A financial year is one of those terms that comes up immediately when you start a business. But what does it actually mean? When does it start? Can you choose it yourself? And what do you need to do when it ends?
This guide covers everything a sole trader or limited company owner needs to know about financial years in Finland.
What is a financial year?
A financial year (tilikausi) is the period over which a business prepares its financial statements. It's the basic accounting cycle: all income, expenses, assets, and liabilities accumulated during the period are gathered together and reported.
A financial year is usually 12 months long, but it doesn't have to follow the calendar year. It can start and end in any month.
Under Finnish accounting law, a financial year is 12 months. The exceptions are the first and last financial years, which can be shorter or longer — up to a maximum of 18 months.
When does a financial year start?
The start date is usually set when you register your business. When you register with the Finnish Trade Register (kaupparekisteri), you declare the start and end dates of your financial year.
The most common financial year in Finland is the calendar year: 1 January to 31 December. It's the simplest option because it aligns with the tax year and most official reporting periods.
Other common financial years include:
- 1 April to 31 March (common in retail)
- 1 July to 30 June (used in some industries)
- 1 October to 30 September
You have fairly free choice in selecting your financial year. It's worth thinking about when your business is busiest: if your work is seasonal, ending the financial year during a quieter period makes the year-end process easier.
Financial year for sole traders
For sole traders (toiminimi), the financial year is always the calendar year — 1 January to 31 December. You can't change this. The period is always 12 months and always starts on 1 January.
If you register a sole trader business during the year — say in April — your first financial year is shorter. It runs from your registration date to the end of the calendar year.
Sole traders aren't required to use double-entry bookkeeping in the same way as limited companies, but all income and expenses still need to be recorded. A bookkeeping tool like NoCFO keeps everything organised automatically throughout the year.
Financial year for limited companies
Limited companies (osakeyhtiö) have more flexibility. The founders decide the start and end dates of the financial year in the articles of association. It can be changed later by amending the articles of association.
Limited companies are required to use double-entry bookkeeping, and official financial statements must be prepared within four months of the financial year ending.
Can you change your financial year?
Yes, but there are practical limitations.
Sole trader: A sole trader cannot change their financial year — it is always the calendar year.
Limited company: The financial year can be changed, but it requires amending the articles of association and filing a notification with the Trade Register. The change can also result in an unusually long or short financial year, though the maximum length is 18 months.
Changing your financial year mid-operation is administratively cumbersome. It's worth thinking carefully about your financial year when you first set up the business.
What happens at the end of a financial year?
The end of the financial year triggers the year-end process. This is the most important accounting event of the year, and it requires care.
1. Closing the books
Before preparing financial statements, all transactions from the financial year need to be recorded. This means:
- All sales and purchase invoices recorded
- All receipts and expenses logged
- Bank account transactions reconciled against the books
- Any accruals made (e.g. prepaid expenses or income that belongs to this period but hasn't been invoiced yet)
If you've kept your books up to date throughout the year — which NoCFO's automatic bank sync and AI categorisation makes much easier — this step is considerably lighter.
2. Accruals and reconciliations
Accruals mean allocating income and expenses to the correct financial year, even if the money hasn't moved yet.
Examples:
- An insurance premium paid in advance that covers part of the next financial year — part of the cost is deferred to the next period
- Work completed this financial year but invoiced in January — the income belongs to this year
- A salary paid in January for work done in December — the expense belongs to the current financial year
3. Depreciation
If the business owns fixed assets — machinery, equipment, vehicles — depreciation is recorded at year-end. Depreciation reduces the book value of assets annually.
4. Inventory count
If the business holds physical stock, it needs to be counted at year-end. The value of inventory affects the financial result.
5. Preparing financial statements
Financial statements consist of three main parts:
- Income statement (tuloslaskelma): shows the financial year's income, expenses, and profit or loss
- Balance sheet (tase): shows the business's assets and liabilities at the end of the financial year
- Balance sheet notes (tase-erittely): breaks down the balance sheet items in detail
For limited companies, financial statements are mandatory and must be filed with the Trade Register within four months of the financial year ending. Sole traders are not required to publish their statements, but the figures are still needed for the tax return.
NoCFO's year-end tool lets you compile financial statements directly from the software once your bookkeeping is up to date.
6. Tax return
After the financial year ends, a tax return must be filed. The deadline depends on your business structure:
- Sole trader: tax return is generally due by early April of the year following the financial year
- Limited company: tax return is due within four months of the financial year ending
7. Audit (if required)
Small limited companies are exempt from a statutory audit if two of the following three conditions are met:
- Turnover under €200,000
- Balance sheet total under €100,000
- Average of three or fewer employees
If these thresholds are exceeded in two consecutive financial years, an auditor must be appointed.
Year-round bookkeeping is what makes year-end manageable
The stress of year-end is directly proportional to how well you've kept your books during the year. If receipts are saved, bank transactions are reconciled, and invoices are logged as they come in, year-end is mostly a summary exercise — not a project.
If everything has piled up, it's a painful few weeks.
NoCFO keeps your bookkeeping current automatically: your bank account syncs in real time, AI suggests how to categorise transactions, and you can scan receipts from your phone the moment they land in your hand. When the financial year ends, the books are already done. The year-end tool compiles the income statement and balance sheet directly from the software.
Year-end checklist for small business owners
Throughout the financial year:
- Log receipts as they come in
- Keep your bank account synced to your bookkeeping
- Check your financial result monthly, not just at year-end
1–2 months before year-end:
- Make sure all invoices are recorded
- Review any accruals needed
- Count inventory if applicable
After the financial year ends:
- Prepare financial statements (limited companies: within 4 months)
- File your tax return on time
- Archive your bookkeeping records (minimum retention: 6 years)
Frequently asked questions
What is a financial year in business? A financial year is the 12-month period over which a business prepares its accounts and financial statements. It can start in any month, though for sole traders in Finland it is always the calendar year.
When does a financial year start in Finland? The start date is set when you register your business. The most common choice is the calendar year (1 January to 31 December). For sole traders, it always starts on 1 January.
Can you change your financial year? Limited companies can change their financial year, but it requires amending the articles of association and notifying the Trade Register. Sole traders cannot change theirs — it is always the calendar year.
What do financial statements include? Financial statements include an income statement, a balance sheet, and balance sheet notes. For limited companies they are mandatory and must be filed with the Trade Register within four months of year-end.
How long do you need to keep accounting records in Finland? Accounting records must be kept for at least six years from the start of the calendar year following the end of the financial year.
Does a sole trader need an auditor in Finland? No. Sole traders have no statutory audit requirement.
When is the tax return due after the financial year? For sole traders, generally by early April of the following year. For limited companies, within four months of the financial year ending.
NoCFO keeps your bookkeeping up to date throughout the financial year, so year-end never catches you off guard. Try it free at nocfo.io.