Calendar Year vs. Fiscal Year
Every business must figure its taxable income based on an annual accounting period called a tax year. The either/or dilemma is often between using the standard Calendar Year (Jan 1 to Dec 31) or a different Fiscal Year. Choosing the wrong one can lead to unnecessary complexities like filing Form 1128 later for approval to change.
The Calendar Year is the most common choice and runs from January 1 to December 31. The Fiscal Year is 12 consecutive months ending on the last day of any month except December. This is an official decision that builds a Safe foundation for your business. You adopt a tax year by filing your first income tax return using that year. Choose correctly now to avoid having to file Form 1128 for IRS approval to change it later.
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DISCLAIMER: This content is for educational purposes only and should not be considered personalized financial advice. Always consult with a qualified financial professional before making financial decisions.