As the end of 2012 draws closer, a number of incorporated companies are getting ready for their year-ends. Choosing your year-end date strategically can have both operational and tax advantages.
If you have just incorporated your business, you have to decide on a year-end date within the first 12 months of incorporating. It doesn’t have to coincide with the anniversary of your incorporation date, nor does it need to coincide with the end of the calendar year. Your ideal year-end really has more to do with your business cycles, which vary from business to business.
Typically, your fiscal year-end will correspond with the end of a calendar month, although it’s not required to. Technically, you could choose your year-end to be any fixed date in the year, or even a floating year-end such as the closest Sunday to a given annual date, as long as your fiscal year doesn’t last more than 53 weeks.
For more on this, I contacted Michael Machon, a chartered accountant with BDO Canada LLP. He said: “Sometimes, a retail store may benefit from counting inventory on a Sunday when they are normally closed for business, thereby benefiting from a floating tax year-end”.
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