What is an accounting year?
Definition of an accounting year
An accounting year is the year covered by your business's accounts. Every business must prepare accounts for a year at a time.
Accounting years for different business types
If you run your business through a limited company, Companies House will set your accounting year end as a year after the end of the month in which you created ('incorporated') the company.
You may wish to change your company's accounting year end to match the calendar year (31st December) or the financial year (31st March).
Example of an accounting year:
If a company set up in February 2007, Companies House may set its first year end date as 29th February 2008. That company could then change its year end to 31st March 2008, to match the financial year.
Frequently Asked Questions
Why is it easier to have my accounts match the tax or financial year end?
Tax reliefs such as capital allowances often change at the tax or financial year end, so you could save time on calculations by choosing the tax or financial year end for your accounts.
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.