Starting a new company can be confusing and difficult. There is an overwhelming amount of new terminology to try and navigate. On top of that, as a business owner there is now a series of important dates that you need to be aware of to ensure you are meeting compliance requirements with the CRA and any lenders.

What is a year end?

A year-end is the date you select to mark the final day of your company’s fiscal year. While it can fall on any day of the year, it’s typically easiest to choose the last day of a particular month. It doesn’t have to match the calendar year but must span a full 365 days. For example, if your year-end is set to June 30, your fiscal year would run from July 1, 2023, to June 30, 2024. This year-end will then continue to be used in subsequent years.

The year-end is crucial because it marks the period during which you summarize your company’s financial information, including the income statement and balance sheet. This data is then used to complete essential tax filings, such as the corporate tax return or GST returns.

How to choose a year end day?

Choosing a year end date is fairly simple. This is simply done at your judgement, and will be submitted to the CRA when you file the first tax return for the corporation. There’s no need to worry about additional forms or applications for this. However, while the decision is yours, there are a few factors to consider.

Things to consider when choosing a year end date

When selecting your year end date, there are a few important factors to keep in mind:

• Choosing a month-end date: Opting for a date at the end of the month can make it easier to reconcile balances with various statements in the future.

• Busy and slow seasons for accounting firms: Accounting firms experience busier periods, typically from January to April. Choosing a year-end date during the slower months (from February to September) could result in faster processing and more responsive communication, as this aligns with the 3-month tax filing deadline (see below in key dates).

• Incorporation date and tax returns: Your incorporation date determines when you need to start filing tax returns. While the incorporation date doesn’t have to align with your year-end, it affects when filings are due. In your first year, your tax return must be filed within 371 days of your incorporation date. For example, if you incorporated on March 31, 2024, your tax return would need to be filed by April 6, 2025, or earlier.

Key Dates

As a business owner, there are several key dates you should be aware of to ensure you meet important reporting requirements:

• Tax return: Unlike personal taxes which are due for everyone on April 30, corporate taxes are based off your year end date. For an active business (not holding passive investments), taxes are generally due 3 months after your year-end. For example, if your year-end is June 30, your taxes will be due by September 30 each year. For an inactive business (holding only passive income), taxes are due 2 months after the year-end. Since it takes time to complete your year-end, it’s recommended to provide your accounting information 1-2 months after the year-end to ensure there’s enough time to meet the deadline.

• GST Return: GST returns are due three months after your year end for annual filers. This changes for quarterly or monthly filers (stay tuned for our new article coming next week discussing the requirements for quarterly and monthly filers). For new and most small companies, you will likely be an annual filer.

• Banking and Loan Requirements: If your business has funding from a bank or lender, you may be required to provide financial information on a set date each year. These dates vary by institution, so it’s important to stay on top of them to maintain your financing and avoid any disruptions. Be sure to check with your bank if you’re unsure about the specific requirements.

Stay Compliant with Expert Guidance

Understanding your year-end and key filing dates is essential for maintaining business compliance. By planning ahead and staying organized, you can ensure that your business stays on track. For further guidance and consultation on year-end planning and tax filing deadlines, don’t hesitate to reach out to us today. We’re here to help your business succeed and meet all compliance requirements.