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Do you use the 4-5-4 Retail Calendar?  It was designed to make retail planning for sales, inventory and payroll easier. 

Prior to and during the 1930s, everyone used the same standard Gregorian calendar. However, during the 1930s there was a shift in shopping. As more people moved from the country to the city seeking work, more and more people shopped on Saturday. Many businesses did half their weekly business on Saturdays.  To further complicate the issue, not only was Saturday the busiest shopping day of the week, there was virtually no shopping at all on Sundays.  Sales planning from year to year could be a nightmare; months with major holidays had 5 Saturdays last year but only 4 this year.  More Saturdays meant more sales, but how was a shopkeeper to plan?

During the 1930s, the 4-5-4 calendar was born. Its purpose was to streamline planning and help make historical sales data line up efficiently for comparison purposes.  Using the 4-5-4 retail calendar, the number of Saturdays and Sundays were split evenly throughout the year and were the same from year to year.  Also, most holidays lined up in the same week with few exceptions. Easter is an exception since it can occur in March or April.

When using a 4-5-4 retail calendar, every month begins on a Sunday and ends on a Saturday. The first month of a quarter has 4 weeks (28 days), the second month has five weeks, and the final month of a quarter has 4 weeks. There are 91 days in each quarter and 364 days in a year. This simplifies planning from year to year for more than just sales. The 4-5-4 calendar begins on February 1. The reason is to have the selling seasons and months line up. In the majority of the country, the first month of the spring selling season is February and the first month of the fall selling season is August. Traditionally January and July are the end of season months and known for clearing out merchandise that failed to sell in-season.  Since the year begins on February 1, it ends on January 31, the last day of the Fall/Winter Season.

1 or 2 (leap year) days are “left over” each year and every 5 to 6 years there is a 53 week year. The extra week is included in January, so occasionally January will have 5 weeks instead of 4. For the next year’s planning, the extra week is usually ignored although some retailers split either the first or the last week’s sales over each of the four prior weeks. You can determine which method to use in your store, but it only happens every 5 to 6 years.  2017 is a 53 week year.  In 2017, January, the last month of the year, will have 5 weeks.  2018 will begin on Sunday, February 4.

Will there be a significant difference if you use the 4-5-4 Retail Accounting Calendar? It depends on your store. If there is an imbalance of sales over the course of a week with most sales on weekends, yes, this will make a major difference in your planning—allowing you to compare like to like or apples to apples. If your sales are evenly spread out over each day of the week, this may not have as pronounced an effect.  Keep in mind that the purpose of the calendar is to make retail planning easier.  Retailers are tasked with having fresh merchandise in stock for customers on a regular basis.  The uniformity from year to year simplifies the planning process.

The 4-5-4 calendar is a voluntary guide, but it is recognized by the IRS. To change from a standard calendar to the 4-5-4 calendar, you need to file an additional statement with you taxes. The statement needs to include the following:

1.  The last month of your year (January or July, for example)
2.  The day of the week the year will end on. In the 4-5-4 retail calendar, this is usually Saturday, but you can choose any day.
3.  The date on which the year ends which will be the day closest to the normal end of the month. For example, in 2016 Saturday, January 28 is 3 days from the normal last day of the month (January 31st). In 2017, the last day of the year is Saturday, February 3. Saturday, January 27 is 4 days from the 31st, but Saturday, February 3rd is only three days from January 31st.
4. Sign the statement including your title and a phone number where you can be reached. Just to be on the safe side, include your taxpayer id like you do on all correspondence with the IRS.

If you try out the 4-5-4 retail calendar in 2017 and decide you don’t like it (change is more difficult for some than others), just file your 2017 taxes as usual without a statement. If, however, you like the ease of planning and wish to keep the 4-5-4 calendar, file the statement of change with your taxes. All it takes to change to the 4-5-4 calendar is to file the statement. If you want to change back after the first year, you will have to petition the IRS and ask for permission.

Our complimentary 4-5-4 calendars are available to those in the US.  It is printed on cardstock and easy to read.  Please let us know via email how many copies you need.  If you live outside the US, we would be happy to email you our calendar in pdf format and you may print it as needed.

Give this great tool a try and see if it helps you as you make your plans!

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