The end of the fiscal year is probably a big time for your business: Many Indiana entrepreneurs have their schedules lined up for their fiscal, tax and calendar years. For sole proprietorships and one-person LLCs, this coordination is, in fact, an IRS mandate.
However, if you have a multi-person LLC or if your business is incorporated, you may want to think about strategizing your fiscal and tax year calendars. Doing so could provide you with some unexpected savings. It could also give you time to collect on your pending accounts before you have to pay out your taxes.
In terms of savings, some accountants charge less for off-peak work. It is a simple change that could save you significant fees. However, that is just the beginning.
Considering that cash flow problems are among the top reasons that businesses declare bankruptcy, any help you can get with controlling or organizing your payment due dates could go a long way towards managing your debts with less extreme tactics. Setting or changing your tax year to coordinate with your revenue schedule could provide more freedom than you might think.
When exactly would be best differs based on the type of business you run. For example, according to The Balance, many retail companies set their years to end at the beginning of February. Since many forms of payment take about a month to process, this delay could allow all of your holiday income to show up on your accounts before they close.
As you can see, this one bookkeeping trick is unlikely to single-handedly save a business. A combination of smart financing, debt management and effective collection could simply find some support from these types of accounting details. Please do not consider this is legal advice. It is meant only to provide background information.