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Benefits of using the 4-5-4 Retail Accounting Calendar

  • Every quarter has exactly 13 weeks

  • Every month begins on a Sunday and ends on a Saturday

  • Each calendar month will have the same number of selling days as it did last year unlike with the “normal” calendar in which a month may have 4 Saturdays this year when it had 5 Saturdays last year

  • Each month corresponds to the same period next year and last year

  • Retail Business cycle best relates to seasons ending in January and July

  • The 4-5-4 Accounting Calendar (a.k.a. the 52-53 Week Calendar) is recognized by the IRS for income tax reporting purposes.

To change to the 4-5-4 Accounting Calendar, file a statement with the tax return at the end of the first tax year for which the election is made. If you are keeping the same fiscal year end, you make the election by filing your tax return for the 52-53 week year and simply attaching a statement showing:

  • the day of the week on which the tax year will always end (SATURDAY)

  • that it will end on the SATURDAY nearest the end of the month

  • the month with reference to which month the tax year will end (this will be your current fiscal year end)

Many retailers have a December fiscal year end because they are not corporations (i.e. they are partnerships, proprietors, etc.) and have no choice about their year end. They can still use the 4-5-4 calendar ending in January, then make a simple adjustment at the December year end to report the tax information for 12-months by adding data from the prior January.

The IRS says that if your year-ending month is unchanged, no additional information needs to be filed other than the statement mentioned above. IRS Form 1128 must be filed only if the year end month changes. For example, if you are changing from a January Fiscal Year End to February or July.

If you do not like the 4-5-4 Calendar, you can change back before the first year end without any notification to the IRS. If you decide you like the 4-5-4 Calendar and the easier and more accurate sales planning it allows, the IRS requires you to maintain the 52-53 Week Year for 4 years (48 months) before making another change in Year end.

The most difficult part of the change is that you will have to change your thinking to a minor degree; however, the sales planning benefits are great. We encourage you to give it a try.

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