The first year: annual balance sheet and tax return
Congratulations: you have started a business! We will explain to you the options available to you for your tax return and annual balance sheet for the first year.
You probably did not start your company on 1 January, but in the middle of the year. The year is drawing to a close, your company has been in existence for a few months and is doing quite well. However, this period has been marked by more expenses than profits and you know that this is normal when starting a business. But how does this affect your tax return? Don’t worry – there are a number of options available to you, which also give you tax advantages.
How long is a financial year?
As a rule, a financial year consists of twelve months and is identical to the calendar year, i.e. it runs from January to December. Under certain conditions, however, it is possible to close the financial year in a different month. Companies in the tourism sector, for example, can choose a tax period that covers a season. New business start-ups also benefit from a flexible accounting period.
Closing the financial year when starting a business
New entrepreneurs have the possibility to deviate from the official accounting year. They can choose between two options: a short financial year, which ends at the end of the current tax period, or a long financial year, which ends at the end of the next tax period. The maximum duration of the first fiscal year varies between 15 and 23 months depending on the canton. The maximum duration can be found in the respective cantonal tax law.
To illustrate this with an example: If you set up your company on 1 May 2022, you can either set the end of the financial year at 31 December 2022, in which case your financial year will last 8 months. Or you can set it for the end of December 2023, in which case it will last 20 months. Whichever you choose, it is important that you determine the financial year when you set up your business.
Hip: A long year is particularly interesting in cantons that do not have a uniform tax rate on company profits. The high initial costs can then be offset by the profit made. For you, this means tax advantages.
