According to Chartered Professional Accountants Canada, not all year-ends are created equal. Sure, it seems to make sense to have your fiscal year-end at the end of the year, but for some businesses, the timing might not be right. Depending on the industry, businesses should factor in the holiday season and the new year ahead — one of the busiest times of the year from a sales or services perspective. Similar to the Canadian Government’s fiscal run from April 1 or March 31, you can choose one that’s right for you.
Corporations can opt to have their year-end on a date of their choosing (as long as it’s within 53 weeks of their incorporation), as can medium-size businesses with one extra step. In order to change a medium-size business year-end from December 31st to a date that works best, the business must apply to the Canada Revenue Agency. When requesting a change, be sure to explain the reason you’re looking for a change, as without it, your request could be delayed.
When choosing a year-end date, consider the following:
• Easy access to accountants during their slower seasons;
• Better alignment with the nature of the business’ slower and busier seasons;
• Allowing enough time for reconciling, including inventory and staffing.
Now that a date has been determined, no matter the size of the company, develop a comprehensive checklist to ensure everything is in order.
Generate financial reports
These reports include an income statement (profit and loss statement), balance sheet and cash flow statement. This is the easiest way to get a sense of where the company stands financially and can assist in projections for the coming year.
Businesses medium and large that carry inventory, or offer services, need to account for what they have remaining — be they products, or contracts on the go. With a year-end determined to work around busy seasons, there should be plenty of time to do it right. Consider automated ad integrated inventory software if your business is still doing it manually and work those costs into your projection for the coming year.
Evaluate your staffing needs
From ensuring that your salaries are competitive to figuring out how your business has changed over the year and whether you’re in need of a staffing overhaul, year-end is the right time to set up your business for success in the upcoming fiscal year.
Get your tech in order
It may not seem connected to year-end from a tax perspective but getting your tech in order — from backing up your data to instituting a company-wide file naming convention — helps streamline your business and save money from an efficiency standpoint. Seemingly small things make a big difference. Take this time to also plan for a website refresh. At year-end, assess where the gaps are in your digital offering and where updates are needed.
Whether the business is medium or large, when you approach year-end like a beginning, you’re setting it up for success.