Your accounting year-end doesn’t have to follow the calendar year, or even the tax year.
You can pick your own accounting year-end date. In fact, it’s sensible to choose your year-end so the timings work best for you, your business and your cash flow.
A few things to consider when when choosing your year-end date are:
- Time of year – What time of year will be least busy and most convenient for the time and admin needed to create and submit your year-end accounts? If Christmas is your busiest time for sales, don’t choose a December year-end, for example.
- Industry standard year-ends – When do other businesses and competitors in your sector/industry have their year-ends? If you want to benchmark against their figures, it helps.
- Impact of tax costs – When are you paying your tax and VAT? If you have a month where there’s habitually a big dip in cash flow due to business tax and/or VAT, it’s best to not make this your year-end date. For example, your corporation tax payment will be due 9 months and a day after your year-end date, so work this into your thinking when deciding on the accounting year-end month to choose.
Can I change the year-end?
You can change your accounting year-end date, by applying to HMRC and filling out the relevant forms. Usually, you can only do this once every five years. Find out more about how to change your year-end here
You can lengthen your company’s financial year:
- to a maximum of 18 months, or longer if your company’s in administration
- once every five years
You can only lengthen the financial year more often than every five years if:
- the company is in administration
- you’re aligning dates with a subsidiary or parent company
- you have special permission from Companies House
If you need help with choosing or changing your year-end, give us a call on 01454 300 999 or drop an email to info@fd-works.co.uk
Find out more about the FD Works’ approach to finance at fd-works.co.uk