The Balance Sheet from 1 January 2021 displays a Retained Earnings of $9,078,695.68 (2019 Retained Earnings + December 2020 YTD Income).

A screenshot of a computer Description automatically generated

Once you finish closing the year, or making any final adjustments, go into the Legal Entity record and close your system by entering a Close Date. This will prevent any future postings prior to that date.

Unlike other transactions, you cannot drill down into the Retained Earnings transaction, but you can see where all expenses were zeroed out at Year End.

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Year-End Checklist
Retained Earnings