What Is a 52/53 Week Filer & How Does It Work?
Understand the 52/53 week fiscal year, a specialized accounting period that aligns business operations with financial reporting cycles, affecting year-end and tax considerations.
An accounting period is the timeframe a business uses for financial records and reporting. While many entities operate on a standard calendar year (January 1 to December 31), some businesses use a fiscal year. A 52/53-week fiscal year is a flexible type of fiscal year that varies in length, allowing businesses to align financial reporting with their unique business cycles.
Understanding the 52/53 Week Fiscal Year
The 52/53-week fiscal year is an accounting period defined by weeks rather than by fixed calendar months. This means the year always concludes on the same day of the week, such as the last Saturday in December or the Sunday nearest to December 31. This consistent ending point results in a fiscal year that is either 52 weeks (364 days) or, approximately every five to six years, 53 weeks (371 days) long. The extra week accounts for the one-day gap each year (two days in a leap year) that accumulates because 52 full weeks only total 364 days.
Businesses often choose this method to align their financial reporting with their natural operational rhythms. For instance, a retail business might prefer its fiscal year to end on a Saturday, which is typically a strong sales day, to ensure consistent weekly patterns are captured in each reporting period. This consistency can streamline inventory counts, sales analysis, and payroll processing, as each fiscal period contains the same number of peak business days and weekends. This method provides a more consistent and comparable basis for financial reporting, especially for businesses with cycles that do not neatly fit into calendar months.
Eligibility for the 52/53 Week Fiscal Year
To be eligible to use a 52/53-week fiscal year, a taxpayer must consistently maintain their books and records and report income and expenses on this basis. The chosen year must always end on the same day of the week. This consistent ending day must be either the date on which that specific day of the week last occurs in a chosen calendar month, or the date on which that specific day of the week falls nearest to the last day of that calendar month.
For example, a business could elect for its year to end on the last Friday in January, or the Friday nearest to January 31st. This consistent application is a fundamental requirement for the Internal Revenue Service (IRS).
Electing and Changing the 52/53 Week Fiscal Year
A new business can adopt a 52/53-week fiscal year without obtaining prior IRS approval by filing its first income tax return using that selected tax year. This initial election requires the business to include a statement with its federal income tax return for the first taxable year.
This statement must specify the calendar month the new year will reference, the day of the week on which it will always end, and whether it will end on the last occurrence of that day or the day nearest to the month’s end. For corporations, this election is indicated on forms such as Form 1120, while S corporations may elect it on Form 2553, Election by a Small Business Corporation.
For an existing business looking to switch to a 52/53-week fiscal year, or to change from one accounting period to another, IRS approval is required. This process involves filing Form 1128, Application to Adopt, Change, or Retain a Tax Year.
The form must be filed by the 15th day of the second calendar month following the close of the short tax year that results from the change. A short tax year is a period of less than 12 months that occurs when a business changes its accounting period. Even if the 52/53-week year ends with reference to the same calendar month as the previous tax year, approval is still necessary.
Practical Considerations for Businesses
Operating under a 52/53-week fiscal year introduces specific considerations for tax reporting. The varying length of the fiscal year (52 or 53 weeks) means that tax filing deadlines, which are tied to the end of the fiscal year, will shift slightly each year. Businesses must carefully track their specific year-end date to ensure timely filing of their income tax returns and accurate calculation of estimated tax payments.
The alternating 52- and 53-week years can also affect financial statements and their comparability. A 53-week year naturally includes an extra week of revenue and expenses, which can distort year-over-year comparisons if not properly adjusted. To maintain consistency for internal analysis or external reporting, companies often make pro-rata adjustments, present data on a 13-week quarter basis, or provide footnotes explaining the impact of the 53rd week.
Managing payroll and other periodic expenses also requires careful attention in a 53-week year. For businesses that pay employees weekly, bi-weekly, or every four weeks, a 53rd pay period may occur. This can affect payroll tax calculations and require adjustments to ensure employees receive appropriate pay and taxes are withheld correctly. Similarly, recurring expenses like rent or utilities, which are often paid monthly, may need to be accrued or deferred differently in a 53-week year to accurately reflect costs within the longer period.