A fiscal year, also called accounting year, refers to a 12-month period during which a company records all the information necessary for its accounting.
How Is the Fiscal Year Calculated?
The fiscal year of a company is calculated from the date of incorporation of the company. Thus, if a company is started on April 7, the tax year begins on this day and ends, at most, 53 weeks later.
How Do You Determine the Tax Year of your Business?
Typically, the fiscal year begins on January 1 and ends on December 31 of the same year.
Companies can also choose to use the date of incorporation of the company as the beginning of the tax year. The beginning of the tax year for the following returns will be the day after the end of the tax year.
For example, a company chooses June 1 as the start of the tax year and sets the end to December 22 of the same year. The second tax year will be from December 23 to December 22.
New businesses can choose any tax year end as long as it is no more than 53 weeks from the date of incorporation.
It is necessary to request authorization in order to change the dates of a company’s tax year.
What Is the Difference Between a Fiscal Year and a Calendar Year?
The calendar year is fixed: it begins on January 1 and ends on December 31. The fiscal year is not fixed. It depends on what the company has decided.
Many companies prefer to match the two to avoid confusion.
What Is the Fiscal Year in Quebec?
In Quebec, companies can decide the dates of their fiscal year as they wish as long as their fiscal year does not exceed 53 weeks.