Duration of the First Accounting Year: How Many Months Do You Need?
The duration of an accounting year? What a funny idea! Why not do like everyone else: December 31st. The code of commerce requires that the accounts of the company be stopped every year. The normal period of a fiscal year is 12 months. By exception, to the constitution of your company, it is possible to choose for your first exercise, a more or less long duration. What factors influence this decision? What is the duration of an accounting year?
Which closing date is the most appropriate?
The seasonality of your activity
You have no choice
- If you fall under the Non-Commercial Income Tax (NBC) regime. You have no choice, your closing date will be December 31st . Even if you were created on December 21st of the same year.
The closing date is free
- If you are an individual company in BIC (artisan or trader)
- or in corporation subject to corporation tax. Except extremely rare case set by law such as cereal cooperatives, for example.
In the latter case, the closing date depends mainly on your activity. It is best to set a date that will allow you to limit the inventory work. For example, a toy store will not be chosen at the end of the year since it is necessarily the time when it holds the most stock. This is also the time where it has less time to complete the inventory.
In general, we keep the moment in the year when the cash will be at the highest and the valuation of stocks at the lowest.
Optimizing your tax system
If you wish to distribute dividends, it may be advisable to provide a closing date for: a distribution for the current or the next calendar year. This in order to juggle the taxation knowing that the finance laws are promulgated in late December.
The minutes of the ordinary general meeting of approval of the accounts must be made within 6 months following the closing and set the date of taxation of the dividends on income tax (IR). In taxation, the recording of dividends in current account is equivalent to payment.
To illustrate our remarks, a closing at 30/09 makes it possible to proceed to an approval before or after the 31/12. This will depend on your tax home or a new more or less favorable regulation from the last finance law.