Whatever business model you are in, you must prepare annual accounts which report on business performance and activities during the financial year. What many may be unaware of, is that businesses are allowed a free choice of when to end an accounting year.
So, for 2012/13 tax, accounting dates can vary between 6 April 2012 and 5 April 2013. The date that you choose may be dictated by commercial reasons, but also by external factors such as interest rate movements, inflation, changes in rates of tax and changes to the tax system.
As a general rule, using a date towards the end of the tax year leads to the simplest application of a current year basis of assessment, although this leaves very little time before tax is payable.
Alternatively, businesses expecting an upward trend in profits may benefit from cashflow advantages if their accounting date is set on or shortly after the beginning of the tax year, although this also has its disadvantages including increased liability should the business cease.
Do you need to review your accounting date?
We can advise on the best year end date for your new business, and help change existing dates to make your business more efficient.