# What Is The Best Corporate Year End?



## 0okm9ijn (Jun 2, 2012)

If your business is incorporated, you can chose the year end of your corporation. What is the best year end? The following are some points that I've heard about this.


Chose a year end that's a slow time for your business. The work associated with taxes will be less of an issue.

Chose a year end from July 31 onwards. This way, you have flexibility when it comes to a bonus. Your corporation can declare a bonus in the last 5 months of the year and get the deduction in that year, but you don't have to take the bonus until the next year.

Chose a year end late in the calendar year to maximize tax deferral. For example, if your corp has a November 30 year end, there will be an 11 month tax deferral on December investment distributions.

Chose a year end in the autumn. A December 31 year end means the work will be done at a time when accountants are very busy. Very busy means more overtime and higher cost?


OTOH, a nonDecember 31 year end makes life more complicated. All tax certificates are issued between January 1 and March 31. For example, your corp has income from an investment trust. How much is dividends, interest or return of capital?


Comments?


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## Homerhomer (Oct 18, 2010)

0okm9ijn said:


> If your business is incorporated, you can chose the year end of your corporation. What is the best year end? The following are some points that I've heard about this.
> 
> 
> *Chose a year end that's a slow time for your business. The work associated with taxes will be less of an issue.*
> ...


I have bolded the two issues that are imo the most important, for example if you are extremely busy in the summer it wouldn't make sense to make your year end July, but if your volume dies down in October than it would make a perfect sense for the year end, you will know how well you did, it will give you and the accountant more time to do the accruals, dividends and so on, and whenever your year end falls in between July and Dec you will have some possibility of tax deferral on bonuses.

Regarding investment income thankfully more and more trusts convert into corporation and the reporting is less and less of an issue, actually the easiest, from the recording point of view, would be to have January year end, this way your deposits on cash basis would match T3 from the investments since they usually pay the income within a month after it's earned.

If your year end is November the accountant will know the income allocation in March, so if the year end is prepared at that time you wil not have any tax deferral since the income can be properly allocated, I wouldn't consider this as an important factor in setting up the year end, also remember that really the deferral only happens once, from the second year on you are reporting previous year's income so there is no deferral after the first year.


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