Re: Recommendation on a Fiscal Year
Afiscal period is used to calculate the annual financial statementglobally. It is clear that our legal systems require us to presentour financial accounts and taxes at the end of each financial year(Krapf, 2008). I propose that our financial year should be differentfrom the calendar year. Hope my proposal will be accepted in regardto my recommendations.
Oneof the reasons, for putting forward this recommendation, is in regardto the management of the inventory. Our sales hit the climax inDecember. The festive season is always busy and there is a lot to bedone in managing the inventory. However, in July, the inventory is atits lowest since the season is less busy. I recommend that our fiscalyear corresponds to this period to allow proper management of theinventory. This will enhance accuracy, cut on costs, and greatsupport from the stuff since most would not be held up.
Wealso need to consider our income taxes. For instance, if we end ourfinancial year at the second half of the calendar year, it will bepossible for our organization to disburse a management bonus in acorporate year and compensate it during the subsequent calendar yearallowing the company to defer claiming it by itself and keep awayfrom paying taxes until the following year. What we will need to dois just to prepare to conform to some legal and revenue credentials.
Basingon the management of the inventory, the income taxes, and theaccounting firms I recommend that we shift the end of our financialyear to July.
Krapf,P. (2008). “Review on Business planning and management”. Journalof Business Management,88,1241-1261.