Most companies have 31 December financial year ends.
Yet you have a choice as to when your company accounting period runs to in the UK – unlike in some other countries – so there is no obligation to follow the crowd. Actually, there are some quite compelling reasons why you should opt NOT to have a 31 December year end:
- the company tax year runs to 31 March so tax changes are often enforced with effect from 1 April. Companies with 31 December year ends therefore have to tackle complicated in-year hybrid tax rates and calculations compared to say 31 March year end companies;
- the personal tax year runs to 5 April. Easier to plan your tax affairs for your owner managed business if your company tax year is more closely aligned with the personal tax year end;
- the end of the calendar year falls into the Christmas and New Year holidays – do you really need the stress of closing your company books for the year end on top of the end of year festivities?
- your compliance costs. Basic laws of supply and demand apply. If most businesses have year ends around the same time, most accountancy firms will be rushed off their feet between November to March so how much scope do you think they might have to share some cost savings with you…?
So how about having a 31 March company financial year end? Or if you want to be really adventurous you could have a 31 July year end? Wild, huh?
Note that there are Companies House documents to file and certain restrictions can apply in changing accounting periods – check with your accountant first or drop me a line in the contact section (tab at top)