While opening a small business corporation in Ontario, how do you select a proper year end date? Is it a random date ?
Or are there guidelines to it?
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There is one edge case that may be of value to you. If you declare a bonus (probably to yourself given a very small company) you can deduct it from your year and then have up to 6 months to actually write the cheque and give it to the person.
Say your year end for the corporation is July 31st. You could declare the bonus July 30th and deduct it from that year, lowering your corporate tax. You could then wait until January 30th to actually write the bonus cheque. The person would then have that taxable income in a later calendar year, deferring paying the tax. Depending on the size of the bonus, this would possibly matter, although if you did large bonuses every year it would only matter the first time.
The other issue is the availability of your bookkeeper or accountant. They are sometimes very busy during personal income tax season. They often like a vacation immediately after that. They may go away in the summer when their kids are out of school. The nice thing about a July 31st year end is that you can probably count on a quick turnaround from your accountant in September. The possible downside is that you won't enjoy reconciling your credit card statements and the like in August as part of getting your year end stuff together. You can avoid that by keeping your books in a decent shape all the time.