Is it normal to have a 13 month financial year in a company’s first year of trading?

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I am confused. I’ve just registered a limited company, and it looks like my first financial year is going to be 13 months. I don’t know about you, but I’ve always understood “a year” to mean 12 months. Is there any particular reason why a financial year would be 13 months? More importantly, is this normal?

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Don’t worry, this is perfectly normal in the first year of trading. Your company’s accounting reference date (ARD), which represents the end of its financial year, falls on the anniversary of the last day of the month in which the company was incorporated. This always results in a first financial year of between 12 and 13 months.

This is easier to understand by way of an example:

  • A company is incorporated (registered) on 8th October 2015. This is the company’s date of incorporation and the start of its financial year.
  • The company’s accounting reference date (ARD) falls on 31st October 2016. This date is the last calendar day of the month the company was incorporated. It is the date on which the company’s financial year ends.
  • The company’s financial year therefore runs from 8th October 2015 - 31st October 2016. This is almost 13 months’ long.
  • The company’s second financial year will run from 1st November 2016 - 31st October 2017. This is exactly 12 months’ long.

Your company’s second and subsequent financial years will always be 12 months’ long, unless you change the accounting reference date by shortening or extending your company’s financial year.

a year ago
 

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