Natural business year;

              4 HASKINS & SELLS January
The Natural Business Year
THE proportion of business organiza­tions
which end their fiscal year on
December 31, as indicated by the results
of a recent investigation, is seventy-two
per cent.
The pressure which accounting firms
annually undergo because of this con­gestion
at the end of the calendar year
has caused professional accountants to
urge a more logical time to close the books
—at the end of the natural business year.
A fiscal year coinciding with the natural
business year would end during that dull
period which follows the heaviest selling
season, ordinarily evidenced by low in­ventories,
low receivables, and a minimum
of borrowings. It is at this time that the
operations of the past year may be most
profitably reviewed and policies formu­lated
for the coming season. This situa­tion
is not confined to those industries
which are directly affected by the growing
of crops. Any company having seasonal
fluctuations, that is, which has an annual
recurring of brisk and dull periods at about
the same time each year, should consider
the question of the natural business year.
There are many such industries not di­rectly
concerned with the maturing of crops.
Frequently those who use the calendar
year as their business year continue to do
so under the impression that the Federal
income tax law requires that a return be
filed for the calendar year. In view of the
fact that the government permits the
filing of returns for a fiscal year ending on
the last day of any month, a considerable
part of the efforts of accountants advoca­ting
the adoption of the natural business
year has necessarily been devoted to
correcting this misconception of the in­ternal
revenue law. In addition, ac­countants
have pointed out the advan­tages
accruing to the business concern