Watch the video on Choosing a year end for your new business

Here is the video transcript for: Choosing a year end for your new business

John Paul: Hi there, and welcome to Campanella McDonald’s Tax Tip video. Today we’re going to talk about what year end you should make your corporation. Fab, take it away.

Fabio: Yeah, so when you first start corporation, most people default to December 31st because they think of the year end as ending with the actual calendar year, but that’s not always the best case. Is it?

John Paul: No. When you have a corporation, you’re actually allowed to pick any day you want within the year, within the 370…

Fabio: Some odd days.

John Paul: Some odd days. You can pick any which one of those days to coincide with your year end.

Fabio: So if you, for example, have a capital intensive company going on and you’re buying a bunch of capital assets, lease hold improvements, autos, so on and so forth, you may want to strike a year end very quickly after the date of incorporation because of the depreciation rates.

John Paul: Right. So we look at a lot of different things when we make this decision for our clients. Is there going to be losses right away that we can file a quick year end for? Pretty much, we’re looking to defer as much tax into the future as possible.

Fabio: The other consideration you would want, would be perhaps taking the year end that is within six months of the personal tax filing year-end which is December 31st. What that allows us to do as accountants, is it allows us to declare a bonus to an owner/manager, take the write off or the deduction in the corporation. We actually don’t have to claim that bonus on the owner/manager’s personal tax return until the next fiscal year end for that person. So we get a good deferral there.

John Paul: Right. So those are just some of the small things that we look at when considering what year end we should make the corporations. Talk to your accountant or give us a shout if you want any information on what year-end do you think yours could be. Until then, see you next time.

Campanella McDonald LLP is a full-service accounting firm based in Oakville Ontario. The firm’s partners and staff concentrate on helping small businessesindependent professionals, and real estate investors maximize their bottom lines by providing specialized accounting, assurance, tax compliance, tax planning and financial advisory services.

Questions about HST and Tax Efficient Strategies

Contact us today by filling out the form below or calling us at 647-496-4075