Choosing a Financial Year End (FYE)
Besides dealing with bookkeeping and taxes, an important part of incorporation is choosing a Financial Year End (FYE). This chosen date will be when you submit all your corporate filings and taxes.
In this article, we’ll be going through what you need to know about your FYE and what you will need to take into account while choosing this date.
What is an FYE
A company’s FYE is the date on which it will have to submit Annual Returns and tax documentation, as part of national legislation. Though your chosen FYE date does not have to be the same as a calendar year, it should last for 12 months-long.
Deciding on a Financial Year End for a new company
So you’ve just set up your new company and you’re in charge of choosing your FYE. Most companies begin on the day of the company incorporation and end on the day of your choice.
Your very first Financial Year cannot last more than 18 months unless the Registrar allows you to extend it. After the first year, your Financial Year should be 12 months long, starting on the day after the previous Financial Year ends.
A company’s FYE must be selected at the time of your company’s incorporation. This cannot be done after that, so you must choose an appropriate date. If you are unsure of what date to choose, common dates that companies use include 31 March, 30 June., 30 September, and 31 December, according to the Accounting and Corporate Regulations Authority (ACRA).
Length of Financial Year
As mentioned previously, your first Financial Year can last for up to 18 months long. However, the IRAS operates within 12 month-long periods. For periods longer than this, they will be split and assessed as 2 independent periods.
This may directly affect the amount of taxes that you will have to pay. If you want to enjoy tax exemptions, you should consider what exemptions you’d like to file for before setting your FYE.
Changing your FYE
You will be able to change your FYE, but only for your current or previous Financial Year. This means that years before will not be able to be altered. However, if statutory deadlines for your Annual General Meeting or the filing of your Annual Returns have passed, you will not be able to change your FYE.
Changing your FYE is pretty simple – you’ll just need to send a notice to the Registrar. But you’ll need approval from the Registrar under the following circumstances:
- If the change in FYE will make your financial year longer than 18 months
- If it is the third request for a change of FYE
- If the FYE was changed within the last 5 years (from the last changed FYE)
Financial Year End
IF you are unsure about what to do when it comes to choosing an FYE or other matters that have to do with incorporation, be sure to contact our experienced team at Swiftly to get it all sorted out.