Year-End Closing

Closing the books for a year ends the opportunity to post entries to the sub-ledgers and general ledger to transfer net income to retained earnings (for a corporation) or to owner's equity (for an individual proprietorship).

To perform year-end closing, go to Setup > Accounting > Manage G/L > Manage Accounting Periods.

Using NetSuite financials, you are not required to make journal entries to close out the income statement to retained earnings. You can choose to do one of the following:

Preparing for Year-End Closing

Be aware of the following as you prepare for year-end closing:


It is recommended that you consult with your accountant to ensure that your books fulfill all legal requirements.

Automatic Close

When you permit NetSuite to automatically close year end, financial statement figures display as if the accounts had been closed, based on the period or periods you select for reports. You are not required to perform a formal year-end closing. NetSuite automatically closes year-end after you close all of the periods in your year.

To permit NetSuite to automatically perform year-end closing, go to Setup > Accounting > Manage G/L > Manage Accounting Periods. Perform the required tasks noted in Preparing for Year-End Closing, referring to the noted topics for specific details.

By using this method, your general ledger ties to financials for the same periods run for all accounts, with the exception of the retained earnings account. The system posts a placeholder entry to the retained earnings account on the balance sheet to reflect the income for the period run.

For example, if you want to see a balance sheet for the fiscal year 2013, NetSuite assesses the cumulative net income though 2013 and displays that value in the retained earnings account for reporting purposes. Similarly, if you run a balance sheet for fiscal year 2012, NetSuite assesses the cumulative net income from 2011 and 2012 to determine the retained earnings balance.

NetSuite does not post the balance to retained earnings because doing so would zero the past income statements and prevent them from being viewed.

On your balance sheet, the retained earnings account and the net income account together make up your cumulative retained earnings balance at any point in time.

Net income from prior fiscal year is displayed in the retained earnings account.

Net income from the current fiscal year-to-date is displayed in the net income account.

The retained earnings account is a system account and cannot be deleted or substituted with another account. If you must adjust retained earnings or allocate the balance to other equity accounts, you can post a journal entry and it is reflected on the balance sheet.

Adjustments to the retained earnings account are combined on the balance sheet along with other account figures. For example, if your net income for 2013 was $100,000 and you made a journal entry that debited retained earnings $10,000 in 2013, your fiscal year 2013 balance sheet displays a $90,000 credit, assuming it was your first year in business.

Manual Close

If you want to start the new fiscal year with a zero net income, go to Transactions > Financial >Make Journal Entries to create journal entries that zero out your income and expense accounts, and transfer the balance to a retained earnings account.


Be aware that the manual close method is not recommended. If you must record entries in the general ledger at year end, consider using the Period End Journal Entries feature. For information, see Period End Journal Entries.

Related Topics

Accounting Period Management
Accounting Period Setup
Fiscal Calendars
GL Audit Numbering
Rules for Future Accounting Periods
Accounting Period Close
Reporting by Accounting Period
Searching by Accounting Period
Locking Transactions

General Notices