The 30 November results declaration for August closings
While most companies close their accounts on 31 December, some do things differently. All those that have opted for a late summer close have until 30 November to declare their results. What was the intended benefit? And how does it work? Find out more with our accounting tips.
Imposed rules and free choice
The accounting period
A financial year lasts 12 months. Except in the case of a business start-up, when it can last up to 24 months. The length of the financial year may or may not correspond to the calendar year. When the company is set up, the founders set a closing date, which may be changed later.
Your closing date
Only organisations subject to the non-commercial profits regime (BNC), such as the liberal professions, are obliged to close their accounts on 31 December.
For the others, which come under the BIC regime (Bénéfices Industriels et Commerciaux), the choice is up to each individual, provided that the date set is precise, such as 30 June, or even during the month: such as 16 June, and not variable: such as "the 3rd Friday of the month". In the case of groups of companies, the only requirement is that the business of the various entities be closed at the same time.
Why close at a different time?
Under the BIC regime, you are free to choose. So much the better... so what would be the best date? There are four points to bear in mind:
Follow your seasonality
Ideally, the financial year should correspond to your operating cycle. So if you have strong seasonal fluctuations, aim for the period after the peak of activity. For example, if you have a sale, close your books one or two months after the sale. This will give you a calmer period to look after your accounts, take stock, etc. This is how many chains close on 31 August.
Boosting your balance sheet
Irrespective of the operational benefits to your organisation, this will have a positive impact on your results. By closing at the end of a good period, your stocks will be at their lowest and your cash flow at its highest. Your balance sheet and profit and loss account will be in top form. And that's something the banks will appreciate, should you need to apply for a loan.
Taxation of dividends
If your company is a SA (Société par Actions), there is another aspect to consider. Dividends paid to your shareholders are taxable. To decide whether they should count for the current or the next tax year, the safest thing to do is to close the accounts on 30 September. This gives your company the choice of distributing dividends either before the end of the calendar year or at the beginning of the following year.
Avoid being caught short
The context of legal reforms is also a strategic variable. As your company is based on the calendar year, it is subject to regulatory changes, even at the last minute. Any reforms passed up to 30 December will be applied to you retroactively. This leaves you no room to adapt to optimise your management accordingly. This is a penalising situation, all the more so in view of the current hot topic of the 2017 budget - the Finance Bill - an amendment to which concerning SMEs has recently been approved with a view to reducing the number of SMEs.recently approved with a view to lowering the rate of corporation tax.
How does it work?
Respecting deadlines
It may be advantageous to close the accounts on a date other than 31 December. Now, are there any specific terms and conditions? Only one: the deadline. At the end of the calendar year, the tax authorities give you 4 months to file your return. You have exactly until the 2nd working day following 1 May. However, if you close your account on another date, the deadline is reduced to 3 months. So if you close your business on 31 August, you have until 30 November to file your tax return.
The availability of your chartered accountant
When you consider that nearly three quarters of all companies close their accounts at the same time, on 31 December, you can imagine the work overload on the accountants' side. But by setting a different closing date, your accountant will be less overworked. This availability is reassuring in terms of their ability to meet the deadline, and can really improve the quality of the exchanges between you and your service provider.
The content of the tax return
What does the tax return actually consist of? Also known as the tax return, it involves declaring your company's taxable income, on the basis of which your corporation tax will be calculated. The form used for the return, if you are a BIC company, is form 2031.
Under the simplified tax regime, it is form 2033, and under the standard tax regime it is form 2050. The return also contains appendices with tables showing all the items on the balance sheet.
Closing the books at the end of the summer can be strategic for many companies. The tax return must be filed by 30 November. This is a tax obligation that must be fulfilled with the help of your chartered accountant in order to provide the authorities with a calculation of your taxable income.
Article translated from French