What is the financial year-end?

In accounting, the closing of accounts corresponds to the period when all the supporting documents are brought together to produce the company’s balance sheet. This is one of the functions offered by company accounting software, enabling you to close the accounts and move on to the next year.

When should the accounts be closed?

The general case

In general, 31 December is chosen by many companies. You are free to define the end date of the financial year, but you do not have the option of choosing a variable date such as the first Monday of a month. You can, for example, close the financial year at the end of a calendar quarter. The financial year must last 12 months (fiscal year). Only the first financial year may be shorter or longer (maximum 24 months).

When choosing the date, it is important to bear in mind that many obligations will have to be fulfilled during the 6 months following the end of the financial year (tax returns, annual inventory, etc.).

Liberal professions under the BNC system

The accounts of companies classified as BNC (non-trading profits) depend on the tax regime to which the company is attached.

In this case, the accounts must be closed on 31 December.

Analyse the accounts closing

Comparison

Once the financial year has ended, the company director will be able to compare and analyse changes in sales, costs and the company’s general situation. By comparing with previous years, they will be able to see whether their business has developed positively or negatively.

Validation of choice

Closing the accounts also provides an opportunity to analyse the impact of the strategic choices made during the financial year. An analysis of the actions taken will help to highlight those with a positive or negative impact.