Changing the accounts year end for sole traders – Tax tip
If you are a sole trader who has:
a) suffered a large drop in sales and profits due to the Pandemic
b) and has a December year end
It may make cease to extend your accounts year end well into 2020 to cover the period of the lock-down:
For example
If you had a year end of December 2019 and you wish to do accounts for say 18 months to 30th June 2020
This has the effect that your earnings for the purpose of doing your 2019 tax return should be in most cases be lower
For example
Alan has a retail shop and always did his accounts to a December year end:
Profits for 12 months to Dec 2019 100,000
Profit for 6 months to June 2020 20,000
If he did accounts for say 18 months to June 2020, the taxable profits that would be included in his tax return
would only be €80,000 as opposed to €100,000. ( total profits of €120,000 divided by 18 and multiplied by 12)
Would advise that a rough calculation be done in advance before accounts are actually prepared to see would it be worthwhile to change the year end in terms of tax saved.
Any queries on the above give me a call on 091 763817 or email me at oliver@taxreturnhelp.ie