Self Employed: Accounting periods and tax basis periods

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When you start in business as a sole trader or in partnership your first accounting period starts on the day that your business starts up and it ends on the date to which your accounts are drawn up. Which accounting period you chose may depend on whether you are making a profit or loss in the opening years of your business. By accounting convention, an accounting period is 12 months long, although your first accounting period may be longer or shorter than this.

For tax purposes the tax year runs from 6 April to 5 April. As you will be preparing accounts for tax purposes, it may be more convenient to ensure that your accounting period end matches that of the tax year.

As with all of our tax tips and web pages this information is necessarily summarised and of a general nature.  If you would like detailed specific advice please contact us.